author:
REYNOLDS, Justice.
      ROBINSON, Justice ELLIS, Chief Justice

text:
    Neal K. SUTHERS, M. D., Appellant, v. BOOKER HOSPITAL DISTRICT et al., Appellees.
    No. 8655.
    Court of Civil Appeals of Texas, Amarillo.
    Nov. 10, 1976.
    Rehearing Denied Dec. 6, 1976.

      Allen, Gaines & Roberson, Ronnie Gaines, Perryton, for appellant.
    Lemon, Close, Atkinson & Shearer, Otis C. Shearer, Booker, for appellees.
   REYNOLDS, Justice.

A scholarship fund, together with a hospital district and its residents claiming third party beneficiary status, instituted this suit to recover monetary damages from a medical doctor for breach of his written agreement with the scholarship fund to locally practice medicine for ten years in consideration for monies advanced by the scholarship fund for the doctor’s medical education. Consistent with the jury’s verdict, the trial court rendered judgment favorable to all parties plaintiff. The pivotal question is whether the written agreement was, and we hold as a matter of law that it was not, intended by the signatory parties to benefit directly the third party beneficiary claimants. Affirmed in part; reversed and rendered in part.

In 1966, Neal K. Suthers, then a student aspiring to become a medical doctor, entered into a written agreement with the Bulah Peery Memorial Scholarship Fund, Inc., a non-profit Texas corporation of Booker, Texas. Introductory recitations and paragraph I provisions are that the Scholarship Fund is agreeable to furnishing a scholarship of $200 monthly during the educational process not to exceed four years to Suthers, who in turn desires to come to Booker upon completion of his educational requirements to practice medicine as a licensed physician. The written agreement next states:

WHEREAS, the parties have made the following agreement and desire same to be reduced to writing in order to avoid any misunderstanding and to have a permanent record of the agreement.
And then it provides that:
II.
In consideration of scholarship agreement, Student agrees to use his best efforts, talent and ability to complete all of the necessary requirements to secure a license to practice medicine in the State of Texas, and agrees to thereafter immediately move to Booker, Texas, and practice medicine as a licensed physician for a period of not less than ten (10) years.
III.
It is contemplated that a diligent effort will be made by the citizens of the Booker community to initiate and complete the necessary action to create a hospital district as heretofore authorized by the legislature of the State of Texas, vote a bond issue and construct reasonably adequate medical and clinical facilities, including equipment so that adequate medical attention may be furnished the citizens of Booker and the surrounding vicinity. Such medical and clinical facilities shall not necessarily include a hospital. In the event such medical and clinical facilities are not furnished within a reasonable time after Student is licensed and willing to practice medicine in Booker, Texas, then the only obligation of Student shall be to reimburse all sums paid to him by the Scholarship Fund without penalty or interest within a reasonable time.
IV.
In the event Student either fails to complete the necessary requirements to secure a license to practice medicine in the State of Texas, or fails to complete the educational requirements of an accredited medical school, or after securing such license, fails to move to Booker, Texas, and actively practice medicine as a licensed physician for as long as five (5) years in Booker, Texas, then Student shall immediately reimburse the Scholarship Fund all sums paid to him with interest thereon from the time such monthly installments were paid at 7% per annum until paid, together with a penalty in a sum equal to 50% of all sums paid to Student as a scholarship. If Student complies with this agreement in all other respects, and actively engages in the practice of medicine as a licensed physician in Booker, Texas, for a period of more than five (5) years, but less than ten (10) years, Student agrees to immediately reimburse the Scholarship Fund all sums paid to him as a scholarship, without penalty, but with interest at 7% per annum from the date each respective scholarship payment was made. The condition of this scholarship shall be fully satisfied by Student in the event he fully complies with the terms of this agreement and completes the requirements for, and secures a license to practice medicine in the State of Texas, and does move to Booker, Texas, and practices medicine as a licensed physician for ten (10) years or more, whereupon Student will not in any manner be obligated to repay any money, including interest, to the Scholarship Fund advanced to him as a scholarship.
V.
It is understood and agreed that the Scholarship Fund shall carry and pay the premiums for a $10,000.00 convertible term life insurance policy on the life of Student for a ten (10) year term, payable in full to the Scholarship Fund in the event of the death of Student. In the event of death, the estate of Student shall not be obligated to reimburse any sum of money to the Scholarship Fund. At the end of such ten (10) year term, Student, if otherwise in compliance with this agreement, shall have the right to own the policy and all incidents of ownership and convert the policy as therein authorized. The Scholarship Fund shall have the right to carry disability insurance policy covering Student and payable to the Scholarship Fund in such amounts and upon such terms as the Scholarship Fund should deem necessary and advisable. . . .
⅜: * ⅜ ⅝ ⅜ ⅜
VIII.
This agreement shall be binding upon the heirs, devisees, legal representatives and successors of the parties and it shall not be assigned.

Thereafter and upon the second attempt to do so, the Booker Hospital District was created. After Suthers received his medical license in 1978, the hospital district constructed a medical clinic at a cost of $140,-000 following a voter authorized issuance of bonds to pay therefor. Upon completion of the clinic in the first part of March, 1974, Suthers, having completed his medical education with the aid of the scholarship amounting to $10,800, moved to Booker and began the practice of medicine in the medical clinic. Some five weeks later, Suthers ceased practicing medicine in Booker and moved to the State of Oklahoma where he has since practiced medicine.

Asserting a right under paragraph IV of the agreement to be reimbursed for the interest bearing $10,800 it had advanced to Suthers, the Bulah Peery Memorial Scholarship Fund, Inc., sued him for that recovery, but it did not seek the fifty per cent penalty mentioned in paragraph IV. The Booker Hospital District and nine of its residents, acting individually and on behalf of the class of residents and the subclass of resident taxpayers of the district, joined in the suit, alleging that the written agreement was made for their benefit as third party beneficiaries. Under that status, the hospital district and the subclass of its resident taxpayers pleaded for recovery from Suth-ers of that portion of the increased cost they attributed to Suthers in constructing the medical clinic, or its monetary decrease in market value, or its reasonable rental value during the remaining term of the agreement. The class of residents of the hospital district asked that Suthers be held liable for the monetary value of their loss of medical services. All parties plaintiff alleged entitlement to and prayed for exemplary damages.

In the trial court, Suthers disputed that the hospital district and its classes of residents were third party beneficiaries who had standing to sue on his written agreement with the Scholarship Fund. He affirmatively confessed his liability to the Scholarship Fund for the monies, bearing the contractual rate of interest, advanced to him.

Over Suthers’ objection that the issue was one of law, the trial court submitted to the jury special issue no. 1 reading:

Was the agreement of the Defendant set forth in the 1966 Scholarship Agreement to reside in, and practice medicine in, Booker for ten years intended for the direct benefit of the Plaintiff class of residents of the later to be formed Booker Hospital District?

