author: GUITTARD, Justice.

text:
    Bobby C. HALL, II, D.C., Appellant, v. PROFESSIONAL LEASING ASSOCIATES, Appellee.
    No. 19162.
    Court of Civil Appeals of Texas, Dallas.
    April 14, 1977.

      Ken Fuqua, Wilson, Berry, Jorgenson & Fuqua, Dallas, for appellant.
    Frank Armstrong, Dallas, for appellee.
   GUITTARD, Justice.

In this suit on an equipment lease, the district court, after trial without a jury, rendered judgment for the lessor for unpaid rentals, and the lessee appeals. The principal question is whether the lessee’s obligation to pay the rentals provided in the lease terminated because of the lessee’s purchase of a portion of the equipment subject to the lease. We hold that it did terminate with respect to the equipment purchased, and, since the lessor has made no claim for rent for the remaining equipment alone, we reverse and render judgment for the lessee.

The lease in question covered eighteen items of equipment used by the lessee in the practice of his profession as a chiropractor. The lease provided for a term of five years and monthly rentals of $362.23. After the lessee had made monthly payments for almost three years, he paid an additional sum of $2,000 and received from the lessor a bill of sale to all of the equipment except one X-ray machine. At the same time, he advised the lessor that he no longer desired to use the X-ray machine, and he requested that the lessor take possession of it and dispose of it. The lessor did not take possession, but did advise the lessee that efforts would be made to obtain a buyer. At the time of trial the machine was still in the lessee’s possession, but the lessee testified that he had replaced it with another machine. The lessor’s proprietor testified that the monthly rental for the X-ray machine alone would have been $227.96 if computed on the same basis as the rental provided in the lease for all of the equipment described. The trial court found that the lessee failed to make the monthly payments under the lease in the amount of $6,968.30, held that the lease was “still viable at the time of the hearing,” and rendered judgment for that amount, together with interest and an attorney’s fee.

The lessee appeals on the ground that the bill of sale to all but one item of the equipment rescinded the lease and relieved him of his obligation to pay the monthly rentals. The lessor seeks to uphold the judgment on the theory that the obligations of the lease are still in force notwithstanding the sale. Neither party contends that the payment should be apportioned according to the value of the equipment remaining. The lessor contends that the bill of sale is not a subsequent contract inconsistent with the rental obligation in the lease and asserts that the effect of the bill of sale is “only to carve out a portion of those items covered by the lease which was upon terms and conditions agreeable to both parties at the time the Bill of Sale was entered into.” Thus, it argues, the lessee’s payment of the $2,000 only entitled him to a credit on the rentals payable under the terms of the lease, leaving the lessee liable for the remaining payments.

We cannot agree that the lessee’s obligation to make the monthly payments in the full amount provided in the lease continued after he had bought and paid for a part of the equipment. Although the lease may have been regarded by the parties as a financing arrangement, the obligation to pay rent was not equivalent to a promissory note. The lease expressly provides that title to the property is in the lessor. Presumably, the monthly payments were to be made as consideration for the lessee’s use of the lessor’s property. The lessor concedes that no further obligation to pay rentals would have existed if all the equipment had been bought and paid for by the lessee. This result would necessarily follow under the rule that when two contracts between the same parties are inconsistent, the later contract is conclusively presumed to have superseded the earlier. Willeke v. Bailey, 144 Tex. 157, 189 S.W.2d 477, 479 (1945); Ed Hoffman Motors v. G. F. C. Corp., 304 S.W.2d 216, 217-18 (Tex.Civ.App.—San Antonio 1957, writ ref’d n.r. e.); 6 Corbin, Contracts § 1296 (2d ed. 1962). For example, the obligation to pay rent under a real estate lease is discharged when the lessee acquires title to the reversion, because the lease is terminated by merger of the leasehold with the reversion. Buell v. Simon Newman Co., 154 F.2d 35, 37-38 (9th Cir. 1946); Lansing v. Pine, 4 Paige Ch. (N.Y.) 639 (1834) ; 3A Thompson, Real Property, § 1315 at 524 (1959 repl.). When the later contract is only partly inconsistent, the earlier contract is superseded only to the extent of the inconsistency. Corbin, supra, at 213. Thus it has been held that when the lessee acquires the reversion in part of the property leased, the rent should be apportioned. Higgins v. California Petroleum & Asphalt Co., 109 Cal. 304, 41 P. 1087, 1088 (1895); Hill v. Reno, 112 Ill. 154, 54 Am.R. 222, 227 (1885); Schick v. Davenport Realty Co., 200 Iowa 997, 205 N.W. 782, 783 (1925); Thompson, supra, § 1298 at 447, § 1315 at 524.

In accordance with these authorities, we hold that the lessor’s execution of the bill of sale and acceptance of the $2,000 as purchase money for the equipment sold is inconsistent with any further obligation of the lessee to pay rent for the equipment purchased and, therefore, the lessee’s obligation to make the monthly payments is extinguished to the extent that such payments were attributable to lessee’s possession and use of that equipment. Consequently, the trial court erred in rendering judgment for the full amount of the unpaid rentals, as claimed in the lessor’s petition.

The lessee contends further that the rental payments should not be apportioned because the contract is not divisible, citing Southwestern Cooperage Co. v. Kivlen, 266 S.W. 826 (Tex.Civ.App.—Dallas 1924, no writ). That case did not involve apportionment of rent. In view of the authorities cited above, we are not convinced that the lessee was relieved of his obligation to pay rent on the remaining equipment by his purchase of the equipment described in the bill of sale. Nevertheless, since the lessor did not plead for an apportioned rental and has taken the position on this appeal that no apportionment of the rental is proper, we conclude that the lessor has abandoned any claim to an apportioned rental. Accordingly, we reverse the judgment of the trial court and here render judgment for the lessee.

Reversed and rendered.

      . In Lansing, this rule was stated as follows:
      For if a great and less estate, Without one intermediate, In the same person coincide,
      It is a kind of parricide;
      The great one sinks or drowns the small, Never again to rise at all.


source: Caselaw Access Project

author: AKIN, Justice.

license: Public Domain

text:
    James Robert McDANIEL, Appellant, v. H. C. DULWORTH, d/b/a Dulworth Welding, Appellee.
    No. 19108.
    Court of Civil Appeals of Texas, Dallas.
    April 15, 1977.
    Rex R. Henger, Bergman & Hicks, Dallas, for appellant.
    Alvin Boyd, Dallas, for appellee.
   AKIN, Justice.

The question presented by this appeal is whether Tex.Bus. & Comm.Code Ann. § 17.-50(b)(1) (Vernon Supp.1976), a part of the Deceptive Trade Practices and Consumer Protection Act, requires the award of treble damages when a violation of the Act is established, or whether the award of treble damages is discretionary with the trial court. We hold that it is mandatory rather than discretionary, and, accordingly, we modify the trial court’s judgment by trebling the damages.

James R. McDaniel sued H. C. Dulworth, doing business as Dulworth Welding, for damages resulting from the collapse of a wrecker bed and boom that Dulworth built for McDaniel. The jury found facts which established Dulworth’s liability under section 17.50(a) of the Deceptive Trade Practices and Consumer Protection Act. The jury also found that McDaniel suffered consequential damages of $533, resulting from the collapse of the equipment, and damages in the amount of $350 for the difference between the value of the equipment as represented and as actually delivered. The jury also awarded McDaniel $2,900 in attorney’s fees. The trial court denied, however, McDaniel’s motion for treble damages and awarded only actual damages of $883 and attorney’s fees. McDaniel limits his appeal to the refusal of the trial court to award treble damages.

McDaniel argues that section 17.50(b)(1) requires the trial court to award treble damages if sought by the consumer. We agree. That statute reads:

§ 17.50 Relief for Consumers
(b) In a suit filed under this section, each consumer who prevails may obtain :
(1) three times the amount of actual damages plus court costs and attorneys’ fees reasonable in relation to the amount of work expended;
(2) an order enjoining such acts or failure to act;
(3) orders necessary to restore to any party to the suit any money or property, real or personal, which may have been acquired in violation of this sub-chapter; and
(4) any other relief which the court deems proper, including the appointment of a receiver or the revocation of a license or certificate authorizing a person to engage in business in this state if the judgment has not been satisfied within three months of the date of the final judgment. The court may not revoke or suspend a license to do business in this state or appoint a receiver to take over the affairs of a person who has failed to satisfy a judgment if the person is a licensee of or regulated by a state agency which has statutory authority to revoke or suspend a license or to appoint a receiver or trustee, [emphasis added]

“May”, as used in the introductory phrase of section 17.50(b) has as its subject “each consumer;” therefore, any discretion lies with the consumer. Merely because the statute uses the permissive “may” with respect to the consumer is not tantamount to saying that the trial court “may” determine whether treble damages are awarded. In our view, the clear language permits the aggrieved consumer four different, yet complementary, remedies to rectify the wrong that he alone may elect to pursue. One of these is treble damages. We hold, therefore, that section 17.50(b)(1) is mandatory in requiring treble damages once liability under section 17.50(a) has been established. Accordingly, the trial court erred in refusing McDaniel’s motion for treble damages.

Our interpretation is in accord with the legislative intent to provide effective relief for aggrieved consumers who would not otherwise sue but for the provision pertaining to treble damages and to reasonable attorney’s fees based upon the amount of work expended rather than the amount of actual damages. To hold otherwise would render ineffective the legislative intent to encourage aggrieved consumers to seek redress and to deter unscrupulous sellers who engage in deceptive trade practices. Indeed, Tex.Bus. & Comm.Code Ann. § 17.44 (Vernon Supp.1976) mandates that the Deceptive Trade Practices and Consumer Protection Act shall be liberally construed so as to protect consumers and to provide efficient and economical procedures to secure this protection.

In so holding, we expressly disagree with the holding in Mallory v. Custer, 537 S.W.2d 141 (Tex.Civ.App.-Austin 1976, no writ), that the award of treble damages under section 17.50(b)(1) is discretionary with the trial court. In Volkswagen of America, Inc. v. Licht, 544 S.W.2d 442, 446 (Tex.Civ.App.-El Paso 1976, no writ), the court held that a consumer was entitled as a matter of law to attorney’s fees on appeal as well as in the trial court under section 17.50(b)(1). Since treble damages are specified in the same subsection as attorney’s fees, it logically follows that treble damages are likewise mandatory.

Since we have concluded that McDaniel was entitled to treble damages as a matter of law, we modify the trial court’s judgment by trebling the actual damages of $883 and render judgment awarding McDaniel $2,649. In all other respects the judgment is affirmed.


author: ROBERTSON, Justice.

text:
    Frank MAYKUS, Jr., Appellant, v. TEXAS BANK & TRUST COMPANY OF DALLAS, Appellee.
    No. 19164.
    Court of Civil Appeals of Texas, Dallas.
    April 18, 1977.

