author: WALKER, Chief Justice.

text:
    JONES et ux. v. BEVIER.
    No. 2370.
    Court of Civil Appeals of Texas. Beaumont.
    April 26, 1933.
    Rehearing Denied May 3, 1933.

      Harry Holmes, of Houston, and Pitts & Idles, of Conroe, for appellants.
    Foster, Williams & Nicholson, of Conroe, and Ed. R. Campbell, of Houston, for appel-lee.
   WALKER, Chief Justice.

On the 23d day of December, 1931, appellants, B. E. Jones and wife, Marzie Jones, instituted this suit against appellee, George M. Bevier, to cancel the following oil, gas, and mineral le'ase executed by them to him on the 22d day of October,. 1931.

“Oil, Gas and Mineral Lease
“This agreement made this the 22nd day of October, 1931, between B. E. Jones and wife, Marzie Jones, Lessor (whether one or more), and George M. Bevier, Lessee, wit-nesseth:
“1. Lessor in consideration of One and no/100 Dollars ($1.00) in hand paid, of the royalties herein provided, and of the agreements of Lessee herein contained, hereby grants, leases and lets exclusively unto Lessee for the purpose of investigating, exploring, prospecting, drilling and mining for and producing oil, gas and all other minerals, laying pipe lines, building tanks, power stations, telephone lines and other structures thereon to produce, save, take care of, treat, transport, and own said products, and housing its employees, the following described land in Montgomery County, Texas, to-wit:
“Beginning at N. W. corner of this 100 ac. survey at a stake from which a W oak 20“ in dia. mkd X brs. N. 6 E. 16 vrs. a Pine 30" in Diam. mkd. X Brs. S. 34 W. 5 vrs. Thence S. 30 E. 429 vrs. to stake in pond for corner. Thence S. 60 W 1201 vrs. to a stake a W. Oak 6“ in diam. mkd. X brs. N. 85 W. 3 vrs. and Red Oak 14" in Diam. brs. N 42 E 2 vrs. Thence N 30 W 429 vrs-. to a stake in Pin Oak 30" in Diam. mkd. X. brs. S. 20 W. 4 vrs. and S. Bay 4" in Diam. mkd. X brs. N. 55 E. 2.5 vrs. Thence N. CO B. 1201 vrs. to place of beginning, containing 91.75 acres of land, a part of Lemuel Smith Survey, Abstract 502, it being the intention to include all land owned or claimed by Lessor in said survey or surveys. For the purpose of calculating the payments hereinafter provided for, said land is estimated to comprise 91.75 acres, whether it actually comprises more or less.
“2. Subject to the other provisions herein contained, this lease shall be for a term of five years and six months from this date (called ‘primary term’) and as long thereafter as oil, gas or other mineral is produced from said land hereunder.
“3. The royalties to be paid by Lessee are: (a) on oil, one-eighth of that produced and saved from said land, the same to be delivered at the wells or to the credit of Lessor into the pipe line to which the wells may be connected; Lessee may from time to time purchase any royalty oil in its possession, paying the market price therefor prevailing for the field where produced on the date of purchase; (b) on gas, including casinghead gas or other gaseous substance, produced from said land and sold or used off the premises or in the manufacture of gasoline or other product therefrom, the market value at the well of one-eighth of the gas so sold or used, provided that on gas sold at the wells the ‘royalty shall be one-eighth of the amount realized from such sale; where gas from a well producing gas only is not sold or used, Lessee may pay as royalty $50.09 per week per year, and upon such • payment it will be considered that gas is being produced within the meaning of Paragraph 2 hereof; and (c) on all other minerals mined and marketed, one-tenth, either in kind or value at the well or mine, at Lessee’s election, except that on sulphur the royalty shall be fifty cents (50.⅜) per long ton. Lessee shall have free use of oil, gas, coal, wood and water from said land, except water from Lessor’s wells, for all operations hereunder, and the royalty on oil, gas and coal shall be computed after deducting any so used. Lessor shall have the privilege at his risk and expense of using gas from any gas well on said land for stoves and inside lights in the principal dwelling thereon out of any surplus gas not needed for operations hereunder.
“4. If operations for drilling are not commenced on said land or on other land in Ransom house or W. Strickland surveys on or before six (6) months from this date, this lease shall then terminate as to both parties unless on or before the expiration of said six months' Lessee shall pay or tender to Lessor or to the credit of Lessor in First National Bank at Conroe (which bank and its successors are Lessor’s agent and shall continue as the depository for all rental payable hereunder regardless of changes in ownership of said land or the rental), the sum of two dollars ($2.00) per acre for the number of acres then covered by this lease and not surrendered as hereinafter provided, which shall cover the privilege of deferring commence ment of drilling operations for a period or twelve (12) months. Thereafter, upon the payment or tender in like manner annually of the sum of one dollar ($1.00) per acre for the number of acres then covered by this lease and not surrendered as hereinafter provided, the commencement of drilling operations may be further deferred for successive periods of twelve (12) months each during the primary term. Payment or tender of rental may be made by check or draft of Lessee mailed or delivered to Lessor or to said bank on or before such date of payment. If such bank (or any successor bank) should fall, liquidate or bo succeeded by another bank, or for any reason fail or refuse to accept rental, Lessee shall not be held in default for failure to make such payment or tender of rental until thirty (30) days after Lessor shall deliver to Lessee a proper recordable instrument naming another bank as agent to receive such payment or tenders. The down cash payment is consideration for this lease according to its terms and shall not be allocated as a mere rental for a period. Lessee may at any, time execute and deliver to Lessor or to the depository above named or place of record a release or releases covering any portion or portions of the above described premises and thereby surrender this lease as to such portion or portions and be relieved of all obligations as to the acreage surrendered, and thereafter the rentals payable hereunder shall be reduced in the proportion that the acreage covered hereby is reduced by said release or releases.
“5. If prior to discovery of oil or gas on said land Lessee should drill a dry hole or holes thereon, or if after discovery of oil or gas the production thereof should cease from any cause, this lease shall not terminate if Lessee commences additional drilling or reworking operations within sixty (60) d'ays thereafter or (if it be within the primary term) commences or resumes the payment or tender of rentals on or before the rental paying date next ensuing after the expiration of three months from date of completion of dry hole or cessation of production. If at the expiration 'of the primary term oil, gas or other mineral is not being produced on said land but Lessee is then engaged in drilling or re-working operations thereon, the lease shall remain in force so long as operations are prosecuted with' no' cessation of more than thirty (30) consecutive days, and if they result in the production of oil, gas or other mineral so long thereafter as oil, gas or other mineral is produced from said land. In the event a well or wells producing oil or gas in paying quantities should be brought in on adjacent land and within one hundred fifty (150) feet of and draining the leased premises, Lessee agrees to drill such offset wells as a reasonably prudent operator would drill under the same or similar circumstances.
“6. Lessee shall have the right at any time during or after the expiration of this lease to remove all property and fixtures by Lessee on said land, including the right to draw and remove all casing. When required by Lessor, Lessee will bury all pipe lines below ordinary plow depth, and no well shall be drilled within two hundred (200) feet of any residence or barn now on said land without Lessor's consent.
“7. The rights of either party hereunder may be assigned in. whole or in part and the provisions hereof shall extend to the heirs, successors and assigns, but no change or divisions in ownership of the land, rentals, or royalties, however accomplished, shall operate to enlarge the obligations or diminish the rights of Lessee. No sale or assignment by Lessor shall be binding on Lessee until Lessee shall be furnished with a certified copy of recorded instrument evidencing same. In event of assignment of this lease as to a segregated portion of said land, the rentals payable hereunder shall be apportionable as between the several leasehold owners ratably according to the surface area of each, and default in rental payment by one shall not affect the rights of other leasehold owners hereunder. If six or more parties become entitled to royalty hereunder, Lessee may withhold payment thereof unless and until furnished with a recordable instrument executed by all such parties designating an agent to receive payment for all.
“8. (Struck out.)
“9. Lessor hereby warrants and agrees to defend the title to said land and agrees that Lessee at its option may discharge any tax, mortgage or other lien upon said land and in event Lessee does so, it shall be subro-gated to such lien with the right to enforce same and apply rentals and royalties accruing hereunder towards satisfying same. Without impairment of Lessee’s rights under the warranty in event of failure of title, it is agreed that if Lessor owns an interest in said land less than the entire fee simple estate, then the royalties and rentals to be paid lessor shall be reduced proportionately.
“In witness whereof, this instrument is executed on the date first above written.
“[Signed] B. E. Jones
“Marzie Jones.”