The jury’s answer of “Yes” and its response to the other special issues formed the basis of the court’s 15 August 1975 judgment decreeing that from Suthers:

1)Bulah Peery Memorial Scholarship Fund, Inc., do have and recover the sum of $15,816.49 (the amount of advancements plus accrued interest), together with interest thereon at the rate of seven per cent (7%) per annum from August 1, 1975;
2) Booker Hospital District and the subclass of resident taxpayers of the district recover the sum of $110,000 (the reduced market value of the medical clinic found by the jury to result from Suth-ers’ decision to practice in Booker for only five weeks), together with interest thereon at the rate of six per cent (6%) per annum from date; and
3) The residents of the Booker Hospital District recover the sum of $1,000 (the damages found by the jury to result from Suthers’ decision not to practice medicine in Booker for more than five weeks), together with interest thereon at the rate of six per cent (6%) per annum from date.

The court ordered that the sum of $13,-898.38, which had been deposited in the registry of the court as the result of garnishment proceedings against Suthers, be applied on, and to that extent discharge, the judgment in favor of the Bulah Peery Memorial Scholarship Fund, Inc. Further, the court ordered that the recoveries by the Booker Hospital District and its classes of residents be applied to discharge the obligations and indebtedness of the hospital district.

On appeal, Suthers does not challenge that portion of the judgment in favor of the Bulah Peery Memorial Scholarship Fund, Inc.; indeed, he judicially admits his liability for the amount of the judgment in favor of the Scholarship Fund and his willingness to pay it, as well as his liability for the contractual fifty per cent penalty which the Scholarship Fund did not impose. The challenge, rather, is to those portions of the judgment decreeing recoveries by the parties claiming third party beneficiary status. In this connection, Suthers has perfected, by his points of error numbered three through six, this two-pronged presentation: the court erred in inquiring of the jury in special issue no. 1 the legal meaning of the agreement; and the jury’s answer to the issue is insupportable for, as a matter of law, Suthers’ written agreement with the Scholarship Fund was not intended to benefit directly the hospital district and its residents as third party beneficiaries so as to give them standing to sue thereon.

Absent any ambiguity in the contract, and none is suggested here, it is elementary that its construction is a question of law for the court. Myers v. Gulf Coast Minerals Management Corporation, 361 S.W.2d 193, 196 (Tex.1962); Tower Contracting Company, Inc., of Texas v. Flores, 157 Tex. 297, 302 S.W.2d 396, 399 (1957). It follows that it was error for the trial court to submit the question of law embraced in special issue no. 1 to the jury, and the question is one to be resolved by established principles of law.

The presumption in Texas is that the signatory parties contract only for themselves; hence, a contract will not be construed as having been made for the benefit of a third party not privy thereto, and he has no right of action thereon, unless it clearly appears such was the intention of the contracting parties. Knox v. Ball, 144 Tex. 402, 191 S.W.2d 17, 21, 164 A.L.R. 1453 (1945); Citizens Nat. Bank in Abilene v. Texas & Pacific Ry. Co., 136 Tex. 333, 150 S.W.2d 1003, 1006 (1941). To qualify as one for whose benefit the contract was made, the third party must show that he is either a donee or a creditor beneficiary of, and not one who is benefited only incidentally by, the performance of the contract, B & C Construction Company v. Grain Handling Corporation, 521 S.W.2d 98, 101 (Tex.Civ.App.-Amarillo 1975, no writ). In Section 356 of Professor Williston’s Treatise on the Law of Contracts, Third Edition (1959), the respective third party beneficiaries are defined thusly:

(1) One “is a donee beneficiary if the purpose of the promisee in obtaining the promise of all or part of the performance thereof, is to make a gift to the beneficiary, or to confer upon him a right against the promisor to some performance neither due [nor supposed] or asserted to be due from the promisee to the beneficiary;”
(2) One “is a creditor beneficiary if no intention to make a gift appears from the terms of the promise, and performance of the promise will satisfy an actual [or supposed] or asserted duty of the promisee to the beneficiary;” and
(3)One “is an incidental beneficiary if the benefits to him are merely incidental to the performance of the promise and if he is neither a donee beneficiary nor a creditor beneficiary.”

Generally, whether a contract was intended for the benefit of a third party depends upon the construction of the instrument whose clear language must be given its plain meaning. Transport Ins. Co. v. Standard Oil Co. of Texas, 161 Tex. 93, 337 S.W.2d 284, 288 (1960). The intention of the contracting parties is gathered from the entire instrument construed as a whole, Southland Royalty Company v. Pan American Petroleum Corporation, 378 S.W.2d 50, 53 (Tex.1964), as manifested by the terms employed in the light of the attending circumstances, Banker v. Breaux, 133 Tex. 183, 128 S.W.2d 23, 24 (1939), there being the presumption that the parties embodied their entire agreement in the written instrument. Danciger Oil & Refining Co. of Texas v. Powell, 137 Tex. 484, 154 S.W.2d 632, 635 (1941).

Given the established principles, pri- or opinions, construing as they do agreements of widely differing terms, offer no precedents, but only assist in analysis; the determination of the parties’ intention must depend upon the particular circumstances of each case. The intention, then, is settled by the application of the pertinent principles of construction to the instrument’s wording, which is considered in the light of the surrounding circumstances. City of Pinehurst v. Spooner Addition Water Company, 432 S.W.2d 515, 519 (Tex.1968). Accordingly, the decision whether the Bulah Peery Memorial Scholarship Fund, Inc. and Neal K. Suthers intended the performance of their 1966 agreement to directly benefit the third party beneficiary claimants depends upon the intention they manifested by the expressions they employed in the light of the attending circumstances.

Introductory to setting forth their mutual understanding in writing, the contracting parties declared that they “have made the following agreement and desire same to be reduced to writing in order to avoid any misunderstanding and to have a permanent record of the agreement.” At the time of the agreement in 1966, the Booker community had been without the services of a local doctor since 1943. The Scholarship Fund was utilized by citizens interested in the effort to secure the future medical services of Suthers and by Suthers as the means of financing his formal medical education. Although Suthers agreed that when the agreement was being formalized he considered the possibility that “things might turn out just the way they have,” it was not contemplated by the nego-tiatory citizens who bound the Scholarship Fund that Suthers might not come to Booker or might not stay; and, furthermore, the citizens did not conceive as a possibility any damages beyond the repayment of the funds advanced. These citizens and Suth-ers furnished the information concerning their agreement to an attorney for his drafting of their written agreement.