      Harry J. Joe, Dallas, for appellant.
    Don Black, Marks & Black, Dallas, for appellee.
   ROBERTSON, Justice.

Frank Maykus, Jr., appellant, was sued by Texas Bank & Trust Company on a guaranty agreement by which he allegedly personally guaranteed an obligation of Maykus Diversified, Inc., a corporation which he controlled. In defense, appellant asserted that the guaranty was not executed to secure the corporate obligation and, alternatively, that the guaranty agreement was not supported by consideration. The trial court directed a verdict for the bank, and this appeal followed. We affirm.

On December 4, 1972, appellant, in his corporate capacity as president of Maykus Diversified, Inc., executed a promissory note payable to Texas Bank & Trust Company. A series of related transactions stemmed from this obligation, including the execution of a second promissory note by Maykus in both his individual and corporate capacities. On August 8, 1973, appellant renewed the second note in his corporate capacity, and subsequent to this renewal, a guaranty agreement was executed and signed “Frank Maykus=Maykus Diversified, Incorporated.” When the corporation defaulted on the underlying obligation, the bank sued appellant individually, claiming that he had personally guaranteed the corporate debt. At trial, appellant contended that the guaranty agreement described above did not secure the corporate obligation and, alternatively, that there was no consideration of the guaranty. The trial court rejected these arguments and directed a verdict for the bank as a matter of law.

The scope of our review in this case is necessarily restricted. Appellant does not contend that the trial court’s construction of the guaranty was erroneous; rather, he merely asserts that the trial court erred in taking the issue of construction from the jury. On this point, we cannot agree with appellant. In the absence of ambiguity, the construction of a contract is a question of law to be decided by the court. Louisiana-Pacific Corp. v. Cain, 519 S.W.2d 528, 529 (Tex.Civ.App. - Beaumont 1974, writ ref’d n. r. e.); Maykus v. First City Realty and Financial Corp., 518 S.W.2d 887, 893 (Tex.Civ.App. - Dallas 1974, no writ). The obligations of the parties are to be ascertained from the language of the document, and the determination of the legal effect of a written instrument is not within the province of the jury. Burgess v. Sylvester, 143 Tex. 25, 182 S.W.2d 358, 360 (1944); Wynnewood State Bank v. Embrey, 451 S.W.2d 930, 932 (Tex.Civ.App. - Dallas 1970, writ ref’d n. r. e.). In this case, appellant apparently seeks to have the jury determine the meaning of “Frank Maykus =Maykus Diversified, Incorporated”; however, appellant did not plead or assert that this language was ambiguous. Appellant’s counsel confirmed this in oral argument by conceding that ambiguity was not an issue. Under the authorities, the construction of an unambiguous contract is not a jury issue. We must, therefore, overrule this point.

In addressing appellant’s assertion of lack of consideration, we begin with the rule that all written contracts are presumed to be supported by consideration. This is a statutory presumption designed to import consideration in the absence of the formality of a seal. Tex.Rev.Civ.Stat.Ann. art. 27 (Vernon 1969); Unthank v. Rippstein, 386 S.W.2d 134, 138 (Tex.1964); Waters v. Waters, 498 S.W.2d 236, 240-41 (Tex.Civ.App. - Tyler 1973, writ ref’d n. r. e.). The guaranty agreement thus imports consideration, and the burden is on the defendant to show that none was actually received. This burden is not shifted by the filing of a sworn plea, for such a plea merely puts the consideration in issue. Newton v. Newton, 77 Tex. 508, 14 S.W. 157, 158 (1890); Decor Dimensionals v. Smith, 494 S.W.2d 266, 268 (Tex.Civ.App. - Dallas 1973, no writ). Therefore, the issue before us is whether appellant presented sufficient evidence to refute the statutory presumption. We conclude that he has not.

The promissory note is dated August 8,1973. The guaranty is dated August 15, 1973. Appellant urges that since the guaranty agreement does not appear to have been executed contemporaneously with the note, it must be supported by new consideration. Cf. King v. Wise, 282 S.W. 570 (Tex.Com.App.1926, jdgmt adopted); Trinity Universal Ins. Co. v. Plainview Hospital and Clinic Foundation, 385 S.W.2d 732 (Tex.Civ.App. - Amarillo 1964, no writ); Simmang v. Farnsworth, 24 S.W. 541 (Tex.Civ.App.1893, no writ). Appellant asserts that by showing the discrepancy in the dates of the two instruments he shifted the burden to the bank to show actual new consideration. We do not agree. As a separate written agreement, the later guaranty agreement imports its own consideration and does not depend on the consideration which supports the note. Although the apparent discrepancy in execution may negate consideration from the original transaction, it does not refute the presumption of new and independent consideration inherent in the separate guaranty agreement. Thus, mere evidence of a time discrepancy in execution between a note and a written guaranty agreement is legally insufficient to rebut the statutory presumption of consideration which supports a separate guaranty accord. The trial court properly directed a verdict for the bank.

Judgment affirmed.


author: ROBINSON, Justice.

text:
    Buford CARTER, Appellant, v. ASSOCIATES DISCOUNT CORPORATION, Appellee.
    No. 8700.
    Court of Civil Appeals of Texas, Amarillo.
    April 18, 1977.
    Rehearing Denied May 16, 1977.
    Charles E. Neal, Amarillo, for appellant.
    Brock, Waters & Galey, Harold H. Pigg, Lubbock, for appellee.
   ROBINSON, Justice.

Plaintiff Associates Discount Corporation, succeeded by Associates Financial Services Co., Inc., is assignee of a conditional sales contract executed by Clark K. Carter to L. B. McGavock d/b/a McGavock Drilling Co. as payment for certain irrigation equipment installed by McGavock on land belonging to Clark K. Carter and on land belonging to Buford Carter. Plaintiff sued Clark K. Carter for the unpaid balance due on the installment sales contract and sued Buford Carter for conversion of its alleged interest in the equipment which was installed on his land and which he sold with the land. A jury found that prior to the assignment of the installment sales contract to plaintiff, McGavock had released any liens that he may or might have had on any equipment which he had installed on Buford Carter’s land. The trial court rendered judgment against Clark K. Carter for the balance due on the contract. He has not appealed. The trial court also rendered judgment against defendant Buford Carter for the amount which the jury found to be the value of the equipment on his land at the time that he disposed of it. Defendant Buford Carter appealed. Reversed and rendered.

Sometime before April 3, 1965, Clark K. Carter, Buford Carter’s father, arranged for L. B. MeGavock, d/b/a McGavock Drilling Company, to install some irrigation equipment on land in Sherman County, Texas. Most of the equipment went onto land owned by Clark K. Carter. One well and its irrigation equipment was installed on a half section of land belonging to Buford Carter. L. B. McGavock testified that he knew that he was installing one well on Buford Carter’s land. Both Carters testified that Clark K. Carter purchased that well and the equipment for Buford Carter as partial payment for Buford’s previous labor for his father in farming operations at Vega, Texas.

On March 29, 1965, McGavock executed a release and waiver of any and all mechanics and materialman’s liens that he might have on that date or at any time in the future on Buford Carter’s land by virtue of the well that he was drilling and equipping on the land at that time. The release recites that it was given in consideration of ten dollars paid to him by the Northwestern Mutual Life Insurance Company and as an inducement to the company to complete a loan to Buford Carter which was to be secured by a deed of trust.

On April 3, 1965, Clark K. Carter executed an Installment Sales Contract to McGavock for irrigation equipment for six water wells. Included in the list of purchased property were irrigation well components, which were installed on Buford Carter’s land. Buford Carter was not a party to this contract. On the same day McGa-vock assigned the installment sales contract to plaintiff Associates Discount Corporation. Neither of the Carters had communicated with Associates Discount prior to this assignment. On April 11,1966, Buford Carter sold his half section of land and the equipment located on it.

On January 8, 1968, Associates Discount, in return for a large payment on the installment sales contract executed a release of all equipment covered by it except for the equipment located on the half-section which had been owned by Buford Carter.

Clark K. Carter defaulted on the note at a time when there was a balance owing of $15,471.76. Plaintiff brought this suit for the debt and for conversion of its alleged interest in the well and equipment located on the Buford Carter land. The case was tried to a jury. The court rendered judgment against Clark K. Carter for the $15,-471.76 balance due on the conditional sales contract plus interest and plus $2,320.76 attorney’s fees and against Buford Carter for $7,000.00 which the jury found to be the value of the equipment on his land at the time he disposed of it.

Appellant-defendant contends, inter alia, that the trial court erred in submitting to the jury issues inquiring if the irrigation well equipment in Buford Carter’s possession was “subject to the indebtedness owed to plaintiff” at any time and at the time that Buford Carter disposed of the equipment. Appellant-defendant contends on appeal that those issues should not have been submitted to the jury because they are questions of law for the court. We do not find that defendant objected to the issues on that ground at the trial. Further, even if proper objection had been made, the mere submission of the issues would not be reversible error in the circumstances of the case before us. In the absence of some showing of extraneous prejudice, submission of a question of law to a jury in a special issue is harmless, since, if the special issue is answered as the court should have decided, there is no damage, and if the special issue is answered to the contrary, the finding is immaterial and hence should be ignored. City of Houston v. Howe & Wise, 323 S.W.2d 134 (Tex.Civ.App., Houston 1959, writ ref’d n. r. e.).

Whether the equipment placed on Buford Carter’s land was subject to the indebtedness owed plaintiff is a question of law to be determined by the court in the light of the undisputed evidence and the facts found by the jury.

The jury found that McGavock was the owner of the equipment prior to April 3, 1965; that MeGavock assented to Buford Carter’s taking possession of the equipment which McGavoek installed on Buford Carter’s land; that at the time he installed the equipment he knew that the land belonged to Buford Carter and that McGavoek released any liens that he may or might have on any equipment on the Buford Carter land prior to April 3, 1965. Appellee-plain-tiff has not challenged those findings by crosspoint. It is undisputed that Buford Carter was not a party to the conditional sales contract and plaintiff’s branch manager testified that Buford Carter had no contact of any kind with the plaintiff prior to the McGavoek assignment of the conditional sales contract to plaintiff.

There is no evidence that plaintiff had any interest in the equipment in question unless it acquired an interest by the assignment of the conditional sales contract. Plaintiff’s assignor McGavoek had no interest in the equipment at the time of the assignment. McGavoek had released to Buford Carter any lien that he had in the equipment before he made the assignment to plaintiff. It is axiomatic that an assign-ee takes only such title to the thing assigned as existed in the assignor at the time of assignment. Beavers v. Consolidated Oil Co. of Texas, 31 S.W.2d 876 (Tex.Civ.App., Amarillo 1930, writ dism’d); Kirkpatrick v. Great American Ins. Co., 299 S.W. 943 (Tex.Civ.App., Waco 1927, no writ). Thus, McGavoek never acquired an interest in the equipment on Buford Carter’s land and Buford Carter could not have converted the equipment by selling it.