For grounds for cancellation, appellants plead: “That no money or thing of value passed from defendant to plaintiff as consideration for said lease. * ⅜ * That said option being a unilateral contract, the same was subject to be revoked by plaintiff. * * * That plaintiff revoked said option * * * and said lease, if ever valid, has terminated and is of no further force and effect.” Appellee answered by general demurrer, general denial, and plea- of not guilty, and by certain special pleas not necessary to mention. Appellant’s second supplemental petition, filed in reply to appellee’s answer, though erroneously stricken by the court, presented no material issue.

The evidence was clearly to the effect that the $1 consideration recited in the lease was not paid nor payment tendered by appellee nor requested by appellants. But there was no evidence on the issues as to whether or not appellee obligated himself to appellants to pay them the $1 and whether or not appellants agreed to execute the lease on the $1 consideration. After this suit was filed, and after appellee had received notice from appel-lahts that it had been filed, and that they had canceled and revoked the lease in so far as they were able, he paid into the bank named in the lease as appellants’ agent the first payment stipulated by the lease for the privilege of deferring drilling obligations. Appellants refused to accept this payment when notified that it had been made, and have not done anything since it was paid to ratify or bind themselves by the payment. Prior, to the institution of the suit appellee had not performed nor attempted to perform any of the agreements and obligations assumed by him as part of the consideration for the execution and delivery of the lease.

On conclusion of the evidence verdict was instructed in favor of appellee, upon which judgment was duly entered, from which appellants have duly appealed.

Opinion.

The lease, upon its execution and delivery by appellants to appellee, operated as a present conveyance of the oil and gas under the premises described in the lease, and vested in appellee a determinable fee in the oil and gas in place. Texas Company v. Davis, 113 Tex. 321, 254 S. W. 304, 255 S. W. 601; Stephens County v. Mid-Kansas Oil & Gas Co., 113 Tex. 160, 254 S. W. 290, 29 A. L. R. 566; Waggoner Estate v. Sigler Oil Co., 118 Tex. 509, 19 S.W.(2d) 27, 30. These cases clearly hold that an “unless” oil and gas mineral lease, such as is in issue in this case, is not a mere option or executory contract but a present grant of an interest in the land. After reviewing carefully these cases, Mr. Walker, in a very able article, Property Interests Created by Lease, Texas Law Review,' vol. VII, No. 1, at page 20, says: “Rightly understood, a lease is not an executory contract but a present conveyance of an interest in land, and this is the well settled view of Texas courts today.” In the recent case of Martin v. Dial, 57 S.W.(2d) 75, 81, Judge Leddy, speaking for the Commission of Appeals,, says: “It is equally clear that the sale of the oil and gas lease was a sale of an interest in the land. It is no longer an open question in this state that an oil and gas lease similar to the one under consideration conveys an interest in land. The purchaser of such lease takes a determinable fee to the minerals in place.” Judge Leddy supports this proposition by citing the Stephens County Case and Corsicana Petroleum Co. v. Owens, 110 Tex. 568, 222 S. W. 154, and Hager v. Stakes, 116 Tex. 453, 294 S. W. 835. Construed as a conveyance of an interest in the land described therein, no consideration was needed to support this lease, for it is the law of this state that a conveyance of land requires no consideration. Rogers v. Rogers (Tex. Com. App.) 15 S.W.(2d) 1037; Baker v. Wescott, 73 Tex. 129, 11 S. W. 157; Robertson v. Hefley, 55 Tex. Civ. App. 368, 118 S. W. 1159; Texas Co. v. Davis, supra; 2 Tiffany, Real Property (2d Ed.) § 438. On these propositions appellee was entitled to his instructed verdict as the nonpayment of the consideration was an immaterial issue.

However, if a consideration was necessary, the following affirmative drilling obligation, assumed by appellee as part .of the consideration for the lease, was sufficient to give it validity: “In the event a well or wells producing oil or gas in paying quantities should be brought in on adjacent land and within one hundred fifty (150) feet of and draining the leased premises, Lessee agrees to drill such offset wells as a reasonably prudent operator would drill under the same or similar circumstances.” Nolan v. Young (Tex. Civ. App.) 220 S. W. 154; Burt v. Deorsam (Tex. Civ. App.) 227 S. W. 354; McCaskey v. Schrock (Tex. Civ. App.) 225 S. W. 418; McCaskey v. McCall (Tex. Civ. App.) 226 S. W. 432; Harness v. Luttrall (Tex. Civ. App.) 225 S. W. 810; Johnson v. Russell (Tex. Civ. App.) 220 S. W. 352; Security Drilling Co. v. Rathke (Tex. Civ. App.) 41 S.W.(2d) 1019, 1022; Humble Oil & Refining Co. v. Strauss (Tex. Civ. App.) 243 S. W. 528. Burt v. Deorsam, supra, answers the contention of appellants that this affirmative drilling obligation cannot constitute an independent consideration because, they say, “the law makes it the duty of the lessee in such lease, in the absence of any provision, to protect the land from drainage from wells on adjoining lands, irrespective of distance.” Mr. Walker, in his article cited above at page 21, note 65, offers the following answer to appellants’ proposition, which he discusses as an objection: “The objection was entirely without merit in that the lessee prior to the execution of the lease was under no legal obligation whatsoever to drill an offset well under any circumstances. This obligation was imposed upon him only by his acceptance of the lease and the possible detriment incurred thereby should be regarded as consideration for the execution of the lease paid by the lessee,, the benefit of which moved to the lessor.”

The judgment of the lower court should be affirmed, and it is accordingly so ordered.

Affirmed.


source: Caselaw Access Project

author: HIGGINS, Justice. '

license: Public Domain

text:
    WHITE v. MONNIG DRY GOODS CO.
    No. 2812.
    Court of Civil Appeals of Texas. El Paso.
    April 20, 1933.
    Rehearing Denied May 11, 1933.
    J. F. McKenzie, of El Paso (on writ of error only), and Howell Johnson and W. C. Jackson, both of Fort Stockton, for plaintiff in error.
    T. M. Milam, of Fort Stockton, for defendant in error.
   HIGGINS, Justice. '

This is a companion ease to that of A. E. W. White, Garnishee, v. D. J. Sibley, 59 S.W.(2d) 286, recently decided by this court, and in which motion for rehearing is this day overruled.

Upon trial, Murray testified that White took all of the goods down to his store on North Nelson street; that White told him he had sold $500 worth of the goods, had turned some of them over to Mrs. King, and had the other goods in his store mixed with his goods. This testimony of Murray affirmatively shows a conversion by White to his own use of the Murray stock of goods. The judgment of the defendant" in error against the principal defendant, Murray, was for $235.40, with interest from September 10, 1931, at the rate of S per cent, per annum.

Upon the hearing of the motion for new trial it was agreed that the value of the stock of goods turned over to White by Murray was $2,000, and that the debts owing by Murray at the time amounted to more than $3,000.

The record shows a violation of the Bulk Sales Law (Rev. St. 1925, art. 4001 et seq.), a denial in the garnishment proceedings of any liability, a conversion by White to his own use and benefit of the Murray stock of goods, and that the value of the goods so converted is in excess of the amount of the judgment in favor of the defendant in er-rc>r against Murray.