The attorney testified that the executed agreement “covered what I was asked to do”; that he tried “to cover the major points” and “the problems,” acknowledging that he “didn’t intentionally omit any major item that was discussed”; that there was “(v)ery little discussion on” the fact that a medical facility might be built, but enough to provide for the option clauses in paragraph IV of the agreement, including the penalty clause inserted as an “inducement” for Suthers to come to Booker and practice medicine, particularly after a consideration of the possibility that he might leave after the medical facility was built. The citizens felt the agreement was for the benefit of the community, but no one expected Suth-ers to provide his medical services free of charge.

Preliminarily to considering the language of the agreement, it should be noticed that the third party beneficiary claimants make no contention that the Scholarship Fund’s purpose in obtaining Suthers’ written promise either to practice or to pay was to make any gift to them as donee beneficiaries. Neither do they contend that Suthers’ promissory performance would satisfy any duty of the Scholarship Fund to them as creditor beneficiaries. Rather, what the third party beneficiary claimants do contend is that once they provided the medical facility, the agreement conferred upon them as donee beneficiaries the right to the performance of Suthers’ promise to practice medicine in Booker for ten years. Necessarily implicit in the contention is the further right to recover from Suthers damages, which are different from and in excess of those specified by the contracting parties, if Suthers failed to practice medicine in Booker for the ten year period.

Turning to the agreement itself, it is at once apparent that it contains no language definitively stating that the agreement made by the contracting parties shall inure to the benefit of third parties; indeed, the specific expressions embrace no more than the faithful performance promised by the signatory parties to each other. It is true, as the third party beneficiary claimants state, that it was expressly contemplated' that the citizens of the community would diligently attempt to create a hospital district, pass a bond issue, and construct a medical facility, which they did, and, if the facility had not been furnished, Suthers would not have been obligated to practice medicine in Booker for ten years. From this premise, the claimants argue that the contracting parties expressed the intent to benefit directly, and not incidentally, the class of residents and subclass of resident taxpayers of the Booker Hospital District. This is a non sequitur. The agreement contains no language stating that such was the intent of the contracting parties. The contractual expression of contemplated effort which the third party beneficiary claimants in fact exerted is not sufficient, without more, to constitute them third party donee beneficiaries; they must, to establish their theory, go further and show that by the language of the entire agreement, as it reflected the attending circumstances, the contracting parties manifested the intention that the third party beneficiary claimants would have a right to Suthers’ medical services in Booker for ten years if they constructed the medical facility.

When the language of the entire agreement is considered in connection with the circumstances out of which it arose, it seems clear that the contracting parties had no intention of making the claimants third party beneficiaries. After contemplating that others would make the effort to construct a medical facility, the absence of which would relieve Suthers of all obligations save the repayment of funds received, the contracting parties did not express an obligation by Suthers to practice in the community for ten years if the facility were constructed. Instead, the parties plainly stated that their agreement was that if the medical facility was constructed, Suthers had the option to practice for ten years and be relieved from repaying any part of the loan or, in lieu thereof, to repay the loan with interest and possibly a penalty. This was the language selected “to cover the major points” of the understanding with the “very little discussion” about a medical facility and a consideration that Suthers might leave after the facility was built leading only to the inclusion of the option clauses in paragraph IV. To intend that Suthers would assume an obligation to third party beneficiaries over and beyond that stated in the agreement would be a major point, but any major item that was discussed was not omitted from the agreement.

Linguistically and circumstantially, then, the contractual expression of contemplation was merely a predicate for another option the contracting parties intended Suthers to have and for which they expressly provided in paragraph IV. This is made more obvious by the lack of language imposing a duty upon Suthers to use any facility made available. Moreover, there is no expression of any terms or conditions under which Suth-ers would be permitted, much less required, to use the facility. And certainly there is no suggestion that anyone is, or would be, entitled, by virtue of the agreement, to demand medical services from Suthers. Furthermore, it must be deemed significant that the only security for the performance undertaken by Suthers was the insurance coverage for the benefit of the Scholarship Fund and not for any third party.

In short, to accept the contention of the third party beneficiary claimants requires the holding that the intention to make the claimants third party donee beneficiaries was so clearly within the contemplation of the contracting parties that they deemed it unnecessary to express it and, therefore, specifically omitted to express it. That holding would be at variance with the language used in, and the circumstances attending the execution of, the agreement.

In view of the foregoing, the hospital district and its classes of residents are only incidental beneficiaries of the agreement reached between Suthers and the Scholarship Fund and, consequently, they have no right of action for a breach of the agreement. Accordingly, Suthers’ points three through six are sustained. His judicial admission of his liability for, and his willingness to pay, the judgment rendered against him in favor of the Scholarship Fund has mooted his remaining points. For this reason, no opinion is expressed about either the merits of those points or the complaints contained therein concerning the measure of damages applied in favor of the third party beneficiary claimants or the validity of the garnishment proceedings.

That portion of the judgment rendered against Neal K. Suthers, M. D., and in favor of the Bulah Peery Memorial Scholarship Fund, Inc., is affirmed. That portion of the judgment rendered against Neal K. Suth-ers, M. D., and in favor of the Booker Hospital District and the subclass of resident taxpayers and in favor of the residents of the Booker Hospital District is reversed, and judgment is here rendered that the Booker Hospital District and its classes of residents take nothing by virtue of the causes of action asserted by them. Costs are assessed against Neal K. Suthers, M. D. Rule 435, Texas Rules of Civil Procedure.

ROBINSON, Justice

(concurring).

I agree that neither the Booker Hospital District and the subclass of its resident taxpayers nor the residents of the Booker Hospital District are third party beneficiaries of the written scholarship agreement executed in June, 1966, between the Bulah Peery Memorial Scholarship Fund, Inc. and Neal K. Suthers, and that the portion of the trial court judgment which awarded the plaintiff hospital district and its resident taxpayers the sum of $110,000 for loss of market value of its clinic and awarded the plaintiff residents of the hospital district the sum of $1,000 for loss of the value of Dr. Suthers’ medical services should be reversed and judgment here rendered denying recovery to those plaintiffs.

The only parties to the contract in question were the Bulah Peery Memorial Scholarship Fund, Inc. and Neal K. Suthers. This written contract provided that the scholarship fund would furnish Suthers with a monthly scholarship of $200 per month while he was in medical school for a period not to exceed four years. Suthers’ obligations in return were spelled out in plain and unambiguous language.

In the event reasonably adequate medical and clinical facilities including equipment, but not necessarily to include a hospital, were not furnished in Booker, Suthers’ obligation was expressly limited to repayment of the funds advanced. However, if the facilities were constructed, Suthers undertook the following express obligations under three different groups of contingencies:

(1) If Suthers failed to complete medical school or failed to get a license to practice medicine or failed to move to Booker and practice medicine for as long as five years, Suthers was to repay the scholarship fund the sums advanced with 7% interest plus 50% of the funds advanced as penalty.

(2) If Suthers practiced medicine in Booker for more than five years, but less than ten years, he was to repay the sums advanced with 7% interest but without penalty.