Buford Carter could not have acted together with Clark K. Carter to tortiously deprive plaintiff of a lien which plaintiff never acquired.

The foregoing holdings are dispositive of this appeal. We do not reach appellant-defendant’s remaining points of error.

The portion of the trial court judgment which grants recovery against Buford Carter is reversed and judgment here rendered that appellee-plaintiff take nothing as to Buford Carter.


author: CIRE, Justice.

text:
    M.I.I., also known as Marketers International, Inc., et al., Appellants, v. E.F.I., INC., Appellee.
    No. 1552.
    Court of Civil Appeals of Texas, Houston (14th Dist.).
    April 20, 1977.
    Rehearing Denied May 11, 1977.

      George Payne, Tom R. Letbetter, Garrett & Letbetter, John C. LaFave, Houston, for appellants.
    J. Leonard Gotsdiner, Ranseler 0. Wyatt, Houston, for appellee.
   CIRE, Justice.

This is an appeal from a judgment for plaintiff in a contract action, alleging the contract upon which plaintiff sued is unenforceable under the Texas antitrust laws. This is the second appeal in this case.

Appellee E.F.I., Inc. is a Florida corporation manufacturing electronic equipment on which it holds U.S. patents. On May 13, 1968 George A. Harris, president of E.F.I., wrote to W. V. Womack, Jr., outlining an exclusive dealership arrangement for the marketing of certain E.F.I. products. Womack replied, accepting the arrangement. Thereafter, to effectuate this agreement, appellant M.I.I., also known as Marketers International, Inc., was incorporated under Texas law, Womack and appellant George Levit each owning one-third of the corporate stock. On December 7, 1969 E.F.I. entered into an “Exclusive Dealer Agreement” with Marketers for the distribution of certain of its products. The contract provided in part:

EFI does by this Agreement hereby appoint and does hereby designate Marketers to be the exclusive dealer and representative for the promotion, sale and distribution, in the territories as set forth and described in Appendix A, attached hereto and made a part hereof. The products covered by this Agreement are those listed in Appendix B, attached hereto.
* * * * * *
3. EFI agrees to sell all units to Marketers in accordance with the prices set forth in Appendix C, attached hereto.
* * * * * *
12. Cancellations of orders by Marketers’ customers shall not constitute cancellation of any Marketers’ orders to EFI.

Under an “Exclusive Distributor Agreement” dated August 4,1970, Marketers was to become the sole distributor of certain E.F.I. products, subject to Marketers’ purchase or orders tendered of designated quotas of units from E.F.I. It provided:

1. EFI does hereby authorize, appoint and designate Marketers to promote the sale of the products listed in Appendix “A” attached hereto and to be EFI’s exclusive distributor in the United States, except for the Chicago, Illinois, area, as defined by DuPage, Lake, Cook and Will counties, for said products .
2. EFI agrees to sell the products shown on Appendix “A” to Marketers in accordance with the prices set forth on Appendix “B” attached hereto.
* * * * * ⅝:
8. It is the intention of the parties to this agreement that Marketers shall at all times remain an independent contractor and shall do nothing to attempt in fact or create in the eyes of the public a partnership, principal-agent relationship, or employer-employee relationship with EFI.

Payment of Marketers’ account due to E.F.I. was guaranteed unconditionally up to $100,000.00 by Levit and Womack, in an instrument executed March 21, 1969.

In December 1970 E.F.I. sued Marketers, Levit, and Womack for breach of the agreement. The defendants answered, alleging that the contracts violated the Texas antitrust laws and were thus invalid and unenforceable. The trial court granted a summary judgment for defendants based on their defense that the contracts were invalid. The Court of Civil Appeals for the First Supreme Judicial District reversed that judgment and remanded the case for trial. 492 S.W.2d 302. The court, at 305, held that if E.F.I.’s activities in Texas were only occasional and isolated and the contract was interstate as to execution and performance, the federal antitrust laws should govern rather than those of Texas. The court said:

It appears that in performing under the contract a considerable number of Marketers’ sales and deliveries of merchandise would directly and necessarily relate to interstate commerce.
* * * * * *
The record does not show to what extent the commerce affected was intrastate and thus subject to Texas law.

The court held that Marketers’ summary judgment proof had not established “that the contract was intrastate as to performance or that the transactions contemplated by and carried out under the contract were essentially intrastate.” The court also held an issue of disputed fact existed as to the question of whether the guarantee of Levit and Womack was executed prior to and was independent of the contracts. In a per cu-riam opinion, the Supreme Court of Texas refused Marketers’ application for writ of error, no reversible error. 506 S.W.2d 579.

On remand, the case was tried before a jury and submitted on 51 special issues. The jury found, inter alia, that: (1) Marketers owed E.F.I. $27,269.80; (2) E.F.I. granted Marketers an exclusive distributorship for the sale of its products for an area including Texas under the December 1969 contract and August 1970 contract but not under the May 1968 letter agreement; (3) the letter agreement and the two contracts contemplated Marketers would serve as an exclusive distributor for the sale of E.F.I. products in an area including Texas; (4) the personal obligation of Levit and Womack to pay for E.F.I. products was part of the consideration for the May 1968 letter agreement; (5) the March 1969 guarantee agreement of Levit and Womack was part of the consideration for the December 1969 and August 1970 contracts; (6) the activities of E.F.I. in Texas were more than occasional and isolated; and (7) Marketers’ sales of E.F.I. products were made 10 percent in Texas and 90 percent outside of Texas. Based upon this verdict, the court entered judgment that E.F.I. recover from Marketers, Levit, and Womack, jointly and severally, the sum of $27,269.80, plus interest and costs.

Womack has not appealed from that judgment. Marketers and Levit appeal on seven points of error. Points one, two, and three complain of the court’s error in overruling Marketers’ motion for judgment and granting E.F.I.’s motion for judgment because the agreements to grant Marketers an exclusive dealership of E.F.I.’s products in Texas were in violation of the Texas antitrust laws and thus void and unenforceable. Points four through seven assert that it was error to enter judgment against Lev-it because his personal obligation to pay for products sold by E.F.I. to Marketers was part of the consideration for the May 1968 letter agreement, his guarantee agreement was part of the consideration for the contracts of December 1969 and August 1970, and these agreements were in violation of the Texas antitrust laws and are thus void and unenforceable. We sustain these points.

Section 15.02(b) of the Texas Business and Commerce Code Annotated (1968) defines a trust as:

a combination of capital, skill, or acts by two or more persons to
(1) restrict, or tend to restrict, trade, commerce, aids to commerce, the preparation of tangible personal property for market or transportation, or the free pursuit of a lawful business; or
sf: ⅜ ⅜: * ⅜ *
(3) prevent or lessen competition in (A) the manufacture, transportation, sale, or purchase of tangible personal property .

Section 15.04 of the Code declares illegal and prohibits every trust defined in section 15.02, and provides that every agreement violating the prohibition against trusts is void and unenforceable in law or equity.

The agreements on their faces show a combination of capital, skill, and acts by the parties to restrict trade and commerce, and to prevent competition in the sale of tangible personal property. It is undisputed that the contracts made Marketers the exclusive distributor for certain E.F.I. products. As to those products, E.F.I. was limited to one distributor in Texas as well as almost all of the rest of the United States.

An agreement between a foreign supplier and a Texas distributor which gives the distributor exclusive sales rights within a territory in Texas is unenforceable. Sherrard v. After Hours, Inc., 464 S.W.2d 87, 89 (Tex.Sup.1971); Climatic Air Distrib. v. Climatic Air Sales, 162 Tex. 237, 241, 345 S.W.2d 702, 704 (1961).

The finding of the jury that 10 percent of Marketers’ sales of E.F.I. products were made in Texas and 90 percent were made outside of Texas shows that the agreement had a direct relation to interstate commerce. But simply because interstate commerce may be affected, the courts of Texas are not prohibited from giving effect to its antitrust laws. Standard Oil Co. v. Tennessee, 217 U.S. 413, 30 S.Ct. 543, 54 L.Ed. 817 (1909); Gulf, C. & S. F. Ry. v. State, 72 Tex. 404, 413, 10 S.W. 81, 85 (1888); Elray, Inc. v. Cathodic Protection Serv., 507 S.W.2d 570, 573 (Tex.Civ.App.—Houston [14th Dist.] 1974, no writ); State v. Southeast Tex. Chap. Nat’l Elec. Contractors Ass’n, 358 S.W.2d 711, 714 (Tex.Civ.App.—Texarkana 1962, writ ref’d n. r. e.), cert. denied, 372 U.S. 969, 83 S.Ct. 1094, 10 L.Ed.2d 131 (1963).

In its previous review of this case, the supreme court directed the courts on remand to consider the question of whether this contract, which violates the public policy of Texas, may be enforced in the state’s courts. 506 S.W.2d at 580. The court said it was reserving that question because “state courts ordinarily will not enforce rights existing under laws of other jurisdictions when to do so would violate the public policy expressed in the statutes of the state of the forum.” Griffin v. McCoach, 313 U.S. 498, 61 S.Ct. 1023, 85 L.Ed. 1481 (1941); Bothwell v. Buckbee-Mears Co., 275 U.S. 274, 48 S.Ct. 124, 72 L.Ed. 277 (1927); Byrd v. Crazy Water Co., 140 S.W.2d 334 (Tex.Civ.App.—Dallas 1940, no writ).

We find this case falls within the rule announced by the court. The contract called for performances in violation of our local antitrust laws. The courts of Texas will not enforce such contracts, regardless of their validity in another state. Byrd v. Crazy Water Co., supra, at 336; J.R. Watkins Co. v. McMullan, 6 S.W.2d 823, 824 (Tex.Civ.App.—Austin 1928, no writ). The Supreme Court of the United States has held this position to be within the constitutional power of the Texas courts. Griffin v. McCoach, supra, at 506, 61 S.Ct. at 1027, 85 L.Ed. at 1486.

Appellee presents two counterpoints. In its first counter-point, it asserts the Texas antitrust laws are not applicable to this transaction because it had a patent on the goods which were the subject of the sale and that the patent owner had the exclusive sales rights to the product which it could grant to Marketers. The First Court of Civil Appeals dealt with this question in its previous opinion. It held that while a patentee may impose restrictions upon the assignee of the patent, it cannot impose restrictions upon one who buys an already manufactured article. 492 S.W.2d at 306-07. The point is overruled.

The second counter-point asserts that Marketers was not entitled to any offset against its account owing to E.F.I. In view of our disposition of the case, we find it unnecessary to determine this question.