Upon the authority of the ruling in the companion case of White v. Sibley, supra, the judgment of the lower court is affirmed.


author: McCLENDON, Chief Justice.

text:
    DAVIDSON v. COMMERCIAL NAT. BANK OF BRADY.
    No. 7820.
    Court of Civil Appeals of Texas. Austin.
    April 5, 1933.
    Rehearing Denied April 26, 1933.

      Baber & Baker and Critz & Woodward, all of Coleman, for plaintiff in error.
    Cunningham, Moursund, Johnson, Rogers & Slatton, of San Antonio, for defendant in error.
   McCLENDON, Chief Justice.

May 14, 1928, Mrs. Davidson (plaintiff below and appellant here) drew a check for $9,000 upon the bank (Commercial National Bank of Brady, defendant below and appel-lee here), in favor of “Joseph M. Cravens or bearer.” This check she delivered to Croth-ers, the bank’s cashier, and it was at once stamped (perforated) “paid,” and the amount charged to her account. This shit was brought on September 21, 1931, by Mrs. Davidson against the bank to recover the amount of the check with interest, on two grounds: (1) That the check was procured by false and fraudulent representations of Crothers that Mrs. Davidson was personally liable for certain defalcations of her recently deceased husband, who was in the employ of the bank; and (2) that the check was delivered with the express agreement that it was to be submitted to Cravens for his approval of the transaction, and was not to be cashed without his indorsement; which agreement was not carried out. The bank, in addition to other defenses, pleaded the 2-year statute of limitations (Rev. St. 1925, art. 5526); which plea Mrs. Davidson sought to avoid on the ground that she did not discover the fraud of Croth-ers until July, 1929, and could not, by the exercise of reasonable diligence, discover it earlier.

The judgment was in favor of the bank upon a special issue verdict, in which all issues submitted were found against Mrs. Davidson, who has appealed from the judgment.

Error is predicated upon objections to the court’s charge, the refusal of special issues, the admission and exclusion of evidence, and alleged misconduct of the jury.

We seriously doubt whether any of the issues thus raised presents reversible error; but, since we have reached the conclusion that the record shows conclusively as a matter of law that the cause of action was barred, other questions presented by the appeal are academic, and their discussion will be pretermitted.

As above shown, the suit was filed 3 years, 4 months, and 7 days after all the occurrences had transpired which gave rise to Mrs. Davidson’s cause of action. The sole question upon this issue, therefore, is whether the facts, viewed most favorably for Mrs. Davidson, would support a finding that by the exercise of that degree (reasonable) of diligence which the law imposed upon her she could not have discovered the fraud alleged to have been perpetrated upon her prior to September 21, 1929, or 1 year, 4 months, and 7 days after its perpetration.

The material facts upon this issue follow:

Davidson (plaintiff’s husband) died March 31, 1928. At that time he and plaintiff had been married upwards of 12 years. They had two children, aged respectively about 11 and 7 years. She was then enceinte and gave birth to a son in August following. Davidson was, and for many years had been, a bookkeeper for the bank. Crothers, the bank’s cashier, was a first cousin of Mr. Davidson, and was a friend of both Mr. and Mrs. Davidson. Mr. Davidson’s mother, a resident of Madison, Ind., died in 1927, leaving an estate of about $100,000, which she devised in trust, but no part of it, except income, went to Mr. Davidson, Cravens, her brother, a lawyer of 48 years’ practice in Indiana, was her executor. He wound up the estate in July, 1929.

Mrs. Davidson’s testimony supports her allegations that Crothers advised her that she was personally liable for her husband’s defalcations, which were represented at that time to be $9,000.' Later, she says, she was told that they aniounted to some $50,000. Her testimony also supports her claim that the check was delivered upon the express understanding and agreement that it was not to be cashed until it had .been approved and indorsed by Cravens.

Mrs. Davidson testified that she relied upon Crothers’ representation as to her personal liability, but for which reliance she would not have delivered the check. This testimony is not reconcilable with the following quotation from her testimony on cross-examination:

“Q. Why did you want that check to go to Madison, Indiana, and be indorsed by Mr. Cravens? A. Because Mr. Crothers was interested in the bank and Mr. Cravens was not interested in the bank and I wanted him to pass on it.
“Q. You wanted somebody else to pass on it? A. I wanted Mr. Cravens to -pass on it. It was made out to him.
“Q. You were not satisfied then with what Mr. Crothers told you? A. Well, he had the bank’s interest at heart.
“Q. You knew that the bank was going to get the nine thousand dollars, and that their interest was adverse to yours, and that therefore you did not want to trust the bank exclusively? A. Well, I wanted Mr. Cravens to pass on it,-because he was a friend of mine too. I wanted his opinion.
“Q. Was he a lawyer? A. I did not know it if he was.
“Q. You just wanted his opinion? A. Yes, sir.
“Q. I thought you said that you went on what Mr. Crothers said to you? A. I did rely on what he said to me to a certain extent hut Mr. Crothers was interested in the bank and Mr. Cravens was a relative.
“Q. You thought it would he better to have Mr. Cravens advise yon on it rather than relying exclusively on what Mr. Crothers said? A. Yes, I wanted Mr. Cravens to pass on it.
“Q. Then you did not rely altogether on what Mr. Crothers told you? A. Yes, I had quite a bit of confidence in Mr. Crothers.
“Q. You had quite a bit of confidence in Mr. Crothers, but the question I asked you was, did you rely altogether on what Mr. Crothers told you? A. Well, evidently not.
“Q. You say evidently not? A. Yes, sir.”

In addition to this admission on her part, the conclusion that she was not willing to rely upon the representations of- Crothers follows necessarily, we think, from her testimony in another place that she made the check payable to Cravens because she was unwilling to make the payment without his sanction and indorsement of the check.

AYe think the conclusion is also irresistible that she consulted with Cravens, either by letter or personally, regarding paying the bank before she drew the check, or in any event shortly thereafter.

Her testimony upon this point 'is exceedingly vague, if not in fact evasive. Examples:

“I had con’espondence with Uncle Joe about different things.”
“I had a lot of correspondence with Mr. Cravens all along and about everything.”
“I wrote to Mr. Cravens about a lot of things and do not remember all I wrote him about.”
“Q. Is it your testimony that you did or did no.t write to Mr. Cravens of Madison, Indiana, about this check in the spring of 1929. A. I do not remember my correspondence in 1929 with anyone.”
“Q. Did Mr. Cravens write to you and advise you to make this payment prior to the time you did make it? A. I had a lot of letters from J. M. Cravens, but did not pay any attention to them at the time. I was ill and pregnant and I did not pay any attention to anything.”

It thus appears from-her own testimony that she was in correspondence with Cravens all along, and relied upon him and expected his advice in this matter. It would be most extraordinary for this most important matter to be omitted from the correspondence. Furthermore, she testified she understood the banking custom to require indorsement by the payee of a check, although payable also to bearer, and it is extremely improbable that she would have delivered such a check to the bank to be sent to Cravens for his indorsement, without some explanation from her as to why it was sent and for what purpose his indorsement was sought. ,

Turning to the testimony of Cravens, introduced by plaintiff, we quote:

“I cannot say that I had anything to do with her making that check. I have answered, and I repeat it here, that I had stated to her that it would probably be better for her to put up a sum out of the proceeds of her insurance money to be used to pay the alleged shortage of her husband when ascertained, believing that thereby and with the application thereon of the Crothers’ indebtedness to the Elizabeth G. Davidson estate, the whole shortage and also AVill Davidson’s indebtedness could be settled, and his good name preserved. I gave this advice to her for that reason, believing the statement made by the Banks officials juSt prior thereto as to the amount of his shortage. Had I known they were claiming a larger shortage, and that such payments would not pay such shortage, and consequently his name would not be cleared of any alleged shortage, I would not have given such advice. I do not remember, and in fact I do not believe that I gave her any specific directions as to making any check, and in fact did not know that she had made such check until long after the date upon which it was marked ‘Paid’ had elapsed.
“It is my recollection that either in my letter to Mrs. Rose Davidson, stating that I thought it best for her to put up, out of the proceeds of the Insurance policies, a certain sum of money, and I may have said nine thousand dollars, but I am not certain about the amount, with the bank, out of which to make good said purported shortage, when it was definitely ascertained, as I stated in answer to Interrogatory Number 11, or in some other letter that I wrote to her about that time, that I stated to her that I would give her, out of my personal moneys, $4,000.00, in view of the fact that any payment that she would make out of the insurance money would deplete her resources to such an extent, that it would be difficult for her and her .children to live comfortably and properly. I am certain that I did state to her in some letter or letters that I would make such payment out of my moneys to her for such reason and purpose, and I did make such payment to her, for the reason and purpose I have just stated. * * *
“As I have stated in answer to á number of the Direct Interrogatories in this deposition, I did state to her that on account of a payment, or payments to be made to said Commercial National Bank out of the proceeds of her insurance moneys, her resources would be depleted, and that I would give her $4,000, out of my moneys to help her and her children in their living. As I think 1 have stated in answer to such Direct Interrogatories, I do not now remember the exact date, as connected with, the date of said check, when I made such statement or statements to her, but I think I made some some time in the Spring or early Summer of 1928, and I did make such payment of $4,000 to her for such purpose, and as I then considered it, and as I now consider it, as a gift to her and her children out of my personal moneys.”

The record shows that this sum was paid in two checks of $2,000 each, one of which was deposited in the bank by Mrs. Davidson on June 11, 1929.

Mrs. Davidson testified that she'first learned that Cravens had not indorsed the check about July, 1930, under the following circum-' stances: At that time some of the bank employees were arrested for embezzlement; which fact aroused her suspicions, and, she then examined the check which had been in her possession ever since about April 1, 1928, when it was returned to her along with her other canceled checks and bank statement.

Upon this point Cravens testified: “I cannot say when was the first time I learned that such check had been issued and charged to the account of Mrs. Davidson on the books of said Commercial National Bank, of Brady, and the amount thereof transferred from her account to the account of said Bank. Some weeks, and it may be some months, after the check was dated, and after the stamp mark thereon indicated that it had been paid, I saw said check, and my recollection is that then and at that time was the first time that I learned about the check, and the other matters inquired about and stated in this cross interrogatory.”

However this may be, she did learn shortly after May 14,1928, that the check was charged to her account. Mrs. Davidson had no further communication with Orothers or any one else connected with the bank regarding the check or the transaction with which it was connected until after July, 1930.

There was no concealment of the alleged fraud from Mrs. Davidson; nor was there any subsequent act or word on the part of Crothers, or any one else connected with the bank, which would excuse her from exercising such diligence to discover the fraud as the law imposed upon her. Her own testimony, above quoted, likewise excludes the existence of such confidential or trust relation as would relieve her of such diligence.

In Connoly v. Hammond, 58 Tex. 11, it was held that neither fraud alone, nor mere ignorance of the fraud, will stop the running of the statute. “There must be both fraud and such concealment that it could not be discovered by the use of reasonable diligence.” This holding followed that in Hudson v. Wheeler, 34 Tex. 356, which in turn followed those in a number of earlier Texas cases. It has been frequently reiterated in later Texas decisions, and is adhered to in many other jurisdictions. See 37 C. J. p. 941, note 8.

A literal application of this rule would prevent any tolling of the statute, where no special circumstances exist which would excuse reasonable diligence. This is the rule’s application in some other jurisdictions (37 O. J. p. 491), and also in this state as applied to judgments procured by fraud. Dunn v. Taylor, 42 Tex. Civ. App. 241, 94 S. W. 347, and cases there cited.

B,ut this literal application is not the interpretation applied generally in this state to actions grounded in fraud or deceit. The general interpretation of the rule is that the statute is tolled for a reasonable time allowed to the defrauded party within which to discover the fraud. Stated in a different form, which the opinions ' quite generally employ, the rule is.that the cause of action does not accrue until the fraud is actually discovered, unless, in the meantime, it would have been discovered by the exercise of reasonable diligence. See 20.Tex. Jur. pp. 112,113, for collation of authorities.

What amounts to reasonable diligence in a given case is ordinarily a fact question; and a variety of circumstances have been held to have evidentiary bearing upon this question. But all agree that, in the absence of concealment, or of confidential or trust relation, or of some subsequent act or word on the part of the defrauder which would tend to lull the defrauded into security and prevent inquiry or investigation, some diligence to discover the fraud is imposed. From this it follows that, where no diligence is shown, the statute ceases to be tolled after a reasonable time has elapsed.

In an action for fraudulent misrepresentation of the quantity of land conveyed, it was held in Bass v. James, 83 Tex. 110, 18 S. W. 336, that where the suit was brought approximately 13 months after the 2-year period had expired, the bar of the statute was complete as a matter of law. The following from the opinion is apropos the present question:

“Appellant relies upon his former confidence in the integrity and veracity of appel-lee as an excuse in .failing to resort to the usual method to ascertain the quantity of land he was buying. He says he had no reason to doubt that subh representations as to quantity were true, and he only ascertained that they were false when he had a survey made in October, 1890, in order to ascertain the extent of the right of way of the St. Dou-is, Arkansas & Texas Railway. More than three years elapsed from the time of making the representations, in October, 1887, to the filing of suit, in November, 1890. It does not appear from the evidence that during this interval appellee made any representations or did anything that was calculated to keep alive the effect produced by the representations made when lie sold the land, or that was calculated to induce appellant not to use reasonable diligence to discover and ascertain the quantity of land contained in the calls of his deed. As said by the court in Kuhlman y. Baker, 50 Tex. 636: 'If the alleged fraud constituted a sufficient reason why appellant did not at the time the sale was made, discover that the quantity was not as represented, his subsequent failure to inform himself of such an important matter as the quantity of land contained in the tract purchased was attributable to his neglect and want of ordinary precaution.’ It does not appear that after the sale any intervening representations were made by appellee, as to the quantity of land, that would induce appellant to relax the diligence required of him, as ah ordinarily prudent man, to ascertain the quantity of land he áctuhlly purchased. If the existence of confidence in the integrity and veracity of the vendor is a sufficient excuse to relieve the vendee from the use of ordinary diligence to discover so important a matter as the quantity of land sold, then this excuse would be effective so long as the confidence continued, and limitation would commence to run, not from the time that the quantity of land could have been discovered by the exercise of ordinary diligence, but from the time the confidence ceased to exist. We do not believe it is the policy of the law that the operation of 'the statute should depend upon such an uncertain contingency, the happening of which Is dependent upon a chapter of accidents. The presumption is, that if the party affected by the fraudulent transaction might, with ordinary care, have seasonably detected it, be seasonably had actual knowledge of it.”

If we make every allowance for Mrs. Davidson’s mental and physical condition — the shock and grief caused by the recent death of her husband and discovery of his defalcation, the impending advent of her expectant offspring — we think a year after the birth of her child was beyond the extreme limit which the law should accord her within which to discover the fraud, if any degree of diligence whatever on her part is to be imposed.

Conceding the correctness of her statement that she did not know that Cravens had not indorsed the check until July, 1930 (although this statement is in apparent direct conflict with evidence she had previously given that, when she handed the check to Crothers, “he walked right around the counter and stamped it paid without any endorsement whatever”), the fact remains that there was no concealment whatever of Cravens’ nonindorsement.. On the contrary, the check, which bore conclusive evidence of that fact, had been returned to her by the bank shortly after its delivery, and thereafter continuously remained in her possession. The means therefore, of ascertaining that the check had not been indorsed by Cravens was in her possession. The most cursory examination of the cheek would have disclosed this fact, and the consequent violation of what she testified was her express agreement with Crothers.