(3)If Suthers practiced medicine in Booker for ten years, he was not obligated to repay the sums advanced.

There is no language in the contract to indicate that Suthers undertook any obligation other than to the plaintiff Scholarship Fund. The language limiting Suthers’ liability in the event a hospital district should not be created and medical facilities should not be constructed cannot reasonably be construed to extend his liability to a guarantee of the markét value of whatever facility (perhaps to include a hospital) a hospital district, if formed, might decide to construct. There is nothing in the record to show either that Suthers would have signed a contract so obligating him to the plaintiff Hospital District or that such an obligation was contemplated by any of the parties to the contract at the time the contract was executed.

Moreover, even if the hospital district itself were a party to the contract, the residents of the district would not be third party beneficiaries of the contract. Nothing in the contract suggests a duty on the part of Suthers to make reparation to individual residents of the Booker Hospital District for damages incurred by the loss of his medical services should he fail to practice there. The situation presented is analogous to that in House v. Houston Water Works Co., 88 Tex. 233, 31 S.W. 179 (1895), wherein the Supreme Court held that the citizens of the community could not recover for loss of property caused by the defendant company’s failure to satisfy its contract to maintain water pressure at fire hydrants.

See also Moch Co. v. Rensselaer Water Co., 247 N.Y. 160, 159 N.E. 896 (1928), holding that a property owner cannot hold one who has contracted to supply a municipality with water for fire protection liable for destruction of his property by fire because of breach of such agreement unless the intention that the contractor be liable to the individual members of the public appears in the contract. The opinion by Justice Cardozo contains the following language:

“. . . The field of obligation would be expanded beyond reasonable limits if less than this were to be demanded as a condition of liability. A promisor undertakes to supply fuel for heating a public building. He is not liable for breach of contract to a visitor who finds the building without fuel, and thus contracts a cold. The list of illustrations can be indefinitely extended. The carrier of the mails under contract with the government is not answerable to the merchant who has lost the benefit of a bargain through negligent delay. The householder is without a remedy against manufacturers of hose and engines, though prompt performance of their contracts would have stayed the ravages of fire. ‘The law does not spread its protection so far.’ Robins Dry Dock & Repair Co. v. Flint, 275 U.S. 303, 48 S.Ct. 134, 72 L.Ed. 290.”

The opinion also states:

“. . .A promisor will not be deemed to have had in mind the assumption of a risk so overwhelming for any trivial reward.”

Prom a reading of the record of the testimony in the trial court, it appears that the problem before us developed not out of Suthers’ contract with the Scholarship Fund in June of 1966, but out of happenings six years later in 1972 and 1973. At that time one election to create a hospital district in Booker had already failed. The record shows that, after assurance by Suth-ers that he did intend to come to Booker to practice medicine, a second election was held creating the Booker Hospital District and was followed by an election approving a bond issue. It also shows that the clinic in question was constructed to meet Suth-ers’ insistence on a “first class facility.” No written contract for use of the facility was ever executed between the Booker Hospital District and Suthers and there was no agreement to execute one. The rent to be paid by Suthers for use of the facility was never agreed upon and, so far as the record shows, was not discussed, although the representatives of the hospital district, but apparently not Suthers, contemplated a rental charge after an undetermined period.

Suthers did in fact move to Booker, buy a home there, and practice medicine in Booker for a period of five weeks after the clinic was completed in March, 1974. There is ample evidence that Suthers’ representation that he was going to return to Booker and his insistence on a first class medical facility were made in good faith and the jury refused to find to the contrary. Whatever moral obligation Dr. Suthers may have incurred to the people of Booker as a result of negotiations .in 1972 and 1973, plaintiffs have not shown that such obligation or his statements then created a right of recovery enforceable by the courts of this State.

Recovery under the terms of the contract of 1966 upon Suthers’ failure to practice medicine in Booker for at least five years is limited to the funds advanced plus 7% interest plus 50% penalty. Plaintiff Scholarship Fund does not seek to recover the penalty of 50% of the funds advanced. Therefore, the validity of the penalty provision is not before us.

We do not reach appellant’s points of error challenging the propriety of the measure of damages which formed the basis of the recovery in the trial court by the Hospital District and the residents of Booker.

I concur in the opinion that the judgment of the trial court insofar as it awards the Bulah Peery Memorial Scholarship Fund, Inc. a recovery of the amounts advanced plus 7% interest should be affirmed and that the judgment for Booker Hospital District and the subclass of resident taxpayers and for the residents of the Booker Hospital District should be reversed and judgment here rendered that those plaintiffs take nothing.

ELLIS, Chief Justice

(dissenting).

I respectfully dissent from that portion of the majority opinion denying recovery to (1) Booker Hospital District and the subclass of resident taxpayers thereof and (2) the class of residents of the District. I concur with the result reached in the remainder of the majority opinion.

As indicated in the majority opinion, a basic matter for determination is whether the plaintiffs, other than the Scholarship Fund, Inc., are third party beneficiaries. It is my opinion that, as a matter of law, Booker Hospital District and the class and subclass of its residents are third party beneficiaries of Suthers’ contract with the Scholarship Fund.

I. STANDING TO SUE

I have reached my conclusions regarding this matter after considering the written contract itself and evaluating the circumstances surrounding its execution, as well as the acts and statements of the parties subsequent to the execution of the contract. I have concluded that the contracting parties intended that these plaintiffs directly benefit from their contract and that they have standing to sue.

Language of the Contract

In my view, the scholarship agreement clearly indicates that the citizens of Booker Hospital District were intended to be benefited by the contract. Although this intent is manifested throughout the contract, several portions are particularly revealing.

(a)Initially, the parties captioned their contract a Scholarship Agreement.” The use of the term “scholarship” instead of “loan” in the caption characterizes the nature of the arrangement, and is persuasive of an overriding purpose and intent to achieve the ultimate goal of having Suthers come as a licensed physician to practice medicine in Booker for at least ten years. Otherwise, under the terms of the agreement, the “scholarship” would have to be repaid. If Suthers fulfilled his obligation, the sum furnished would be regarded as a grant for a scholarship rather than a mere loan to be repaid. The primary objective of the project, as manifested by the caption as well as the entire agreement, was not to assist in Suthers’ education or to generate a profit from a loan to Suthers. The primary objective was to make Suthers’ services available to the community for at least ten years. Only in this event would the Scholarship Fund, Inc. become more than a mere lending agency and grant a “scholarship” to Suthers.

(b) The preamble of the agreement stated:

“. . . the Bulah Peery Memorial Scholarship Fund, Inc. ... is agreeable to furnishing a scholarship to Neal K. Suthers . . . who in turn desires to come to Booker, Texas, upon completion of all educational and other requirements, and practice medicine as a licensed physician. . . .” (emphasis added)

This language expresses the parties’ clear intent that Suthers should come to practice in Booker.