The judgment of the trial court is reversed, and judgment is rendered that ap-pellee E.F.I., Inc. take nothing by its suit against appellants M.I.I. and George Levit. The judgment as to W. V. Womack is affirmed.


text:
    A. O. BACHER, Appellant, v. G. C. MADDUX, Appellee.
    No. 19192.
    Court of Civil Appeals of Texas, Dallas.
    April 20, 1977.
    Joe Putnum, Irving, for appellant.
    Reid A. Rector, Power, Ashley, Rector & Kinkeade, Irving, for appellee.
   AKIN, Justice.

This is an appeal by A. O. Bacher, the plaintiff, from a summary judgment denying him recovery on a note executed by G. C. Maddux, the defendant. The sole basis of the trial court’s judgment was that Bacher’s cause of action on the note was barred by the four-year statute of limitations, Tex.Rev.Civ.Stat.Ann. art. 5527 (Vernon 1958), which provides that suit must be brought on a written debt within four years after the cause of action accrues. We hold, however, that plaintiff’s cause of action is not so barred and, accordingly, reverse and remand.

The controversy emanates from a note for $15,824.39 executed by Maddux and payable to Bacher. This note provided for payment in fifteen equal semi-annual installments of $989 and one final payment of $989.39, with the first payment “being due and payable on or before July 1,1966, and a like payment thereafter on or before January 1 and July 1 of each year thereafter . until paid in full.” Thus, under the terms of the note, the last installment was due on July 1, 1974. The defendant made substantial prepayments, but failed to make further payments after July 1, 1971, although $1,450 of the principal remained unpaid. Plaintiff sued for this sum on August 31, 1976.

The defendant asserts that the suit was barred by the statute of limitations because he failed to pay installments due on January 1, 1972, and July 1, 1972, as required by the note. His rationale is that the plaintiff’s cause of action accrued then and is, therefore, barred. He does not contend that he does not owe the debt. On the other hand, plaintiff argues that by virtue of the prepayments made by the defendant, no payments were actually due in January and July 1972. We agree with plaintiff. Where a party prepays note payments, these prepayments are applied to the installments first maturing. Curry v. O’Daniel, 102 S.W.2d 481, 482 (Tex.Civ.App.—Waco 1937, writ ref’d); see Champlin Oil & Refining Co. v. Chastain, 403 S.W.2d 376, 390 (Tex.1965). In Curry, Justice Alexander, later Chief Justice of the Texas Supreme Court, addressed a factually similar situation. In holding that the prepaid funds are applied according to priority of time, the court noted that this is especially so where “such application is necessary in order to prevent a just debt from being barred by the statute of limitation.” We conclude, therefore, that when the prepayments here are applied according to priority of time, that the payments in 1972 were paid by the prepayment. Thus, the delinquency and cause of action did not accrue until defendant failed to pay the 1974 installments.

Defendant argues, however, that the statute of limitations runs against each installment from the time it becomes due, citing Hammann v. H. J. McMullen & Co., 122 Tex. 476, 62 S.W.2d 59, 61 (1933). We agree; however, the statute does not operate to bar installment payments that have been prepaid. Defendant’s contention ignores the language of the note which provides that the installment payments are due “on or before” each installment date. Since the defendant prepaid installments as the note authorized him to do and since we have held that they are to be applied according to priority of time, it follows that no past-due installments existed prior to January 1, 1974.

Reversed and remanded.


author: BARROW, Chief Justice.

text:
    Jack LITTLE, Appellant, v. BUSINESS DATA CENTER, INC., Appellee.
    No. 15799.
    Court of Civil Appeals of Texas, San Antonio.
    April 27, 1977.
    A. Z. Laurel, Jr., Hall & Zaffirini, Laredo, for appellant.
    Stephen C. Parten, San Antonio, for ap-pellee.
   BARROW, Chief Justice.

Appellant has perfected his appeal from a summary judgment whereby appellee recovered the sum of $801.53 owed on a promissory note executed by appellant plus $300.00 as reasonable attorney’s fees.

Appellant complains by his first point that the summary judgment was erroneously granted against him on the note in that there are fact issues as to the amount owed and also as to appellee’s right to file suit on the note. Appellant’s second point urges that a fact issue is raised as to the reasonable amount of attorney’s fees. Appellee concedes that the second point is well taken and that the award for attorney’s fees cannot stand.

The summary judgment is based on the pleadings of the parties and the affidavit of James R. Forsyth, president of appellee. Appellee alleged by its sworn petition that it is the holder of a note executed on May 9, 1975 by appellant to the Brooks Field National Bank in the amount of $1,345.20, which was payable in 12 monthly installments of $112.10. A copy of the note is attached to the petition. Appellee alleged that this note was endorsed to it by the bank on April 18, 1976 for a valuable consideration and that appellee is the present holder of such note. Further, the note was past due and payable with a balance of $801.53. Appellant did not deny execution of the note or that it was past due. His pleadings question the amount owed and he demanded that appellee make a full and complete accounting of all payments received as well as the crediting of all amounts of principal, interest, costs, and expenses. Appellant also asserted a counterclaim for certain sums allegedly wrongfully withheld by appellee from appellant’s salary.

The affidavit of appellee’s president identified the note signed by appellant and averred that appellee was the holder of the note. He also swore that the note was past due and that appellant had refused to pay the sum of $801.53 owing on said note. Appellant did not file an answer or controvert appellee’s motion for summary judgment. Neither appellant nor his attorney appeared at the hearing of the motion. The trial court severed the counterclaim which had been filed by appellant from the suit on the note. Summary judgment was then entered in appellee’s suit for the sum of $801.53 plus the sum of $300.00 for attorney’s fees. § 3.307(b) of the Tex.Bus. & Comm.Code Ann. (1968) provides:

When signatures are admitted or established, production of the instrument entitles a holder to recover on it unless the defendant establishes a defense.

Appellant did not deny execution of the promissory note, nor did he allege any affirmative defense as required by Rule 94 and Rule 95, Tex.R.Civ.P. Therefore, ap-pellee was not required to prove that it was a holder in due course. Whittenburg v. Cessna Finance Corp., 536 S.W.2d 444 (Tex.Civ.App.—Houston [14th Dist.] 1976, writ ref’d n. r. e.); Hensley v. City Bank and Trust Co., 495 S.W.2d 282 (Tex.Civ.App.—Tyler 1973, writ ref’d n. r. e.). Appellant did not properly plead payment and there is no summary judgment • evidence to raise such issue. He cannot now complain of the amount of the judgment. Southwestern Fire & Casualty Co. v. Larue, 367 S.W.2d 162 (Tex.1963).

The trial court did not err in granting appellee a summary judgment for the sum of $801.53 which was due and owing on appellant’s promissory note. Appellee concedes that a fact issue was raised as to the reasonable amount of attorney’s fees. This is a separate issue from the amount owed on the note and can be severed. Woods Exploration & Producing Co., Inc. v. Arkla Equipment Co., 528 S.W.2d 568 (Tex.1975).

The judgment of the trial court is modified to provide that appellee’s claim for attorney’s fees against appellant is severed, and as to that part of the case, the judgment of the trial court is reversed and the cause is remanded to the trial court. As so modified, the judgment of the trial court is affirmed. The costs of this appeal are taxed one-half against appellant and one-half against appellee.

      . Appellant filed a motion for continuance, but does not complain of the trial court’s refusal to grant such motion.


text:
    Epifanio Simon CASTILLO et al., Appellants, v. AMERICAN STATES INSURANCE COMPANY OF TEXAS, Appellee.
    No. 19190.
    Court of Civil Appeals of Texas, Dallas.
    April 28, 1977.
    David K. Line, Robert W. Hartson, Inc., Dallas, for appellants.
    Henry Stollenwerck, Dallas, for appellee.
   ROBERTSON, Justice.

Epifanio Simon Castillo, Jose Castillo and wife, Josefa Castillo, appellants herein, sued American States Insurance Company of Texas, appellee, seeking to recover for the fire loss of a residential dwelling, insured by appellee. American filed a motion for summary judgment and alleged that there had been a change of ownership after the issuance of the policy. The trial court found that there was a change of ownership after the issuance of the policy and granted the summary judgment. Because we find that there is no evidence to support this finding, we reverse and remand for trial on the merits.

The change of ownership defense is based on the section of the policy entitled “conditions suspending or restricting insurance.” That section provides that - “Unless otherwise provided in writing added hereto, this Company shall not be liable for loss occurring . (d) following a change in ownership of the insured property.” The record reflects that the original policy was renewed on October 3, 1972, for a period of three years. Jose Castillo and wife, Josefa Castillo, were the named insureds. The property was destroyed by fire on February 23, 1975, and thereafter Juan Villegas and wife, Francisca Villegas, conveyed the property to Epifanio Castillo on April 28, 1975. In an affidavit, Epifanio Castillo stated that Jose and Josefa Castillo conveyed the property which is the subject of this lawsuit to Julio Castillo in or about 1970.

The only summary-judgment evidence of a change of ownership is the affidavit of Epifanio Castillo which reveals that the alleged change occurred before the effective date of the policy. The affidavit does not support the finding that there occurred a change of ownership after the issuance of the renewal policy. The only effect of this affidavit is to show a possible change of ownership prior to the date of the renewal policy. The only summary-judgment evidence offered by either party regarding a change of ownership after the date of the policy is the warranty deed which names Juan Villegas and wife, Francisca Villegas, as grantors and Epifanio Simon Castillo and wife, Cynthia E. Castillo, as grantees. Since there is no explanation of how Juan and Francisca Villegas had acquired their title, this deed is no evidence that the insureds, Jose and Josefa Castillo, had ever conveyed the property. If the Villegas had no legal title, their conveyance conferred no legal rights. There is no evidence in this record that the insured property change ownership after the effective date of the insurance policy in question, and for that reason the summary judgment cannot stand.

The issue on appeal is whether the summary-judgment proof establishes a matter of law that there was no genuine issue of fact as to one or more of the essential elements of the plaintiffs’ cause of action. Gibbs v. General Motors Corp., 450 S.W.2d 827, 828 (Tex.1970). All doubts regarding the existence of genuine issues of material fact must be resolved against the party moving for a summary judgment. Wilcox v. St. Mary’s University of San Antonio, Inc., 531 S.W.2d 589, 592 (Tex.1975); Gulbenkian v. Penn, 151 Tex. 412, 252 S.W.2d 929, 931 (1952). The requisite facts for summary judgment must be affirmatively established by the summary-judgment record; no supporting presumptions will be indulged. Cook v. Brundidge, Fountain, Elliott & Churchill, 533 S.W.2d 751, 759 (Tex.1976); Box v. Bates, 162 Tex. 184, 346 S.W.2d 317, 318 (1961).