One of the essential elements of actionable fraud is that the false statement must be relied upon by the defrauded party. Mis. Davidson’s quoted testimony sho.ws that her reliance on Crothers’ statement that she was personally liable was only to the extent that she believed what he said to be true. She was not willing to rely upon it as a basis for her action. He was representing the bank whose interests were antagonistic to hers, and she wanted and required the advice of Cravens before she would act. That she got Cravens’ advice in the matter prior, in any event, to June, 1929, is manifest. Her own testimony on this point is, as above shown, vague and unsatisfactory, if not in fact evasive. She was in correspondence with Cravens both before and after the check was given. Cravens’ quoted testimony concludes the matter. Whether he knew of the check before it was given is unimportant. He did advise her and promised to make her a gift of $4,000 if she made the payment. He did subsequently make the gift; one of the covering checks being cashed on June 11, 1929. His testimony shows that he did know,- and he must necessarily have known, of the payment prior to that time. Otherwise he would not have sent the money, because Mrs. Davidson’s depleted finances consequent upon the $9,000 payment was the motivating cause for the gift. We do not, of course, mean to assert that the record shows that Cravens advised her that she was not personally liable for her -husband’s defalcations. It does show, however, and conclusively so, we think, that he did advise her in regard to making' the payment. Her petition upon which she went to trial alleges that she “had an uncle by marriage, Joseph M. Cravens, of Madison, Indiana, in whom she had confidence and to whom she looked for legal advice in regard to her liability for said debt, and so instructed and advised said bank and its cashier.” The gravamen of her suit was the alleged false statement of Cro-thers as to her legal liability. The record presents no excuse for her failure to submit this all-important question to Cravens, or to seek legal counsel elsewhere.

The pertinent facts upon the issue of reasonable diligence to dicover the fraud, stated, as we have endeavored to state them, most favorably to Mrs. Davidson, and disregarding entirely the evidence of Crothers which presents a direct conflict with that of Mrs. Davidson on every material point, we think bring the case clearly within the rule that, where but one reasonable conclusion can be drawn from the evidence, no fact issue is presented.

The trial court’s judgment is affirmed.

Affirmed.


author: MURRAY, Justice.

text:
    SANDERS NURSERY CO. v. J. C. ENGELMAN, Inc.
    No. 9176.
    Court of Civil Appeals of Texas. San Antonio.
    March 22, 1933.
    Rehearing Denied May 10, 1933.
    Greenwood & Lewis, of Harlingen, for plaintiff in error.
    Sawnie Smith, of San Antonio, and Kennedy Smith, of Edinburg, for defendant in error.
   MURRAY, Justice.

This is a motion to strike out statement of facts. The statement of facts in this case was prepared by the official court reporter, filed with the clerk of the court below, approved by the trial judge, and forwarded to the clerk of this court.

Attorneys for the defendant in error were not given notice of the filing of the statement of facts with the clerk below, bad no opportunity to make their objections thereto, and did not in 'anyway agree to said statement of facts.

Article 2238, R. C. S. 1925, as amended by Acts 1931, 42d Leg., 1st Called Sess., p. 75, c. 34, § 2 (Yernon’s Ann. Civ. St. art. 2238), reads as follows: “When any party to any suit reported by any such reporter shall desire a transcript of the reporter’s notes of the evidence in said suit, said party may apply for the same and such stenographer shall thereupon file an original and duplicate copy thereof in question and answer form among the papers in said cause, and it shall be made the duty of the court, if the transcript be found to be correct, to approve the same; provided, however, before approving same, notice of the filing shall be given to the interested parties, who may make objections thereto, and any objections, if found to be material and well-founded, shall be allowed. If said transcript is thus approved and signed by the judge, the same shall be filed among the papers of said cause and become a record therein, but not to be recorded.”

It is clear that this plain provision of the statute, which requires the giving of notice, was not complied with. The motion will be granted and said statement of faetsi stricken from the record. Corbett et al. v. Raymondville Independent School District et al. (Tex. Civ. App.) 52 S.W.(2d) 1116.


author: O’QLTNN, Justice.

text:
    SHABOUB v. DE LACIE et al.
    No. 2324.
    Court of Civil Appeals of Texas. Beaumont.
    March 22, 1933.
    Rehearing Denied April 26, 1933.

      , A. D. Lipscomb, F. S. Jones, and W. K. Blain, all of Beaumont, for appellant.
    Howell & Howell,' of Beaumont, for ap-pellees.
   O’QLTNN, Justice.

Appellees filed this suit against appellant to recover special damages for the breach of a building lease contract. The amount of damages sought by the two plaintiffs amounted to $9,720. Plaintiffs alleged that on August 27,1931, they entered into a written contract with defendant -wherein he contracted to erect a filling station and garage building to be situated on certain lands on the Yoth road in Jefferson county, Tex., and to lease said building to them for a period of three years at a rental of $35 per month; and that said building was to be completed and ready for occupancy by September 30, 1931.

They further alleged that in accordance with their agreement with defendant and in addition to the consideration set forth in the lease contract, plaintiff Roy Abshire executed to defendant a deed of trust lien on a certain lot in Nederland, Jefferson county, Tex., in the sum of $500 to secure the faithful performance by them of their lease contract, and delivered same-to defendant on to wit, the date of the execution of the said written lease contract, August 27, 1931, possession of which defendant still retained, but that defendant failed and refused to build said filling station and garage as he had contracted to do, to their'damage in the amounts sued for.

They further specially alleged:

“Plaintiffs represent that the plaintiff, John De Lacie, Jr., was employed by the Andy Yaile Tile Shop at Beaumont, Texas, at a wage of One Hundred ($100.09) Dollars per month and relying upon the terms and conditions of the said lease contract, resigned from that employment on the 27th day of August, 1931, and by reason of the breach of said contract by the defendant herein he has been damaged by this defendant for the loss of such wage for the term of said lease in the sum of Thirty Six Hundred ($3600.00) Dollars; and that the plaintiff, Boy E. Ab-shire, at the time of the execution of the said lease contract, was employed by the Sinclair Oil & Refining Company at Beaumont, Texas, as a filling station operator at a wage of One Hundred and Seventy ($170'.00) Dollars per month, and relying upon the defendant’s faithful performance of the said lease contract, resigned from his employment on the 27th day of August, 1931, and by reason of the breach and failure by the defendant to carry out the terms and conditions of the said lease contract, he has suffered a loss of such wages and will continue to suffer a loss of such wages during the term of said lease contract to his actual damages in the sum of Six Thousand One Hundred and Twenty ($6,120.00) Dollars.”

They further alleged that at the time the lease contract was executed, they informed defendant of their employment, as alleged, and that upon the execution of said contract they, and each of them, intended to and would resign said employment in order to enter into and pursue their business at said filling station and garage, and that they were experienced operators of such business and intended to and were going to devote their entire time to developing and pushing their said contracted business.

Appellant answered by general demurrer, several special exceptions, general denial, and specially that at the time the lease contract was executed, and as an inducement and as a part of the consideration therefor, appel-lees were to give “some character” of security in the sum of $500 to defendant to secure the rent of the premises to become due, and that in order to induce defendant to enter into said lease contract and for the purpose of “cheating and defrauding the defendant” appellees made false material statements concerning the security offered to be pledged in that said Roy Abshire was the owner of lot 21 in block 5 of the Hollywood addition to the town of Nederland, Jefferson county, Tex., and that same was of the reasonable value of $500; that said representation of the value of said lot was false and was known to be false when so made; that defendant did not know of the falsity of said statement, but believed same to be true, and that said false statement was made for the purpose of inducing defendant to act on same, and that he did act upon same and executed said lease with the understanding that if the market value of said lot was $500, as represented, he, defendant, would carry out his lease contract, but that if the market value of said lot was not sufficient to secure the said amount of $500 then said lease contract was to be at an end. That upon an investigation as to the value of said lot, defendant ascertained its value to be $100, and he then notified appellees that if they would execute bond in his favor in the sum of $500 he would carry out his lease contract, but that appellees failed and refused so to do, and were not entitled to maintain their suit. He further answered that by reason of appellees’ false representations as to the security inducing said lease contract, the consideration for same had wholly failed.