(c) The entire second paragraph of the scholarship agreement represents Suthers’ unambiguous promise to practice in Booker for at least ten years:

“II.
In consideration of scholarship agreement, Student agrees to use his best efforts, talent and ability to complete all of the necessary requirements to secure a license to practice medicine in the State of Texas, and agrees to thereafter immediately move to Booker, Texas, and practice medicine as a licensed physician for a period of not less than ten (10) years.”

(d) Paragraph III expresses the parties’ expectation that medical facilities would be built “so that adequate medical attention may be furnished the citizens of Booker and the surrounding vicinity.” (emphasis added).

(e) Paragraph IV provides an economic inducement for Suthers to fulfill his promise to practice for ten years in Booker.

The other paragraphs of the agreement are not pertinent to a determination of the matter here under consideration. In my view, however, the language analyzed above illustrates that the entire agreement was calculated to obligate Suthers contractually to practice in Booker for ten years. Only the citizens of Booker could benefit from Suthers’ promise to practice in Booker, and it is obvious that the contract was intended to benefit them. Suthers’ obligation (set forth in Paragraph II) was not merely “another option” under a loan agreement. On the contrary, the agreement reflects the parties’ intent that “adequate medical attention may be furnished the citizens of Booker and the surrounding vicinity.” This intent becomes even more obvious when the circumstances surrounding the execution of the agreement are examined.

Circumstances

The record reveals that the efforts of the Scholarship Fund in contractually binding Suthers to come to Booker was but one part of a fully integrated plan to make medical services available to the residents of the Booker Hospital District. At the time of contracting, all parties were aware that the Booker community had not had a physician practice in it for approximately twenty-five years. Further, the Booker Booster Club (akin to a Chamber of Commerce) had been making vigorous efforts to secure medical services for Booker for many years. One of these efforts involved channeling community funds into the Bulah Peery Memorial Scholarship Fund so that Suthers could be educated. The Booster Club gave individuals in the Booker community the opportunity to contribute to the Fund. The negotiations with Suthers leading up to the 1966 agreement were conducted by members of the Booster Club. It is apparent that at the time the contract was executed, all parties were aware of the community’s involvement in the effort to secure medical services for the Booker community.

Because the rights of third parties are involved here, the law permits us to consider not only the circumstances surrounding the contract’s execution, but also acts and statements of the parties subsequent to the execution of the contract in determining their intentions. This is true even though the contract was unambiguous on its face. Allison v. Campbell, 117 Tex. 277, 298 S.W. 523 (Tex.Comm’n App.1927, opinion adopted); Guardian Financial Corp. v. Rollins, 312 S.W.2d 553 (Tex.Civ.App.-Beaumont 1958, writ ref’d n. r. e.). See also, Ryan v. Kent, 36 S.W.2d 1007 (Tex.Comm’n App.1931, jdgmt. adopted); 13 Tex.Jur.2d Contracts § 126, at 297. In this case, the conduct of the parties subsequent to the contract’s execution is entirely consistent with our conclusion that the citizens of Booker were intended to benefit from the contract with Suthers. The citizens, according to the plan set forth in the scholarship agreement, activated the Hospital District, voted bonds and built a $140,000 clinic. Furthermore, Suthers’ actions indicate that his promise to practice in Booker was made for the citizens’ benefit. Before the clinic was built, he insisted upon it being a “first class” facility. With anything less, he apparently considered that he could not adequately attend to the community’s medical needs. When the entire record is reviewed, it is apparent that the Scholarship Agreement was only one part of a community project designed to accomplish one goal — providing medical services for the Booker community. From these circumstances and from the written words of the Scholarship Agreement itself, I have concluded that the parties to the contract intended to benefit directly the citizens of the Booker community.

The contracting parties’ intent to benefit the residents of the Booker Hospital District makes those residents third party beneficiaries of the contract. Casey v. Watts, 130 S.W.2d 396 (Tex.Civ.App.-Waco 1939, writ dism’d jdgmt. cor.). See also, Banker v. Breaux, 133 Tex. 183, 128 S.W.2d 23 (Tex.Comm’n App.1939, opinion adopted). Suthers has argued, however, that the plaintiffs lack standing to maintain this suit because they were intended to benefit only incidentally from the Scholarship Agreement. I disagree.

If a contract is executed primarily to benefit a third party, that party has standing to sue on that contract. Republic Nat’l Bank v. Nat’l Bankers Life Ins. Co., 427 S.W.2d 76 (Tex.Civ.App.-Dallas 1968, writ ref’d n. r. e.); Cooley v. Cash, 207 S.W.2d 436 (Tex.Civ.App.-Fort Worth 1947, no writ). Accord Quilter v. Wendland, 403 S.W.2d 335 (Tex.1966); Taggart v. Crews, 521 S.W.2d 703 (Tex.Civ.App.-San Antonio 1975, no writ). Cf. Banker v. Breaux, supra; Citizens Nat’l Bank v. Texas & P. Ry. Co., 136 Tex. 333, 150 S.W.2d 1003 (1941). I have concluded that this contract was executed primarily to benefit the citizens of the Booker Hospital District. The citizens were the only ones who could benefit from the doctor’s promise to practice in Booker for ten years; the Bulah Peery Memorial Scholarship Fund received no benefit from that promise. This" fact, coupled with the notion that the contract was but one part of a larger effort to obtain medical services for Booker, supports the conclusion that these plaintiffs have standing to sue under the Scholarship Agreement.

The majority opinion, however, sets forth the proposition that in order for a third party beneficiary to have standing to sue, such party must be either a donee or creditor beneficiary and not merely an incidental beneficiary. Although the distinction between the categories of beneficiaries is not always clearly demonstrated, it is my opinion that, in this case, the furnishing of the scholarship grant by the Scholarship Fund, Inc., as a means for assisting in the education of the doctor, to the end that a licensed physician would be available to practice medicine in the Booker Hospital District, operates to constitute the Booker Hospital District and its class and subclass of residents as donee beneficiaries of the Scholarship Fund project. As previously stated, the project was set up as a means to directly benefit the Booker community by making medical services available to it; the primary beneficiary was not the Scholarship Fund. Thus, the benefits bestowed were for the direct and not incidental benefits of the community and its residents. Under this arrangement a new and beneficial legal relationship was created between the third party beneficiaries and the promissor. In this connection see Cumis Ins. Soc., Inc. v. Republic Nat’l Bank, 480 S.W.2d 762 (Tex.Civ.App.-Dallas 1972, writ ref’d n. r. e.). Additionally, it is well recognized “that a third party who would be benefited by performance of a contractual promise may enforce that promise by suit if he is a donee beneficiary . . .” Id. at 766. Also, see Republic Nat’l Bank v. Nat’l Bankers Life Ins. Co., supra; Restatement of Contracts §§ 133, 147 (1932); 2 S. Williston Treatise on the Law of Contracts § 356 (3d ed. 1959). In view of the foregoing, it is my opinion that the Hospital District and its residents are the direct and not merely incidental beneficiaries of the contract by the Scholarship Fund with Suthers and have standing to sue for damages arising out of the breach of the contract made for their direct benefit.