Although the insurance company asserts that appellant was not covered under the policy, this contention was not specified in its motion for summary judgment. Grounds not raised in the motion for summary judgment cannot be considered to support the judgment on appeal. Avinger v. Campbell, 499 S.W.2d 698, 702 (Tex.Civ.App.—Dallas 1973) writ ref’d n. r. e. per curiam, 505 S.W.2d 788 (Tex.1974). As authority to the contrary, the insurance company cites Spray v. Stash, 523 S.W.2d 262 (Tex.Civ.App.—Eastland 1975, writ ref’d n. r. e.), which held that the specificity requirement can be waived by a party’s failure to except to a generalized motion for summary judgment. The rationale of Spray, however, can only apply in cases where no specific grounds were stated; appellant thus could not object to any lack of specificity and has not waived his right to be informed of additional grounds relied upon to support the motion.

Reversed and remanded.


author: YOUNG, Justice.

text:
    Oscar B. (Buster) GRAY et al., Appellants, v. Jean E. KIRKLAND, Jr., Individually and d/b/a Palmetal Gin Company, Appellees.
    No. 1142.
    Court of Civil Appeals of Texas, Corpus Christi.
    April 28, 1977.
    Rehearing Denied May 19, 1977.
    Gordon L. Briscoe, Brownsville, for appellants.
    Neal Bonner, Bonner & Bonner, Harlin-gen, for appellees.
   OPINION

YOUNG, Justice.

The sole question presented by this appeal is whether the claim made the basis of the appellees’ suit here is a compulsory counterclaim and therefore barred by judgment rendered in appellants’ prior suit. The trial court held that the claim was not barred. We agree.

Jean E. Kirkland, Jr., individually and as independent executor of the estate of Major Davis, deceased, and Dan A. Davis, G. Wayne Davis, and Wendell Davis all individually and d/b/a Palmetal Gin Company sued Oscar B. (Buster) Gray, Sterling S. Gray, and Jimmy A. Gray, all individually and d/b/a as Oscar B. Gray and Sons.

Plaintiffs, who, at all times material hereto, owned and operated the Palmetal Gin Company in Cameron County, brought this action against defendants, farmers and former gin customers, to recover the sum of $4,742.00 for cotton planting seed supplied by plaintiffs to defendants and utilized by the defendants to produce their 1974 cotton crop.

Defendants contended there and contend here that plaintiffs’ claim was barred by virtue of the doctrine of res judicata because it arose out of the same transaction or occurrence which was the subject matter of the claims, under a contract of sale of cotton, previously asserted successfully by defendants, as plaintiffs, in Cause No. 59,-243-C, 197th District Court, Cameron County, Texas; and, therefore, was a compulsory counterclaim which should have been asserted in the prior cause under Rule 97(a), T.R.C.P. Following an appeal of that prior case to this Court, we reformed the trial court’s judgment and affirmed. See Traylor v. Gray, 547 S.W.2d 644 (Tex.Civ.App.—Corpus Christi 1977, writ filed).

Following a trial before the court, without a jury, the trial court entered judgment and finding therein “. . . that Plaintiff’s action in this cause had not matured prior to the time Cause Number 59,243-C, in the One Hundred Ninety-seventh Judicial District Court of Cameron County, Texas, was tried and decided on its merits . the trial court overruled defendants’ plea of res judicata and entered judgment for plaintiffs in the amount of $4,742.00 along with attorney’s fees and costs. The defendants appeal from that judgment.

Rule 97(a), T.R.C.P. (Supp.1977) reads, in part, as follows:

“(a) Compulsory Counterclaims, A pleading shall state as a counterclaim any claim within the jurisdiction of the court, not the subject of a pending action, which at the time of filing the pleading the pleader has against any opposing party, if it arises out of the transaction or occurrence that is the subject matter of the opposing party’s claim . . .”

Failure to assert a compulsory counterclaim precludes assertion thereof in a subsequent action. Griffin v. Holiday Inns of America, 496 S.W.2d 535 (Tex.Sup.1973); Harris v. Jones, 404 S.W.2d 349 (Tex.Civ.App.—Eastland 1966, writ ref’d). But a party is not required, under Rule 97(a), to file a counterclaim unless the claim is mature at the time his answer is due. Denbina v. City of Hurst, 516 S.W.2d 460 (Tex.Civ.App.—Tyler 1974, no writ); 2 McDonald, Texas Civil Practice, § 7.49 p. 285 (1970).

To determine whether Palmetal’s claim should have been asserted in Grays’ previous suit, it is necessary to determine when Palmetal’s claim became mature. It is Palmetal’s position that the account did not mature until the Grays received payment for their cotton. The Grays assert, however, that the debt matured when the implied agreement to gin with Palmetal was broken. To determine which theory is correct it is necessary to examine the course of dealings of the parties as developed by the facts, which are virtually undisputed.

The dealings between the gin and the cotton farmer here involve many processes but, for the purpose of this opinion, we will focus on the supply of cotton planting seed by the gin to the farmer. From 1963 to 1973 the Grays ginned their cotton with Palmetal. For this ten-year period seed was advanced on credit to the Grays by Palmetal. It was the policy of the gin to allow this debt to remain in abeyance until the Grays sold their cotton.

The actual sale of cotton involved the gin as a type of middleman. The Grays would deliver their cotton to Palmetal where it would be ginned. The finished product would be shown to buyers by samples. The buyer would then pay the ginner, who would then deduct the costs of ginning and the amount due for seed advanced by Palmetal to the Grays. In 1972, a system of advance contracting was begun in which the future crop was purchased before it was planted. At harvest time the farmers received the advance contract price for the cotton regardless of the harvest time market price. The ginner performed similar services for the farmer under the new system.

Through February 20, 1974 and March 5, 1974, the cotton planting seed, made the basis of this cause of action, was advanced by Palmetal to the Grays. These advancements were recorded in the ledger accounts of the gin on March 31, 1974. Previous to this period the Grays through Dan Davis, manager of Palmetal Gin, had entered into a contract to sell the Grays’ cotton for 78$ per pound. It was also understood at this time that the Grays would gin their cotton with Palmetal.

On July 13, 1974, Mr. Davis repudiated his contract for the sale of the Grays’ cotton. whereupon the Grays began ginning their cotton with the Elrod Gin of Harlin-gen, Texas, soon thereafter and continued to do so throughout August. The Grays placed their cotton in the “government loan” after ginning and it had not been sold when the first suit went to trial on the merits. In fact, the cotton was not sold until 1975, beginning in June. On August 28, 1974, the Grays received a statement consisting of a copy of each of the cotton seed sale tickets and an adding machine tape reflecting the total of these tickets to be $4,742.00. Handwritten on the adding machine tape were the words “Bal. Due Gin.” On December 31, 1974, the Grays received an auditor’s statement from Palmetal stating the amount due on their account as $4,742.00, and requesting that they sign and return the statement if it was correct.

The Grays filed suit for breach of contract on July 26,1974, against Palmetal and others. Palmetal answered without offsets or counterclaims on January 27, 1975. The trial began on February 24,1975, and ended with a judgment favorable to the Grays on July 31, 1975. The instant suit was filed January 28, 1976.

It has been held that a contract can exist whether expressed or implied and that the latter arises from the acts and conducts of the parties. In the instance of an implied contract, the issue of mutual assent is a question of fact to be inferred from the surrounding circumstances. The theory is that a course of dealing between the parties can imply a meeting of the minds. Haws & Garrett General Contractors, Inc. v. Gorbett Brothers Welding Co., 480 S.W.2d 607 (Tex.Sup.1972). In the present case, the acceptance of cotton seed on credit and the payment for the seed over a ten-year period is proof of the Grays’ agreement to pay for the seed advanced on credit.

The issue remaining unresolved, however, is at what time did this debt become due. The Supreme Court in the recent decision of Nelson v. Union Equity Co-operative Exchange, 20 Tex.Sup.Ct.J. 237 (March 19, 1977) stated that a farmer is a merchant as defined by the Texas Business and Commerce Code, thus making the provision of that Code applicable to farmers. Tex.Bus. & Comm.Code Ann. § 2.208(a) (1968) provides:

“Course of Performance or Practical Construction
(a) Where the contract for sale involves repeated occasions for performance by either party with knowledge of the nature of the performance and opportunity for objection to it by the other, any course of performance accepted or acquiesced in without objection shall be relevant to determine the meaning of the agreement.”

In the present case, we have a ten-year period to look to in determining when payment for the seed was due or matured. The Grays accepted cotton seed on credit from Palmetal over this period. Payment for this seed along with the ginning cost was taken out of money paid the ginner by the purchaser of the cotton.

This extension of credit by Palmetal was an inducement offered, by the gin to the Grays in anticipation that they would gin with Palmetal. Palmetal was, however, fully aware that the Grays were under only a limited duty to gin with it. The contract for sale of cotton entered into by the Grays allowed them to gin with any of the following gins: Palmetal Gin, Elrod, E. Rio Hon-do, and Harlingen Gin Company. Therefore, the plain meaning of this ten-year course of dealing was that the debt for seed as contracted for was not due until the Grays sold their cotton. The Grays by ginning with Elrod did no more than act pursuant to the rights granted them by contract. This action involved no notice to Palmetal that the debt was mature. Kaspar v. Keller, 466 S.W.2d 326 (Tex.Civ.App.—Waco 1971, writ ref’d n.r.e.).

Thus, the debt was not mature until after the Grays sold their cotton. The cotton was not sold until after a hearing on the merits of the first lawsuit. Therefore, Palmetal was not barred, the debt being unmatured. Denbina v. City of Hurst, supra; Sewall Paint & Glass Co. of Texas v. Booth Lumber & Loan Co., 34 S.W.2d 650 (Tex.Civ.App.—Dallas 1930, affirmed, 50 S.W.2d 793 (Tex.Comm’n App.1932).

The judgment of the trial court is affirmed.


author: BISSETT, Justice.

text:
    COLONIAL LIFE & ACCIDENT INSURANCE COMPANY, Appellant, v. Cue Dee SQUYRES, Appellee.
    No. 1181.
    Court of Civil Appeals of Texas, Corpus Christi.
    April 28, 1977.
    Rehearing Denied May 19, 1977.

      Allen V. Davis, Davis & Hale, Corpus Christi, for appellant.
    Derryl L. Collins, Law Offices of William R. Edwards, Corpus Christi, for appellee.
   OPINION

BISSETT, Justice.

This is a suit to recover benefits under an accident policy of insurance. Cue Dee Squyres sued Colonial Life & Accident Insurance Company to recover both accrued and unaecrued monthly payments for the full eleven-year term of the policy, plus attorney’s fees, court costs and the 12% statutory penalty. Trial was to a jury, which answered the issues favorably to plaintiff. Judgment was rendered that plaintiff have and recover from defendant $2,758.00 as benefits due under the policy from September 8, 1972 until July 6, 1976, plus the statutory penalty thereon in the sum of $330.96, less benefits previously paid, plus attorney’s fees in the amount of $2,500.00, plus court costs and interest on the total amount of the judgment ($5,588.96) from date of judgment until paid. Defendant has appealed.