The court overruled defendant’s general demurrer, and all of his special exceptions, except one, which it is not necessary to state. At the close of the evidence, defendant moved for an instructed verdict in his favor, which was refused. The case was then tried to a jury upon special issues, upon the answers to which judgment was rendered in favor of appellee De Lacie for $480, and in favor of appellee Abshire for $1,360. Motion for a new trial was overruled and the case is before us on appeal.

Appellant’s first proposition is based upon his first six assignments of error. These complain that the court erred in overruling defendant’s general demurrer, and five special exceptions. The contention 'under this proposition is that the petition of appellees failed to state a cause of action because it did not allege that at the time the lease contract was executed appellant had knowledge of such facts and circumstances as to put him upon notice that a breach by him of the lease contract would result in the special damages sought to be recovered — in other words, that the petition must allege the existence of special circumstances of which appellant had notice, from which it should be known or inferred that a breach of the contract by him would result in the special damages claimed. This contention is overruled. The petition alleged that at the time the contract was made appellees told appellant that they were then employed, the nature of their employment, the name of their employers, and the wages each was earning. It further alleged that appellees, at the time of the executing of the lease contract, informed appellant that upon the execution of said contract they intended to resign from said employment and devote their entire time to the fostering of the business they were to engage in, and that relying upon appellant’s carrying out his said contract, they did resign and so informed appellant. Each of these allegations were fully supported by the evidence, and so found by the jury in answer to special issues. Appellees sought to recover special damages in the extent or to the amount of their lost wages resulting from appellees giving up their employment and wages earned through their said employment, because of the execution of the lease contract with appellant by which they intended and expected to engage in the filling station and garage business to be carried on in the building contracted to be built and leased to them by appellant. The amount of wages earned by them in their prior employment was alleged and proven. It' was shown that appellee De Lacie was earning an average of $60 a month and that appel-lee Roy Abshire was earning an average of $170 a month. The jury found damages for De Lacie in the sum of $480, and for Abshire, $1,360. This was damages in the sum of their respective lost wages for eight months, that being exactly the length of time from the executing of the contract until the date of the judgment. These sums were not recovered as wages, but as damages measured by the loss of such wages for such time, occasioned by appellant’s breach of the contract to build and deliver the building to appellees. Appellant having notice of the special facts and circumstances surrounding the execution of the lease contract, the damages arising from the breach of the contract must be held to have been reasonably in the contemplation of the parties at the time of the execution of the contract, and hence recoverable as resulting from a breach of same. 13 Tex. Jur. §§ 174, 175, 176, pp. 319, 320, 321, 322.

Appellant’s insistence that the damages recoverable by appellees, if any, would bo general damages, is not sound. Likewise, his contention that the damages sought are not recoverable because too speculative and remote, cannot be sustained. Appellees did not seek to recover contemplated profits or income from their intended filling station and garage operations, but special damages suffered by reason of tbe loss of wages which they would have earned at employments which they had resigned when the lease contract was executed, measured by the extent of the lost wages.

The second and third propositions complain that the court erred in refusing the request for an instructed verdict. The instruction was requested on the theory that the petition of appellees did not allege a cause of action, wherefore appellant’s general demurrer should have been sustained. What we have above said disposes of this proposition. The pleadings of appellees and the evidence were sufficient to support the judgment.

The fourth and fifth propositions challenge the correctness of the court’s charge on the measure of damages. Special issue No. 9 reads: “What sum of money, do you find from a preponderance of the evidence, would fairly and reasonably compensate the plaintiff, Roy Abshire, - for the damages suffered by him. Answer by stating the amount, if any, in dollars and cents.”

■Special issue No. 11 was: “What sum of money, do you find from a preponderance of the evidence, would fairly and reasonably compensate the plaintiff, John De Laeie, Jr., for the damages suffered by him, if any. Answer by stating the amount, if any, in dollars and cents.”

Relative to these issues, the court charged: “In connection with the foregoing Special Issue No. 11, and Special Issue No. 9, you are instructed that in assessing such damages, if any, you will take the difference between the aggregate amount of money, if any, that plaintiff had a reasonable expectation of earning during the term of the lease contract had plaintiff not relied upon said contract, if he did so rely, and given up his employment, if he did; and the aggregate amount of money, if any, plaintiff has a reasonable expectation during the period of said contract after having given up his employment, if he did.”

Appellant excepted to this charge “because the court fails to instruct the jury as to the correct measure of damages, if any, to which the plaintiffs would be entitled under the pleading and facts in this ease, and permits the plaintiffs to recover on damages which were speculative and remote and not within the contemplation of the parties at the time the contract was entered into.” It will be observed that the objection to the charge is that it permits the plaintiffs to recover speculative and remote damages. We do not think the charge subject to this objection. The suit was not for damages growing out of a refusal to deliver possession of a building already in existence, but for damages for refusing to erect a building under a written contract of leasing and to deliver same, to plaintiffs for a determinate lease period. The damages claimed are not for contemplated profits from the business in which plaintiffs were going to engage, but for special damages suffered by reason of the loss of wages plaintiffs would have earned in employments they had at the time of the execution of the lease contract and which they resigned and gave up by reason of the contract so they could enter into their new business, which was known to appellant. The proposition is based upon, and is in the words of appellant’s nineteenth assignment of error, which was a repetition of appellant’s thirteenth exception to the court’s charge. The' statement “because the court fails to instruct the jury as to the correct measure of damages, if any, to which plaintiffs will be entitled under the pleading and facts,” is too general, does not point. out any error, nor does it suggest any measure proper to -be given. Moreover, we think the charge gives the proper measure under the pleadings and the facts. As a general rule, the measure of damages in the case of a breach of a contract is the amount which will compensate the injured person for the loss which the fulfillment of the contract would have prevented, or the breach of it has entailed. The execution of the lease contract caused appellees to give up their present employment, and appellant’s failure to carry out his contract caused them to lose the wages they would have earned but for said contract. The assignments are overruled.

What we have said disposes of the seventh proposition.

The sixth proposition insists that the court committed reversible error in failing to define in its charge the term “general damages,” contending that “if there was an issue to present to the jury under the pleading and evidence, then the issue of ‘general damages’ was the issue.” This assignment is overruled. Appellees did not seek to recover general damages for the breach of a civil contract, but pleaded facts showing special damages for the breach of such contract, and prayed for the recovery of such special damages. The issue of general damages was not raised either by the pleading or the evidence, and so could not have been submitted to the jury, and, therefore, need not be defined in the court’s charge. Furthermore, the definition of “damages” given in the court’s charge was taken bodily from appellant’s objection to the charge. To have defined general damages would not only have been improper, but calculated to have misled and confused the jury.

The eighth proposition asserts that:

“(a) It was error for the court to submit special issues to the jury assuming certain facts constituting appellees’ cause of action.”
“(b) It was error for the court to submit an issue to the jury which was not made by the pleading.”

Tlie first contention (a) here presented, points to no error. It states no fact assumed by the court. However, an inspection of the charge of the court fails to disclose any issue submitted that assumes any fact to be determined, or upon which any finding should be made. The second (b) insistence is but the statement of an abstract principle of law. No issue is pointed out that was submitted without basis in the pleading. No such issue was submitted.

All assignments of error by appellant having been considered, and.none of them showing reversible error, the judgment should be affirmed, and it is so ordered.

Affirmed.


text:
    AMERICAN FINANCE CO. OF GALVESTON v. COPPARD.
    No. 2354.
    Court of Civil Appeals of Texas. Beaumont.
    April 26, 1933.
    Rehearing Denied May 3, 1933.
    Leo Brewer and Olind H. Pitman, both of San Antonio, for appellant.
    Geo. M. Meyer and. Templeton, Brooks, Napier & Brown, all of San Antonio, and Williams, Neethe & Williams, of Galveston, for appellee.
   WALKER, Chief Justice.