II. DAMAGES

My view on the standing to sue issue has prompted a consideration of Suthers’ arguments concerning the damages awarded in this case.

Preliminarily, Suthers has argued that Paragraph IY of the Agreement provides for liquidated damages. I agree with the plaintiffs that Suthers waived this argument under Tex.R.Civ.P. 279 and that in any event the provision in Paragraph IV constitutes only an unenforceable penalty. Consequently, actual damages is the appropriate basis for recovery.

Foreseeability of Damages

Suthers has contended that the consequential damages awarded the Hospital District and the class of its citizens were unforeseeable and too remote to be recoverable. I do not agree.

To award consequential damages in a contract case, the fact of injury from a breach must be foreseeable at the time of contracting. If the fact of injury is foreseeable at the time of contracting, it makes no difference that the extent (or amount) of damage is not. Nat’l Bank of Cleburne v. M. M. Pittman Roller Mill, 265 S.W. 1024 (Tex.Comm’n App.1924, holding approved); Restatement of Contracts § 330 (1932). I do not believe that in 1966 Suthers foresaw that he would be liable for the specific sum of $110,000. I do believe that the contract itself and the circumstances surrounding its execution all indicate that in 1966 Suthers could foresee that the Hospital District would be injured if he breached his promise to the Scholarship Fund. The parties contemplated that a hospital district would be created; they contemplated that a clinic would be built. Those facts are recited in the written contract which they executed. Suthers also knew that Booker had been trying for almost twenty-five years to get a doctor. From all of these facts, it is reasonable to conclude that Suthers could foresee that the Hospital District would be injured if he breached his contract with the Scholarship Fund. At the trial he admitted that he had considered the possibility that “things would turn out just the way they did,” before he entered into the contract. He knew that if he breached the Hospital District would be left with a new clinic, the bonded indebtedness, no doctor, and little chance of getting one. I believe it has been established that the injury to the Hospital District was foreseeable in 1966. •

Under the same reasoning, the damage to the class of residents of the Hospital District was also foreseeable. The record reveals that Suthers knew in 1966 that residents of Booker were to be benefited by his contract with the Scholarship Fund. The entire arrangement was calculated to benefit them by virtue of the availability of medical services in the community. There is no indication in the record that the services were to be furnished free, but the basic concern was local availability of medical services. It follows then, that in 1966 Suth-ers could foresee that Booker’s residents would be injured if he breached his contract with the Scholarship Fund. Under the authorities cited in the preceding paragraph, the fact that he foresaw the fact of injury is enough to hold him liable for damages; the amount of damages was for the jury to decide from the evidence produced.

Measure of Damages

Suthers has contended that the trial court incorrectly measured the damages to the Hospital District.

In response to Suthers’ contentions, it should be noted that the “universal rule for measuring damages for the breach of a contract is just compensation for the loss or damage actually sustained.” Stewart v. Basey, 150 Tex. 666, 245 S.W.2d 484, 486 (1952). In this case, as a third party beneficiary, the Hospital District was entitled to rely on Suthers’ promise that he would come to Booker. See Krueger v. Williams, 163 Tex. 545, 359 S.W.2d 48 (Tex.1962). In reliance upon Suthers’ promise to come to Booker if a clinic was built, the Hospital District spent $140,000 on a new clinic. The jury found that such sum represented the fair market value prior to Suthers’ vacation of the clinic. Because Suthers failed to perform, the clinic is worth, according to the jury’s findings, only $30,000. The difference between what was spent and the value of the clinic in its present form accurately reflects the extent of damages to the Hospital District. Damages awarded for injuries sustained in reliance upon a contractual promise should compensate the non-breaching party to the extent that he was damaged by his reliance. Manney v. Burgess, 346 S.W.2d 937 (Tex.Civ.App.-Fort Worth 1961, no writ); C. McCormick, Handbook on the Law of Damages 582-86 (1935). See also, Stewart v. Basey, supra. In the light of the jury’s findings, the award of $110,000 to the Hospital District and its resident taxpayers should be sustained.

Furthermore, the jury finding as to the market value of the clinic after the breach is supported by competent evidence. We note the testimony of James H. Godfrey, who was in the real estate business and an associate member of a real estate appraisal society. Mr. Godfrey described the floor plan and furnishings of the clinic and detailed the clinic’s technical and laboratory equipment. He stated that $140,000 was a fair cost allocation to the clinic and that such dollar figure was, in his opinion, the reasonable cash market value of the clinic occupied by a practicing physician in March, 1974. Mr. Godfrey pointed out that the clinic was a special purpose facility and that it was built to be used as a doctor’s clinic. The clinic floors were concrete slab in which the plumbing was set. There were three half baths and one three-quarters bath, but no full baths. Lead sheeting lined the x-ray area. A hallway through the center of the clinic gave access to patient rooms, a pharmacy, an emergency room and the x-ray room. The evidence in the trial shows that considerable effort by the Hospital District to acquire another doctor to replace Doctor Suthers and use the clinic for medical services in the community had been unsuccessful. In connection with the jury’s answer to this damage issue involving the reduced value of the clinic by reason of the doctor’s breach, (along with other damage issues) it is significant that the court instructed the jury as follows:

“. . . you are instructed that you may consider the prospect, if any, of a medical doctor moving to, and practicing medicine in, Booker for any period during the ten years provided for in the Scholarship Agreement.”

Pursuant to a question predicated upon an assumption (supported by evidence of probative force) that it was difficult to get a medical doctor to practice medicine in Booker, Texas, Mr. Godfrey stated that in his opinion the reasonable cash market value of the facility, unoccupied by a practicing physician, was $30,000. Suthers offered no testimony to dispute or offset this appraisal. The weight and credibility of the testimony submitted was for the jury to determine. In my opinion there is sufficient evidence of probative force to support the jury’s finding of the market value of the clinic after Suthers’ breach. The $110,-000 awarded for the damages accruing to the Hospital District and the taxpaying residents of the District represents their tangible monetary detriment by reason of reliance on Suthers’ promise and his failure to practice in Booker in accordance with the agreement.

Suthers has not challenged the sufficiency of the evidence presented at the trial which supports the $1,000 recovery by the residents of Booker Hospital District. He has argued only that these damages were not foreseeable. The reasons for concluding that damages were foreseeable have been previously set forth. Therefore, I would sustain the award.