The parties will be referred to as “plaintiff” and “defendant,” as they were in the trial court. The principal issues presented are whether the trial court erred in refusing to admit into evidence in the trial of this case certain portions of a motion in limine filed by plaintiff’s attorney in a previously tried federal suit, wherein plaintiff in this suit was also plaintiff therein, and whether the trial court erred in refusing to admit into evidence the verdict of the jury and the judgment of the court in the federal action.

Plaintiff purchased a disability accident policy from defendant on June 8, 1972. It provided, among other provisions, that under certain conditions, and subject to certain exclusions, plaintiff would be paid certain monthly benefits so long as he was disabled because of an on-the-job injury. The policy was in force and effect during all of the times material to this action.

On September 8, 1972, plaintiff did, in fact, suffer an on-the-job injury. On that date, while employed as a truck driver for Gulf Iron Works in Corpus Christi, Texas, he stepped on a rotten four-by-four on the bed of a truck. His leg went through the bed of the truck down to the drive line, and his body went backwards over the side of the truck. He remained in bed and off work some four weeks following this accident, then returned to Gulf Iron and attempted to work for four days, then remained at home another week. He attempted to work off and on until March 8, 1973, when, according to him, the pain and stiffness in his back became intolerable. He has not worked since that date.

Plaintiff testified that during the period October 1972, until March, 1973, while he attempted to work off and on, he could not perform the duties of a truck driver; that he had pain in his low back and could not stand any weight on his right side. He further testified that during that interval of time, when a load came up, his fellow employees took it for him, and he spent his time at work walking around and talking and hooking cables for the man on the crane.

Plaintiff consulted various doctors following the injury, and was eventually referred to Dr. Barnes, who first saw him on June 1, 1973. Dr. Barnes, who testified by deposition, diagnosed plaintiff’s condition, as follows:

“I said I felt the patient had rather marked deterioration in his entire spine, but his most severe injury appeared to me to have occurred between the fourth and fifth lumbar vertebrae in the low back because X-rays showed rather marked narrowing of this particular interspace.”

On further questioning, Dr. Barnes said:

. . It’s reasonably probable that the patient damaged the pre-existing abnormal condition between the fourth and fifth lumbar vertebrae to the extent that he has not been able to regain his physical vigor or physical ability to work since the fall of September 8th, 1972.”

Dr. Barnes further testified that plaintiff, in giving him his past medical history, did not mention any prior accidents, did not tell him that he had previously suffered a whiplash injury, and did not tell him that he had previously sustained damage to his sciatic nerve and pulled his hip out of joint. In response to the question as to whether the injury on September 8, 1972 was the cause of plaintiff’s “present condition of the lumbar spine or whether it aggravated a pre-existing condition,” he replied:

“I feel that the injury of September, 1972, did aggravate the pre-existing condition, certainly.”

Dr. Barnes was also asked if he had an opinion in' reasonable medical probability as to what caused the ruptured intervertebral disc situation which he described as causing the disability. He answered that question thusly:

“I feel that the fall in September, 1972, did precipitate or complete the rupturing of the intervertebral discs, a situation which had obviously been developing over the years as a result of progressive deterioration.”

The testimony of Dr. Barnes concluded with the following statement:

“I think he is probably suffering in two areas, the L^á, L-5, interspace, the next to the last one which shows to be quite narrowed by X-ray and at the lumbo-sacral level on the right side, this evidence being supplied by the electromyo-graphic studies and not by X-ray studies.”

The jury found that plaintiff sustained, independently of all other causes, continuous total disability as a result of the bodily injury sustained by him on September 8, 1972, and that his total disability was permanent. Those findings are not challenged in this appeal.

Plaintiff, who had spent his work life primarily as a truck driver following his discharge from the Army after World War II, suffered two injuries prior to his injury on September 8,1972. The first occurred in the 1950’s while plaintiff was employed at Reynolds Metals, and the second was in 1969 while he was driving for Inland Motor Freight Lines. The Reynolds injury was to plaintiff’s left hip. He stated that the doctor told him that it pinched the sciatic nerve. After he recovered from this injury, plaintiff performed logging work in East Texas for approximately two and one-half years. The hip injury did not bother plaintiff at all while he was logging; in fact, he had no trouble at all performing logging work or as a line driver until 1969 when he was in a collision while driving for Inland.

The collision referred to above resulted in an injury to plaintiff’s neck. This was the only injury he suffered in that collision. Afterwards, plaintiff returned to work for Inland, but was unable to drive on the line due to his neck, and Inland put him on the dock checking freight. Due to his inability to drive on the line, plaintiff lost his job with Inland, and after being off work for several months, got a job as a security guard. During his employment as a security guard, plaintiff took therapy treatments for his neck under Dr. Norstrom, and when the condition improved, he went to work for Gulf Iron Works. While with Gulf Iron, plaintiff testified that he did not have any physical difficulties in performing his job until he was injured on September 8, 1972.

Plaintiff, prior to the filing of this suit, filed suit in connection with his injury which he sustained in the 1950’s and also filed to recover workmen’s compensation benefits for his 1969 injury. The latter suit was against Liberty Mutual Insurance Co., Civil Action No. 70-C-71, in the District Court of the United States for the Southern District of Texas, Corpus Christi Division, hereinafter referred to as the “federal court action.”

Defendant, who contended that plaintiff’s disability did not result directly, independently and exclusively of all other causes from bodily injuries caused solely by the accident of September 8, 1972, at the trial in this case, sought to introduce into evidence a motion in limine that was filed by plaintiff’s attorney in the federal action, a certified copy of verdict, and a certified copy of the judgment which was rendered in that action. The trial judge refused to permit those documents, which appear in the record by bill of exceptions, into evidence. Defendant complains of that action in its first three points of error.

Defendant, in its first point of error, contends that the trial court erred in refusing to admit into evidence “all or any part of the first sentence of paragraph VII and the first sentence in paragraph IX” of the motion in limine.

The first sentence of paragraph VII reads:

“Plaintiff would show that many years ago, in the 1950s, a suit was filed on behalf of Plaintiff in which an allegation was made that Plaintiff was totally incapacitated permanently. Any reference to any claim of “permanent” incapacity or disability in such suit does not constitute a judicial admission, but is rather but a prediction, and, under the authority of Hartford Accident & Indemnity Co. v. [Mc]Cardell, 369 S.W.2d 331 (Tex.Sup.Ct., 1963), such matter is wholly immaterial and irrelevant, prejudicial to the Plaintiff and not admissible in this case.”
The first sentence of paragraph IX reads: “The suit referred to above resulted from an injury to the Plaintiff, involving primarily his lumbo sacral spine. Unless and until the Defendant is in a position to produce evidence that any injury sustained by the Plaintiff in the 1950s is a producing or the sole cause of his persent (sic) incapacity, the fact of such injury is wholly immaterial and irrelevant to any issue in this case and the introduction of any evidence of the same before the jury would be prejudicial to the Plaintiff and confusing to the jury. . . .”

The offer of parts of the motion was couched in the following words:

“. . . to offer part of a motion in limine filed in that case by Mr. William R. Edwards as attorney for Mr. Squyres in which he asks the Court to not permit any reference to a claim of permanent incapacity or disability from a suit in the 1950s, and then went on to make this statement: ‘The suit referred to above resulted from an injury to the Plaintiff, involving primarily his lumbosacral spine.’ ”
* * * * * *
“. . . All I want to get in evidence is that in the case in Federal court in 1971, Mr. Squyres’ lawyer, Mr. Edwards, filed a motion in limine asking that nothing be said about his having, in the 1950s, a suit in which he claimed total and permanent disability. And also offered in that connection with that motion, Mr. Edwards as attorney for Mr. Squyres stated as a fact that the injury in the 1950s was primarily —it’s there in writing; I‘m not quoting it exactly — primarily an injury to the lumbar spine.”

Defendant, in its brief, sums up its position in the following statement:

“Under the provisions of the policy, for plaintiff to recover he had the burden of proving that the condition of his lumbo-sacral spine resulted directly, independently and exclusively of all other causes from bodily injuries effected solely by accident arising out of or in the course of plaintiff’s occupation or employment, and that the condition of his low back was not caused directly or indirectly by disease or bodily infirmity. Therefore, whether plaintiff sustained an injury to his lumbo-sacral spine by the accident in the 1950s was very material.”

It is settled law in this State that pleadings in other actions which contain statements of fact which are inconsistent with the party’s present position are admissible in evidence as admissions. Hartford Accident & Indemnity Company v. McCardell, 369 S.W.2d 331 (Tex.Sup.1963); L. J. Reseda v. Transamerica Insurance Company, 414 S.W.2d 742 (Tex.Civ.App.—Corpus Christi 1967, writ ref’d n. r. e.). However, the statement in the prior pleading that plaintiff was “totally incapacitated permanently” is a mere prediction, not an allegation of fact. Hartford Accident & Indemnity Company v. McCardell, supra. Such an allegation is not admissible for impeachment, and where properly objected to, is irrelevant to any other issue in the case. St. Paul Fire & Marine Insurance Company v. J. T. Murphree, 163 Tex. 534, 357 S.W.2d 744 (1962), statement was clearly inadmissible under the objection lodged by plaintiff. The burden was on defendant to delete the inadmissible matter, and having failed to do so, the trial court did not err in rejecting the offer. 1 C. McCormick & R. Ray, Texas Evidence, § 21 (2d ed. 1956).

The statement in the first sentence in paragraph IX of the motion in limine “The suit referred to above resulted from an injury to the Plaintiff, involving primarily his lumbo sacral spine,” even if properly offered, was inadmissible, because it was immaterial to whether the 1972 injury resulted in total and permanent disability.

Plaintiff testified that he recovered from the Reynolds injury and that it gave him no trouble either performing logging work or as a line truck driver. Since plaintiff went to work for Inland in 1957 and had performed logging work for two and one-half years prior to that, all subsequent to the Reynolds injury, the Reynolds injury predated the injury at issue here by at least eighteen years. That testimony was uncon-troverted. In the absence of any evidence which connects the back injury in the Reynolds injury case with the injury or disability at issue in the present case, the first sentence in paragraph IX cannot be held as having any bearing on any material issue here presented. The statement was inadmissible when challenged (as it was) by plaintiff.

Moreover, if the trial court did err in refusing to admit the first sentence in paragraph IX of the motion in limine into evidence, the error was not reversible error. Plaintiff freely admitted that he had suffered an injury to his hip in the 1950’s, and that a doctor had told him that the sciatic nerve had been pinched. Defendant fully developed this and the neck injury at trial. The most that the excluded statements would have shown was that plaintiffs lawyer thought that the Reynolds injury was to plaintiff’s back. Counsel for defendant questioned Dr. Barnes concerning the hip and sciatic nerve injury, and asked him whether, in light of these injuries, the accident of September 8, 1972, aggravated a preexisting condition. Dr. Barnes’s response was favorable to Defendant. Defendant had an opportunity to question Dr. Barnes with respect to prior back injuries and present that evidence to the jury, or on a bill of exception, but did not do so.