This suit was instituted in district court, Bexar county, by appellant, American Finance Company of Galveston, a corporation, against Alamo National Bank of San Antonio and M. Coppard, trustee in bankruptcy of the estate of Joseph Howard Le Sage, bankrupt, to recover a fund of $10,291.77, with 3 per cent, interest from April 22, 1930. Appellant claimed the fund as the proceeds of sixteen automobiles which it claimed to own and which had been sold under an agreement between it and appellee, Cop-pard, and deposited by agreement in Alamo National Bank. Coppard claimed that tire automobiles belonged to the estate of the bankrupt and that 'the fund belonged to him as trustee of the bankrupt estate. The Alamo National Bank tendered the fund into court by its interpleader and prayed for discharge with its costs and attorney’s fees. Upon trial to the court without a jury, judgment was rendered for appellant for $5,789.48 of the principal sum, the proceeds of the sale of nine of the automobiles, and for appellee, Coppard, for $4,502.29, the proceeds of the sale of seven automobiles. Judgment for the Alamo National Bank was in its favor on its interpleader with its costs and $100 attorney’s fees. The appeal involves only the amount awarded appellee, Coppard.

The following facts constitute the basis of appellant’s claim to the seven automobiles: The bankrupt, Joseph Howard Le Sage, had a contract with appellant by which appellant advanced him about 90 per cent, of the cost price of the automobiles. When the automobiles arrived in San Antonio, where Le Sage was doing business, he would draw drafts on appellant for the amount allowed him by his contract, with bills of lading attached ; and he also executed to appellant instruments in writing, designated by the parties as trust receipts, which acknowledged fee-simple title in appellee to the automobiles, with permission to Le Sage to exhibit and sell them. On November 11, 1929, Le Sage was in default in his payments to appellant, as per the terms of their contract, and on that dato appellant instituted a suit against him in district court of Galveston county to recover the title and possession of certain automobiles covered by the trust receipts above referred to, including the seven automobiles in issue in this case. And in connection with that suit appellant sued out writ of sequestration. The next day service was had upon Lie Sage, and the sheriff of Bexar county executed the 'writ of sequestration by seizing and taking into his custody and possession these seven automobiles. A few hours later Le Sage was adjudged bankrupt on his petition. Appellee, Coppard, was immediately appointed receiver of the bankrupt estate, and qualified as such'. On December 3, 1929, appellant was awarded judgment against Le Sage for the absolute title to the seven automobiles. On December 6, 1929, after the rendition of that judgment, appellee, Coppard, was appointed trustee in bankruptcy of the estate of Le Sage and immediately qualified as such. Immediately after appellee, Cop-paid, was appointed receiver, and before the rendition of tbe judgment by the Galveston court in favor of appellant for the title and possession of the automobiles, he, as receiver, “filed a petition with the referee, alleging that the trust receipts executed by the bankrupt (Le Sage) constituted chattel mortgages; that the liens thereunder, if any existed, were void as to the creditors; that the levy of the writ of sequestration had been nullified by the bankruptcy adjudication; that the claim of ownership of appellant (American Finance Company) was not bona fide and it was not a substantial'adverse claim to the property; and prayed for a summary order directing any and all persons in possession of the property to deliver possession and control thereof to himself. Appellant (American Finance Company) appeared specially before the referee and filed a plea to the jurisdiction of the court to issue a summary order. The plea was overruled and appellant (American Finance Company) answered, claiming ownership by virtue of the trust receipts, and denying that the bankrupt (Le Sage) was insolvent. The referee conducted a hearing. After taking evidence, the referee held that the claim of appellant (American Finance Company) was colorable only and not a substantial adverse claim to the property and ordered it restored to the receiver. On petition to review the order of the referee, the District Court affirmed it and this appeal followed.” While that proceeding was pending in the federal courts, appellant and ap-pellee, Coppard, agreed to sell these seven automobiles, with nine others that were in issue between them, and to deposit the proceeds in Alamo National Bank, which was done. This suit was instituted, as stated above, to determine the title to that fund. As the basis of its claim, appellant made the same contentions in this suit as in the Galveston county district court, and in answer thereto appellee, Coppard, made the same defense as made by him before the referee in bankruptcy, with the further contention that the judgment of the Galveston county district court as to him was absolutely void.

Opinion.

On this appeal appellant contends: (a) The judgment rendered in the Galveston county district court was a valid and final adjudication of its title to and ownership of the seven automobiles; (b) the trust receipts covering the seven automobiles did not evidence a .security transaction but full title and ownership in appellant; (c) should the trust receipts be construed as chattel mortgages, nevertheless they are valid in favor of appellant as against the trustee in bankruptcy. We think the first proposition is conclusive of the issues in this case. The quotation of the facts and issues given above is taken from the opinion of the Circuit Court of Appeals, American Finance Co. of Galveston, Texas v. Coppard, 45 F.(2d) 154, 155, wherein the summary order of the referee in bankruptcy, as affirmed by the federal District Court, was reversed. In reversing the judgment of the District Court, the Circuit Court of Appeals said: “A suit was pending in a state court of competent jurisdiction in which appellant claimed the ownership of the property by virtue of documents which on their face purported to vest title. The property was in the custody of the state court and not in possession of the bankrupt. The claim was undoubtedly in good faith and required a determination both as to the facts and the law.” As we construe this holding, the Circuit Court of Appeals determined that the Galveston district court had jurisdiction to adjudicate both the law and the facts in issue between it and Le Sage involving the title to these automobiles. The decision of that court vested the absolute title to these seven automobiles in appellant. As the Galveston county district court had jurisdiction to determine both the law and the facts involving the title to these automobiles, it follows that the judgment of that court was res adjudicaba as to every contention made by appellee in this case.

It follows that the judgment of the lower court should be reversed, and judgment here rendered in favor of appellant, and it is accordingly so ordered.


author: SMITH, Justice.

text:
    LANDER et al. v. JORDAN.
    No. 9042.
    Court of Civil Appeals of Texas. San Antonio.
    April 12, 1933.
    Rehearing Denied May 10, 1933.

      Houston & Johnson, of Dallas, and C. C. Carsner, of Victoria, for appellants.
    J. W. Ragsdale and Proctor, Vandenberge, Crain & Vandenberge, all of Victoria, for ap-pellee.
   SMITH, Justice.

Appellee, Royal G. Jordan, brought this action aga-inst J. H. Lander and the Metropolitan Casualty Insurance Company of New York, alleging that he was injured through the negligence of Lander, who ran his automobile against and upon Jordan.

The insurance company was impleaded solely upon the contention that it was liable directly to appellee because it had contracted with Lander to protect him from the operation of any judgment which may be recovered against him by persons injured through the operation of his private automobile. Both Lander and the insurance company urged pleas in abatement on account of the joinder of the insurance company, but the pleas were overruled, and judgment was rendered against both defendants jointly, and both have appealed.