For the reasons above stated, I would hold that the Booker Hospital District and the subclass of resident taxpayers thereof and the class of residents of the District are third party beneficiaries with standing to bring this suit and that the damages found by the jury should be-sustained. Accordingly, the judgment of the trial court should be affirmed.


source: Caselaw Access Project

author: OSBORN, Justice.

license: Public Domain

text:
    B. MIAL, Appellant, v. R. MIAL, Appellee.
    No. 6497.
    Court of Civil Appeals of Texas, El Paso.
    Nov. 10, 1976.

      William Pate, El Paso, for appellant.
    Sam Blackham, El Paso, for appellee.
   OPINION

OSBORN, Justice.

This appeal is from a divorce decree which divided the community property, named Appellant, Mrs. Mial, managing conservator of the parties’ two sons, named Appellee, Mr. Mial, possessory conservator with visitation rights, and fixed an obligation for monthly child support until each child is eighteen years old. We affirm.

The attorney representing the Appellant on the appeal only has filed an excellent brief presenting two points of error. First, it is contended that the trial Court erred in awarding Appellant only 20% of the vested military retirement benefits of the Appel-lee, and in delaying the payment of such benefits until the Appellee retires from the Army. It is next contended that the trial Court erred in limiting the amount of the monthly child support payments to $200.00 per child for the two minor hemophiliac sons and in limiting such payments until each child becomes eighteen years old.

The case was tried to the Court without a jury. The testimony was not taken by a court reporter and we have no statement of facts. The trial Court complied with a request for findings of fact and conclusions of law, and they were timely filed after the judgment was entered. In considering the two points of error under the record before us, the rule is that “[w]hen specific findings of fact and conclusions of law are filed, and no statement of facts is brought forward, the findings of fact are binding on the parties and are accepted as justified by the evidence. * * The correctness of the legal conclusions from the facts found will be reviewed.” 4 McDonald, Texas Civil Practice, Sec. 16.10 at 29-30 (Rev.Vol.1971).

Justice Keith, in Ives v. Watson, 521 S.W.2d 930 (Tex.Civ.App., Beaumont 1975, writ ref’d n. r. e.), set forth the basic rules applicable to an appeal where no statement of facts is filed, but where the trial Court filed findings of fact and conclusions of law following a nonjury trial. He said:

“In presenting the nature of the case and the contentions of the parties, we are compelled to rely exclusively upon the pleadings and the findings of fact made by the trial court. In so doing, we will bear in mind several rules enunciated recently in Austin Paving Co. v. Cimarron Construction, Inc., 511 S.W.2d 417, 419 (Tex.Civ.App., Austin 1974, no writ): (a) If the findings of fact are susceptible of different constructions, they will be construed to be in harmony with the judgment and to support it; (b) every presumption will be indulged in favor of the trial court’s findings and judgment. Moreover, as said in Arlington Bank & Trust v. Nowell Motors, Inc., 511 S.W.2d 415, 416 (Tex.Civ.App., Fort Worth 1974, no writ), since the defendant requested the trial court to file such findings, and did not request any additional findings, the findings of the trial court are binding on the parties and this court. Additionally, defendant is powerless to make a viable complaint as to the legal sufficiency of the evidence to support the judgment in the absence of a statement of facts. Id.
“However, even without a statement of facts, it is our duty to review the correctness of the legal conclusions drawn from the facts actually found by the trial court. Dutchover v. Dutchover, 334 S.W.2d 569, 571 (Tex.Civ.App., El Paso 1960, no writ); 4 McDonald, Texas Civil Practice Sec. 16.10 at 30 (Rev.Vol.1971).”

Having reviewed the facts as found by the trial Court, we cannot say that the legal conclusions drawn therefrom are erroneous. There is no finding as to how many of the sixteen years the parties have been married they lived in a community property state. Just because the parties were married sixteen of the twenty-one years Appellee has been in the service would not automatically entitle Appellant to a 16/2ist interest in her husband’s retirement benefits. The Court found that the parties “own various items of community property, both real and personal and are indebted in varying amounts.” Thus, we note that the retirement pay was only one' of several items to be considered in dividing the community property. The Court is not required to divide each asset equally. It is not even required to divide each asset. The Court is only required to make a division of all the community property in a manner that is just and right, having due regard for the rights of each party and the children of the marriage. Tex.Family Code Ann. See. 3.63.

In addition to the provision requiring Appellee to pay child support of $200.00 per month per child, approximately $2,750.00 was placed in trust for the benefit of the two boys. The Court, having made no finding that the boys required continuous care and personal supervision because of physical disability and will not be able to support themselves, was not permitted to order support beyond their eighteenth birthdays. Tex.Family Code Ann. Sec. 14.-05.

No statement of facts having been filed, we cannot say that the trial Court abused its discretion or that its judgment is erroneous. Dobbs v. Dobbs, 449 S.W.2d 119 (Tex.Civ.App., Tyler 1969, no writ). Points of error one and two are overruled. The judgment of the trial Court is affirmed.


author: WARD, Justice.

text:
    Richard M. BURGESS, Jr., Appellant, v. ANCILLIARY ACCEPTANCE CORPORATION et al., Appellees.
    No. 6523.
    Court of Civil Appeals of Texas, El Paso.
    Nov. 10, 1976.
    Rehearing Denied Dec. 1, 1976.

      Gilliland & McNeel, Albert M. McNeel, Jr., San Antonio, H. R. Hohenberger, Houston, for appellant.
    LeLaurin, Adams, Eichelbaum & Sanders, P. C., Arch G. Adams, John S. Warren, San Antonio, for appellees.
   OPINION

WARD, Justice.

This is an appeal from an order dismissing the Plaintiff’s suit where the special appearance of two foreign corporate Defendants contested jurisdiction under the provisions of Rule 120a, Tex.R.Civ.P. The question presented is whether the evidence developed at the hearing can take the place of the necessary allegations as to the mode of service of process which are required to be in the Plaintiff’s petition under Article 2031b, Sec. 3, Tex.Rev.Civ.Stat.Ann. We affirm the judgment of dismissal.

This is a suit for usury. Dr. Richard M. Burgess alleged that on January 25, 1973, he borrowed $20,000.00 from the Defendant, Ancilliary Acceptance Corporation, an Arizona corporation, and executed a series of instruments including a sale and a leaseback of his office furniture whereunder over a five-year period he agreed to lease the property for the sum of $41,250.00; that the lease was assigned on the same day by Ancilliary Acceptance to the Defendant, U. S. Thrift Leasing Corporation, an Arizona corporation, and that the lease procedure was a fraud to avoid the usury laws of Texas; that thereafter, Dr. Burgess paid to U. S. Thrift Leasing Corporation 18 payments of $687.50, until September, 1974, when he quit paying and brought suit for usury under Article 5069-1.06(2), Tex.Rev.Civ.Stat.Ann. In his petition, the Plaintiff alleged that both foreign corporations were doing business in the State of Texas, they did not have any resident agent, they did not obtain a certificate of authority to do business in the State of Texas, and service of process should be had on the Secretary of State of the State of Texas in accordance with Article 2031b.