Dr. Barnes testified that plaintiff is suffering from ruptured intervertebral discs at L4-L5 and at the lumbosacral level on the right side. Plaintiff testified, and Dr. Barnes was asked to assume, that plaintiff was able to perform his duties without any problems with his back just prior to the September 1972 injury. Dr. Barnes was asked also to take into account preexisting conditions including degeneration due to aging and the hip sciatic nerve injury and neck injury. Under those assumptions, his opinion was that “. . . the fall in September, 1972, did precipitate or complete the rupturing of the intervertebral discs, a situation which had obviously been developing over the years as a result of progressive deterioration.” In that state of the record, the exclusion of the first sentence in paragraph IX of the motion, if error, was harmless and did not amount to such a denial of defendant’s rights as was reasonably calculated to cause and probably did cause the rendition of an improper judgment. Rule 434, T.R.C.P.; St. Paul Fire & Marine Insurance Company v. J. T. Murphree, 163 Tex. 534, 357 S.W.2d 744 (1962); Aetna Casualty & Surety Company v. Tucker, 418 S.W.2d 382 (Tex.Civ.App.—Beaumont 1967, writ ref’d n. r. e.). Defendant’s first point is overruled.

Defendant further offered into evidence certified copies of the jury verdict, the judgment and the release of judgment in the federal court action which was tried in 1971. Plaintiff, in that case was suing for the recovery of workmen’s compensation benefits following his 1969 injury. The documents were offered for the purpose of impeaching plaintiff’s testimony “in which he testified that his health was perfect just prior to the September, 1972 accident. Plaintiff objected to the admission of the documents into evidence on several grounds, including the ground that they were not relevant to any issue in the case. The objections were sustained. Defendant, in its second, third and fourth points of error, complains of the refusal by the trial court to admit the documents into evidence.

The verdict and the judgment in the federal action are not statements made by plaintiff, but are statements made by the jury and the trial court in an unrelated matter involving a different defendant and different facts. The matters adjudicated in the prior suit are not material to any issue in this case, and even if they were, a verdict and a judgment in a prior suit is admissible to show matters adjudicated only where the parties and subject matter in the two suits are the same, which is not the situation here involved. See 2 C. McCormick & R. Ray, Texas Evidence, § 1279 (2d ed. 1956). The release of the judgment would have shown only that plaintiff received $18,-115.42 in the 1971 federal action for the 1969 injury, which was of no concern to the jury in the present action. Neither the verdict nor the judgment nor the release of judgment was admissible in this case. Defendant’s second, third and fourth points are overruled.

In the fifth point of error, defendant contends that the court erred in rendering judgment for monthly payments under the insurance policy in question from September 8, 1972 until July 6, 1976, less benefits from September 8, 1972 until October 29, 1972, because plaintiff’s own testimony showed that plaintiff worked from October 30, 1972 until March, 1973.

The jury, in Special Issue No. 1, was asked:

“Do you find from a preponderance of the evidence that Cue Dee Squyres sustained, independently of all other causes, continuous total disability as a result of accidental bodily injuries sustained on September 8, 1972?”

The following definitions were given by the trial court in connection with the submission of Special Issue No. 1:

“The term, ‘total disability,’ as used in this issue does not mean a state of complete or absolute inability to do any work or transact any business, but total disability exists if Plaintiff cannot substantially perform, in the exercise of ordinary care, every material duty pertaining to his occupation.
The word ‘continuous’ as used in this issue does not mean constant nor does it denote ceaselessness and absolute continuity. It means regular, protracted, enduring, and without any substantial interruption of sequence.”

Defendant did not object to the submission of Special Issue No. 1 and the accompanying definitions.

Defendant states in its brief that “there is no testimony whatever showing how many days between October 30, 1972 and sometime in March, 1973, that plaintiff worked.” The argument is made that the evidence is wholly insufficient to justify a recovery for that period of time. We do not agree.

Under the definition submitted by the trial court in its charge concerning “total disability” and “continuous,” there was sufficient evidence to support the jury’s finding that plaintiff sustained continuous total disability as a result of accidental bodily injuries sustained on September 8, 1972. Plaintiff’s testimony that after September 8, 1972, he could not perform his work as a truck driver and that the .other employees carried him on the days he attempted to work has already been stated in some detail. This testimony was uncontradicted. Defendant’s fifth point is overruled.

The judgment of the trial court is AFFIRMED.


author: McCLOUD, Chief Justice.

text:
    USLIFE TITLE INSURANCE COMPANY OF DALLAS et al., Appellants, v. ROSSCO, INCORPORATED, Appellee.
    No. 4998.
    Court of Civil Appeals of Texas, Eastland.
    April 28, 1977.
    Rehearing Denied May 19, 1977.

      Royal H. Brin and Robert Hyer Thomas, Strasburger, Price, Kelton, Martin & Unis, Dallas, for appellants.
    Robert H. Mow, Jr. and Barbara Lynn, Carrington, Coleman, Sloman, Johnson & Blumenthal, Dallas, for appellee.
   McCLOUD, Chief Justice.

Plaintiff, Rossco, Inc. sued defendants, USLIFE Title Insurance Company of Dallas and USLIFE Title Company of Houston, for conversion of funds received by US-LIFE Houston allegedly belonging to Ros-sco. Plaintiff asserted that USLIFE Houston was a trustee of certain escrow funds which it agreed to hold and distribute as escrow agent in connection with the closing of a real estate transaction involving a sale by plaintiff to John Lester, E. Mitchell Smith and other related entities and individuals of two real estate developments, Place One Apartments in Houston, Texas, and Tall Timbers Apartments in New Orleans, Louisiana. Rossco alleged that contrary to its fiduciary duties as a trustee, USLIFE Houston refused to forward to plaintiff $105,666.66 which was received by the escrow agent after the closing, and the escrow agent willfully and maliciously breached its fiduciary obligation by sending the money to its alter ego company, defendant, USLIFE Dallas. Defendants contend USLIFE Dallas loaned Lester and Smith $121,500 at the time of the closing in order that the real estate transaction could be completed and the $105,666.66 was properly sent to USLIFE Dallas as part payment of that loan.

The jury found that the $105,666.66 was from the sale of interest in Place One Apartments; USLIFE Houston converted the $105,666.66 to its own use and benefit or the use and benefit of USLIFE Dallas; either or both USLIFE Houston or US-LIFE Dallas participated in the conversion with malice or in wanton or conscious disregard for the rights of plaintiff; USLIFE Houston breached its fiduciary duties to plaintiff with malice or in wanton or conscious disregard for the rights of plaintiff; USLIFE Houston became the alter ego of USLIFE Dallas; $60,000 should be assessed against USLIFE Houston as exemplary damages; and, $30,000 should be assessed against USLIFE Dallas as exemplary damages. Based upon the jury’s findings judgment was entered against the defendants, jointly and severally, for $105,666.66 actual damages plus prejudgment interest of $13,-084.18, plus exemplary damages of $60,000, for a total of $178,750.84. The judgment additionally provided for recovery of $30,-000 exemplary damages against USLIFE Dallas. Defendants have appealed. We reverse and remand.

On January 31, 1974, instruments designated as “Closing Agreement” and “Escrow Instructions” were executed by Rossco, Smith and Lester as “Developers” and A. R. Kadell, an employee of USLIFE Houston, as “Escrow Agent.” The Closing Agreement provides in part:

“2. Developers agree that all additional proceeds from the sale or other disposition of partnership interests in Place One Apartments, Ltd., a Texas limited partnership, of which E. Mitchell Smith, Jr. and John R. Lester are general partners, shall be paid immediately as and when and in whatever amounts received by Developers or any of them to Rossco and shall be credited against payment of the Note B until Note B shall be fully paid.
3. Developers agree that all of the proceeds from the sale or other disposition of partnership interests in Tall Timbers Apartments II, Ltd., a partnership in commendam of which E. Mitchell Smith, Jr., John R. Lester and S. Louis Hutche-son are general partners, shall be paid immediately as and when and in whatever amounts received by Developers or any of them to Escrow Agent for the benefit of Rossco (pursuant to the Escrow Instructions).”

The Escrow Instructions provide in part:

“E. Upon receipt from Developers of funds from the proceeds from the sale or other disposition of partnership interests in Place One Apartments, Ltd., from Developers, if Rossco elects to have such funds channeled through Escrow Agent, Escrow Agent shall record the amount of such proceeds received by him and shall immediately disburse such amounts, as received by him, to Rossco in accordance with instructions given by Rossco.
F. Upon receipt by Escrow Agent of proceeds from the sale or other disposition of partnership interests in Tall Timbers Apartments II, Ltd., pursuant to paragraph 8 of the Closing Instructions, Escrow Agent shall record the amounts of such proceeds as received, and shall place such proceeds in a special escrow account from which they shall be disbursed in accordance with the terms hereof.”

Plaintiff contends the above quoted paragraphs 2 and E entitled it to the $105,666.66 which was deposited in an escrow account at the office of USLIFE Houston and later transferred to USLIFE Dallas.

The trial was brief. The only witnesses who testified were Ervin Beal, Treasurer and Secretary of USLIFE Houston and US-LIFE Dallas, and A. R. Kadell, Senior Vice-President of USLIFE Houston, who were called by plaintiff as adverse witnesses.

In Special Issue 1, the jury found that the $105,666.66 was from the sale of interest in Place One Apartments. Defendants argue there is no evidence to support the finding. We agree.