The pertinent provisions of the contract whereby the insurance company was obligated to Lander are substantially as follows:

“The Metropolitan Casualty Insurance Company does hereby insure (Lander) ⅜ * *
“Against loss and/or expense arising or resulting from claims upon the Assured for damages in consequence of an accident * * * caused by reason of the ownership, maintenance, or use of the automobile or automobiles described ⅜ ⅜ * resulting in:
“A. Bodily injuries and/or death accidentally suffered or alleged to have been suffered by any person or persons not hereinafter excepted ; * * *
“C. To defend in the name and on behalf of the Assured any suit brought against the Assured to enforce such claim, whether groundless or not, on account of damages suffered or alleged to have been suffered as above referred to; and
“D. To pay the expenses incurred in defending any suit referred to in preceding paragraph, together with the interest on any judgment within the limits of the Insurance hereby granted, and any costs taxed against the Assured on account thereof. * * *
“G. Bankruptcy or insolvency of the Assured shall not relieve the Company of any of its obligations hereunder. If any person or his legal representatives shall obtain final judgment against the Assured because of any such injuries, and execution thereon is returned unsatisfied by reason of bankruptcy, insolvency or any other cause, or if such judgment is not satisfied within thirty days after it is rendered, then such person or his legal representatives may proceed against the Company to recover the amount of such judgment, either at law or in equity, but not exceeding the limit of this policy applicable thereto. * * *
“(3) The Company reserves the right to settle any claim or 'suit.
“(4) The Assured shall not voluntarily assume any liability; nor, interfere in any negotiations or legal proceedings conducted by the Company on account of any claim; nor, except at the Assured’s own cost, settle any claim; nor, without the written consent of the Company previously given, incur any expense, * ⅜ *
“(6) No action shall lie against the Company until the amount "of the damages for which the Assured is liable by reason- of any loss covered by this policy is determined either by a final judgment against the Assured, or by agreement between the Assured and the plaintiff with the written consent of the Company.”

The trial court upheld the joinder of the insurance company upon the theory urged by appellee that the contract between the company and the automobile owner may be treated as made for the direct benefit of any person injured by the owner, without regard to the terms and limitations of the contract. The contention is without support in law or good morals.

The insurance company and the owner only are parties to the contract. By its terms the company is obligated to indemnify the owner against losses in certain specified contingencies, but provided that no’ action upon the contract shall lie against the company “until the amount of the damages for which the Assured is liable by reason of any loss covered by this policy is determined either by a final judgment against the Assured, or by agreement between the Assured and the plaintiff with the written consent of the Company.” This provision is perfectly plain and unambiguous. It is not contrary to any rule of law, statutory or otherwise. It should be enforced between the parties to it according to its terms.

In this case both parties to the contract are satisfied with that and all other provisions of it. They are both here insisting upon the enforcement of those provisions as written. Surely, then, no third party, and a total stranger to the contract at that, can come in and, complaining of its terms, have the courts reconstruct and construe it so as to divert its benefits to him in direct contravention of its terms and the obvious intentions of the real parties to it. In the language of the Supreme Court of Alabama: “Courts cannot tamper with and change the terms of contracts, nor can they substitute as beneficiaries thereunder unnamed and unintended strangers who have nothing whatever to do with either the contracts or the contractors. To exercise such powers would be to usurp despotic authority.” Goodman v. Georgia Life Ins. Co., 189 Ala. 130, 66 So. 649, 650.

There seems to be no occasion to write at length upon this point. The question has been directly decided adversely to appellee’s contention in this case, in two very recent cases, involving substantially identical contracts. Cuellar v. Moore (Tex. Civ. App.) 55 S.W.(2d) 244; Ray v. Moxon (Tex. Civ. App.) 56 S.W.(2d) 469. In those cases the authorities are- well collated upon the point and show that the great weight of authority supports the holding here announced. Attention is also directed to the opinion of Associate Justice Murray of this court on rehearing of the case of Cannon Ball Motor Freight Lines v. Volker Grasso, this day handed down, to be reported in 59 S.W.(2d) 337.

The conclusion announced renders it unnecessary to discuss or decide other points raised in the briefs.

The judgment is reversed, and the cause remanded.


author: FLY, Chief Justice.

text:
    PARKER v. MATHER.
    No. 9050.
    Court of Civil Appeals of Texas. San Antonio.
    April 5, 1933.
    Rehearing Denied May 10, 1933.
    Wier & Wier, of San Antonio, for appellant.
    Barrett, Barrett & Taylor, of San Antonio, for appellee.
   FLY, Chief Justice.

This action was instituted' by appellee, J. A. Mather, against appellant, A. W. Parker, to recover damages arising from personal injuries inflicted by appellant by an assault upon the person of appellee, which was alleged to have occurred at Randolph Field, a Military Reservation for the training of aviators by the United States.

The cause was submitted to a jury on special issues and on the answers thereto judgment was entered in favor of appellee for $400 actual and $100 exemplary damages.

In the trial court appellant pleaded to the jurisdiction, because the assault was alleged to have occurred on Randolph Field, which had been ceded to and was owned and controlled by the United States government. The plea was overruled. It was alleged and proved that appellant assaulted and injured appellee in territory in the possession and under the exclusive control of our federal government, and that such field had been conveyed to and is the property of such government. The assault, was undoubtedly a tort and an action based on such tort was transitory in its nature. This court, in the case of Mexican Cent. Railway Co. v. Mitten, 13 Tex. Civ. App. 653, 36 S. W. 282, 283, clearly sets forth the nature and character of a transitory action in these words, taken from Cooley on Torts (2d Ed.) p. 551:

“It is a general rule that, for the purpose of redress, it is immaterial wher'' a wrong was committed; in other words, a wrong be-, ing personal, redress may be sought- for it, wherever the- wrongdoer may be found. To this there are a few exceptions, in which actions are said to be local, and must therefore be'brought not only within the country, but also within the very county where they arose. The distinction between transitory and local actions is this: If the cause of action is one that might have arisen anywhere, then it is transitory; but, if it could only have arisen in one place, then it is local.”

A writ of error was refused in that ease by the Supreme Court, although the opinion criticized and practically overruled a decision of the Texas Supreme Court in Mexican Nat. Railway Co. v. Jackson, 89 Tex. 107, 33 S. W. 857, 31 L. R. A. 276, 59 Am. St. Rep. 28. The Mitten Case has never been questioned and has been often approvingly cited by state and federal courts. In the case of Slater v. Mexican Railroad, 194 U. S. 120, 24 S. Ct. 581, 48 L. Ed. 900, in a dissenting opinion Chief Justice Puller condemned the ruling in the Jackson Case and approved the decision in the Mitten Case, and stated that it had been approved by the Supreme Court of Texas, and the Jackson Case practically set aside. There is nothing said in the majority opinion, by Judge Holmes, that criticizes the Mitten Case. He made the mistake of citing the Jackson Case, which had been practically overruled by the Supreme Court of Texas, as was shown by Chief Justice Puller. It follows that the first and second propositions assailing the jurisdiction of the state court must be overruled.

The third proposition attacks the testimony of a physician as to the character of appellee’s injuries at a date long after the assault took place, and is overruled. It merely attacks the credibility of the witness and the weight to be given to his testimony. That was a question for the jury and not this court.

The fourth proposition is on the weight of the evidence and is without merit.

The fifth proposition complains that the testimony would sustain only nominal damages, but we overrule the contention. The evidence was heard by the jury and it was sufficient to sustain the verdict. Appellee swore that he was assaulted and severely injured by appellant who had invited him into his office. He testified that he had for weeks suffered great pain from the injuries and that he had not recovered fully from the wounds which were inflicted in 1929, when the trial took place and his testimony given, on May 10, 1932. It would appear from the testimony that the injury was permanent. The jury-credited the testimony of appellee. We cannot, under the facts found to be true by the jury, hold the verdict excessive.

The judgment is affirmed.

On Motion for Rehearing.

The case of Jones v. Ry. Co., 68 S. W. 186, decided by this court, is cited as following the Jackson Case. The latter case held that the laws of Mexico are so dissimilar to those of Texas in regard to personal injuries as to render such ease unenforceable in Texas, and the same laws were proved in the Jones Case. No question of dissimilarity of laws arises in this case. The laws of Mexico were not proved in the Mitten Case, and consequently that ease is in the same category as the present case. There are no complications as to the laws of the United States. Probably, if the United States had provided an exclusive method in which- torts occurring within its exclusive territory should be tried, there might be some ground on which to base the confident assertions of appellant. This court does not willfully disregard a decision of the Supreme Court, but follows the last expression of the Supreme Court.

The motion for rehearing is overruled.