Following the real estate closing on January 31, 1974, six checks totaling $105,666.66 were deposited in the “Rossco, Inc.-Lester” escrow account. Plaintiff first argues that Kadell admitted these checks were from the sale of interest in Place One Apartments. We disagree. Kadell testified, when called as an adverse witness, that he had no first hand knowledge regarding the checks, and he only surmised or assumed the checks were from the sale of interest in Place One Apartments. Plaintiff relies upon a statement in Kadell’s deposition as an admission and some evidence the funds came from the sale of interest in Place One Apartments. The statement of facts reflects the following questions and answers:

“Q . Now, let me refer you to the reverse side of Plaintiff’s Exhibit 5, under the date of 2-15-74. There are six checks shown there, are there not?
A Yes.
Q Totaling $105,666.66?
A That’s right.
Q Those checks came from the sale of interest in Place One Apartments, did they not, Mr. Kadell?
A Here again we get back to our same question that we had difficulty with a moment ago.
Q Well, just answer my question. You knew they came from the sale of interest in Place One Apartments, didn’t you?
A I can’t be sure, counsel.
Q Well, didn’t you tell me that back on March 20, 1975 when you gave your deposition?
A I think the phrasing was ‘we can assume that’.
Q Well, I think you testified, did you not, that you guessed that I could say that you knew that, is where they came from.
A Well, I am not trying to be difficult. It is just a play on words.
Q Well, did you know it or didn’t you?
A I wasn’t given any specific instructions. That was not a factor at that time.
Q Didn’t you testify back on March 20 though that you knew that the funds came from Place One Apartments? And I am referring to the funds that came in between January 31 and February 15, 1974.
Q . Well, did you so testify?
A I think I could probably use the same words today as I did then.
Q Well, are you changing your testimony that you gave back in March?
A No, sir, I don’t think so.
Q March was a lot closer to when all this took place back in 1974 than it is today, isn’t it?
A Yes, sir.
Q You would assume your testimony back in March was reliable, wouldn’t you?
A Yes, sir.
Q In fact, you took an oath to tell the truth just like you did today?
A That’s right.
Q And you are an officer of the Court, you know what that means?
A That’s right.
Q Let me back up. I am going to read my question on page 64, line 25, continuing on to the next page. ‘And isn’t it true that the funds that came in after January 31, 1974, you knew came from the sale of interest in Place One Apartments?’ And what was your answer?
A ‘Yes, I assumed that. I inferred that from the pattern which had occurred.’
Q And I said, ‘Well, you knew that, didn’t you?’ and what was your answer?
A ‘I guess you could say that I knéw that.”’
(Emphasis added).

We do not consider Kadell’s statement in his deposition, “I guess you could say that I knew that”, as any evidence to support the jury’s answer to Special Issue 1. His statement that he guessed plaintiff’s counsel could say “that he knew that” does not constitute an admission. In the preliminary questions propounded by plaintiff’s counsel it will be noted that counsel asked Kadell, “Well, I think you testified, did you not, that you guessed that I could say that you knew that is where they came from.”

Plaintiff also argues the jury could properly infer from the circumstantial evidence that the checks came from the sale of interest in Place One Apartments. We disagree. The fact the checks were from the Houston area and were deposited in the “Rossco, Inc.-Lester” escrow account is no evidence the checks came from the sale of interest in Place One Apartments. None of the makers of the checks testified, nor did Lester who delivered the checks to Kadell testify. While the circumstantial evidence tends to show Kadell assumed the checks came from the sale of interest in Place One Apartments, there is no evidence which would permit the jury to properly infer the checks did in fact come from a sale of interest in Place One Apartments. Kadell testified that he had no knowledge as to whether the checks came from the sale of interest in Place One Apartments. He stated he received no instruction from anyone. His assumptions and surmises are not evidence of the vital fact. The jury could disregard Kadell’s testimony, but the jury could not properly find the converse of his testimony when there was no independent evidence to support such finding. Briscoe v. Laminack Tire Service, Inc., 546 S.W.2d 695 (Tex.Civ.App.—Texarkana 1977, writ filed).

Plaintiff next argues that a fiduciary relationship existed between plaintiff and the escrow agent and the defendants had the burden of establishing the funds did not come from sale of interest in Place One Apartments. The burden of proof in Special Issue 1 was placed on plaintiff to prove by a preponderance of the evidence the $105,666.66 that was deposited into the escrow account was from the sale of interest in Place One Apartments. Plaintiff has no cross-points and plaintiff’s objections to the charge fail to include an objection that the burden of proof was improperly placed on plaintiff in Special Issue 1. We do not reach the question of who should have had the burden of proof. Special Issue 1 placed the burden on plaintiff and plaintiff has failed to properly perfect any complaint.

Since we have found the court erred in awarding plaintiff actual damages, we also reverse the, award of exemplary damages. Phillips v. Wertz, 546 S.W.2d 902 (Tex.Civ.App.—Dallas 1977, writ filed).

We hold there is no evidence to support the jury’s answer to Special Issue 1 and for that reason the judgment of the trial court is reversed. We feel, however, that the evidence was not fully developed, and in the interest of justice the cause is remanded.


author: STERNBERG, Justice.

text:
    Barbara Jean ATWOOD (now Parrott), Appellant, v. Ronald Kennedy ATWOOD, Appellee.
    Supreme Court of Kentucky.
    Nov. 12, 1976.
    C. David Emerson, Bradley & Emerson, Lexington, for appellant.
    D. Frederick Saunders, Brown, Sledd & McCann, P. S. C., Lexington, for appellee.
   STERNBERG, Justice.

The custody of the parties’ children was changed from appellant to appellee by order of the Fayette Circuit Court, from which order this appeal is prosecuted.

The marriage of Barbara and Ronald was dissolved on September 21, 1973, and custody of their three children was awarded to Barbara. Subsequently, she married Dr. Norman Parrott, a widower with four children, from Paducah, Kentucky. Shortly after their marriage, domestic difficulties arose, and Barbara and her three children returned to Lexington, Kentucky, where the children were enrolled in the public schools. This separation was short-lived because Barbara and Dr. Parrott reconciled, and once again they were together in Padu-cah, with one difference — the eldest of Barbara’s children was left in Lexington with the child’s father. However, in the fall of 1975 Barbara and Dr. Parrott again separated and Barbara returned to Lexington, where she filed a petition to dissolve her marriage.

On December 24, 1975, Dr. Parrott executed an affidavit, which was filed with the Judge of the McCracken County Quarterly Court, charging Barbara with being mentally ill and likely to cause injury to herself or others if not immediately restrained. The warrant was withdrawn, however, without any action having been taken thereon. During the time of and even before their first separation, Barbara, Dr. Parrott and his son, Steve, had been consulting regularly with two psychiatrists, Dr. R. Kelley and Dr. M. C. Glasgow. Dr. Kelley, in giving his deposition, among other things, said that he had seen Barbara in his professional capacity eight times since October 10, 1975. Dr. Glasgow treated Steve and, in the course of seeing him on social occasions at the doctor’s home and also at the home of the Parrotts, had been around Barbara and Dr. Parrott.

On January 6, 1976, Barbara’s first husband, the appellee herein, filed a motion in the Fayette Circuit Court asking that he be awarded custody of the children. He proposed to take the depositions of both Dr. Kelley and Dr. Glasgow, and appellant applied to the court for a protective order prohibiting the taking of these depositions on the grounds “ * * * that both Dr. Kelley and Dr. Glasgow are psychiatrists who have seen the Respondent in their professional capacities as psychiatrists, and that any and all communications by and between the aforesaid psychiatrists and the Respondent are privileged under the provisions of KRS 421.215 (1966).” The court denied the motion. The depositions of the two psychiatrists were duly taken and were considered by the court in determining that the custody of the children should be taken from appellant and awarded to appellee.

The issue as stated in appellant’s brief is:

“Did the Trial Court err in permitting the taking of depositions of two psychiatrists over the objection of the Appellant, based upon the psychiatrist-patient privilege, and in considering that testimony in arriving at its decision in a change of custody proceeding?”

In a memorandum of law which appellant filed with the chancellor, in speaking of Drs. Kelley and Glasgow, it is stated:

“ * * * The two proposed witnesses are psychiatrists who were acting in their professional capacities as psychiatrists.

At common law there is no privilege existing between doctor and patient or psychiatrist and patient. 44 A.L.R.3d 24. The 1966 regular session of the General Assembly adopted the psychiatrist-patient privilege law, which has been codified as KRS 421.215. By the provisions of this statute, privileged communications between psychiatrist and patient exist with an absolute certainty except in three instances, to-wit:

“(a) When a psychiatrist, in the course of diagnosis or treatment of the patient, determines that the patient is in need of admission to or commitment to a hospital for care of the patient’s mental illness;
(b) If a judge finds that the patient, after having been informed that the communications would not be privileged, has made communications to a psychiatrist in the course of a psychiatric examination ordered by the court provided that such communications shall be admissible only on issues involving the patient’s mental condition;
(c) In a civil proceeding in which the patient introduces his mental condition as an element of his claim or defense, or, after the patient’s death, when said condition is introduced by any party claiming or defending through or as a beneficiary of the patient, and the judge finds that it is more important to the interests of justice that the communication be disclosed than that the relationship between patient and psychiatrist be protected. (Enact. Acts 1966, ch. 121, §§ 1 to 3.)”

A custody action is a civil proceeding of momentous proportions. It not only affects the parents but dramatically and drastically affects the lives of the children. Regardless of the desires of the parents, in making an award of custody the polar star is to determine what is for the best interest of the child. In making this determination, the court must, among other things, consider the following:

“403.270. Custody-Best interest of child shall determine—
(1) The court shall determine custody in accordance with the best interests of the child. The court shall consider all relevant factors including:
* * * * * *
(c) The interaction and interrelationship of the child with his parent or parents, his siblings, and any other person who may significantly affect the child’s best interests;
(d) The child’s adjustment to his home, school, and community; and
(e) The mental and physical health of all individuals involved.”
“403.340. Modification of custody decree—
* * * * * *
(2)If a court of this state has jurisdiction pursuant to the uniform child custody jurisdiction act, the court shall not modify a prior custody decree unless it finds, upon the basis of facts that have arisen since the prior decree or that were unknown to the court at the time of entry of the prior decree, that a change has occurred in the circumstances of the child or his custodian, and that the modification is necessary to serve the best interests of the child. In applying these standards the court shall retain the custodian appointed pursuant to the prior decree unless:
(c) The child’s present environment endangers seriously his physical, mental, moral, or emotional health, and the harm likely to be caused by a change of environment is outweighed by its advantages to him.”

KRS 403.270 and KRS 403.340 were enacted at the 1972 regular session of the General Assembly.

In every custody proceeding (KRS 403.270) and in every proceeding for the modification of a custody decree (KRS 403.-340), the mental and physical health of not only the parents but of the child is of great concern and importance to the court. Whenever custody of infants is in dispute, the parties seeking custodial authority subject themselves to extensive and acute investigation of all factors relevant to the permanent and, hopefully, proper award of custody. Of major importance is the mental and physical health of all of the parties and whether the child is in an environment likely to endanger his physical, mental, moral or emotional health. Allen v. Department for Human Resources, Ky., 540 S.W.2d 597 (1976).

In seeking the custody of the children in the original petition for dissolution of marriage, appellant made her mental condition an element to be considered by the court in awarding her custody. It makes little difference that the parties have agreed among themselves as to which of them would be the custodial parent. Their agreement is not binding on the court which is at all times primarily concerned with the welfare of the child and thereafter concerned for the parents. Wells v. Wells, Ky., 412 S.W.2d 568 (1967).

The psychiatrist-patient privilege statute was adopted in 1966 and the statutes dealing with award of custody and its modification were adopted in 1972, some six years later. The latter statutes place the mental conditions of all family members squarely in issue. The standard of KRS 421.215(3)(c) has been met by operation of law. We are of the opinion that the depositions of Drs. Kelley and Glasgow were properly taken. The chancellor, in determining modification of the award of custody, was fully justified in considering them.

The judgment is affirmed.

All concur.