Each Defendant thereafter appeared by special appearance under Rule 120a and alleged that they were not amenable to process of the Texas Court as each was an Arizona corporation, and each had been served with citation in the cause by service upon the Secretary of State of Texas without the allegation of sufficient jurisdictional facts, and that each did not have with regard to this cause those minimum contacts with the State of Texas which would constitutionally support jurisdiction over each Defendant. After the hearing, the contest was sustained. Upon request, findings of fact and conclusions of law were filed.

The first point of the Appellant is to the effect that the trial Court committed error in basing its order of dismissal on defects in the pleadings, as the requirements of Article 2031b were met by the evidence and admissions of the Defendants at the hearing. The Appellant concedes that his pleadings were defective in that they failed to allege specifically that the Defendants did not maintain a regular place of business in the State of Texas, and that the defect in the allegations would prohibit a default judgment. McKanna v. Edgar, 388 S.W.2d 927 (Tex.1965). At the hearing, it was developed that each Defendant had no employee in the State of Texas, maintained no regular place of business in the State, had no resident or designated agent in the State, and had no certificate of authority to do business in the State. The Appellant argues that having proved as a fact all necessary requisites for service upon the Secretary of State, and the Defendants not having excepted to the petition, Rule 90, Tex.R.Civ.P., should apply and the trial Court should have overruled the plea. This contention is unsound as the motion pointed out the defects, the motion was sustained, and the cause was dismissed. Rule 90 has no application. To adopt the rule proposed by the Appellant would destroy the purpose of the special appearance and would penalize the diligent by favoring the defaulter who could upon appeal secure a reversal. This Court had already held that the lack of the necessary affirmative allegation under Article 2031b was reason enough to sustain the motion objecting to the process under Rule 120a. Curry v. Dell Publishing Company, 438 S.W.2d 887 (Tex.Civ.App., El Paso 1969, writ ref’d n. r. e.). While not specifically passed on, the facts were established in that hearing which justified the service on the Secretary of State. The Appellant’s first point is overruled.

The trial Court’s action being correct in sustaining the Appellees’ complaints regarding the defective pleading on the Rule 120a hearing, we do not reach the Appellant’s second point which discusses the question of whether or not the Appellees were “doing business” in Texas. The judgment of the trial Court is affirmed.


text:
    DEALER SERVICE PLAN, INC., Appellant, v. Benny R. CHABARRIA, Appellee.
    No. 6548.
    Court of Civil Appeals of Texas, El Paso.
    Nov. 10, 1976.

      Oster & Kaufman, Stanley M. Kaufman, Aaron S. Kaufman, Herbert Garon, Jr., Dallas, for appellant.
    Nisbet & Thompson, Robert S. Thompson, San Antonio, McMahon, Cox, Todd, Tidwell & Locke, Jack Q. Tidwell, Shafer, Gilliland, Davis, Bunton & McCollum, Inc., Stephen L. Brannan, Odessa, for appellee.
   OPINION

OSBORN, Justice.

This is a venue case. The trial Court overruled the Appellant’s plea of privilege. We affirm.

The Appellee filed suit in the District Court of Ector County, seeking to recover damages and attorney’s fees under the consumer credit provisions of the Texas Statutes. In particular, recovery is sought under Article 5069-6.01, et seq., 5069 — 7.01, et seq., and 5069-8.01, et seq., Tex.Rev.Civ. Stat.Ann. The suit alleged that in 1973, the Appellee purchased a mobile home on credit in Ector County. The suit named as Defendants the seller, a bank as financer, and the Appellant herein as financer-bro-ker.

The Appellant filed a plea of privilege in which it alleged that it was a foreign corporation incorporated under the laws of the State of Florida, and having its principal place of business in Tampa, Florida, and that its registered agent for service was the C.T. Corporation System in Dallas, Texas. The plea then states:

“Defendant is asserting venue herein under and by virtue of the provisions of Subdivision (27) of Article 1995, V.A.T.S., and by doing so is asserting his privilege to have venue of this suit transferred to Dallas County, the place where such company has an agency or representative.”

The Appellee filed a controverting plea asserting venue in Ector County under the provisions of Subdivision 27 of Article 1995, Tex.Rev.Civ.Stat.Ann., and later filed an amended controverting plea asserting venue under both Subdivision 4 and Subdivision 27 of Article 1995, Tex.Rev.Civ.Stat.Ann.

The Texas venue statute, Article 1995, Tex.Rev.Civ.Stat.Ann., initially provides that “[n]o person who is an inhabitant of this State shall be sued out of the county in which he has his domicile * * *.” Then follow certain exceptions under which a plaintiff may sue a defendant in a county other than that of the defendant’s domicile. Domicile, as used in the venue statute, is generally construed as synonymous with residence. Snyder v. Pitts, 150 Tex. 407, 241 S.W.2d 136 (1951).

In our case, there is no statement in the plea of privilege as to where the Defendant has its residence in Texas, but only a statement that it has an agency or representative in Dallas County. That is not sufficient. In Aviation Credit Corporation of New York v. University Aerial Service Corporation, 59 S.W.2d 870 (Tex.Civ.App.-Eastland 1933, writ dism’d), the Court considered a somewhat similar pleading in the case of a foreign corporation, and said:

“ * * * It alleged therein that it was domiciled in, and a resident of, New York State. Nowhere did it allege that it also had a domicile in, or was a resident of, the state of Texas. Venue was sought to be transferred to Bexar county on an allegation that appellant had an agent in that county in the person of James B. Stafford. Article 1995, R.S.1925, provides: ‘No person who is an inhabitant of this State shall be sued out of the county in which he has his domicile except in the following cases. * * * ’ Follow then certain exceptions not necessary here to mention. Article 2007, R.S.1925, provides: ‘A plea of privilege to be sued in the county of one’s residence shall be sufficient if * * * shall state the county of his residence at the time of such plea.’ These statutes, by their express terms, are available only to inhabitants of this state, and the only county to which a cause could be transferred upon a plea of privilege is the county in this state of defendant’s residence or domicile. There is no statutory authority for transferring a cause by plea of privilege to the county where the defendant has an agent merely, but the whole legislation has to do with the right of a defendant to be sued in the county in which he has his domicile and to protect that right by having eases transferred to that county. This does not at all mean that a foreign corporation could not avail itself of the benefits of these statutes, provided it had established its domicile in this state. For the purpose of venue a party may have more than one residence or domicile, and, notwithstanding the appellant had its domicile in the state of New York, it might have also had one in Texas, but the plea of privilege wholly failed to allege any domicile in Texas, and that omission rendered it fatally defective. * * * ”

The Appellant in this case seems to have lost sight of the fact that the Subdivisions under Article 1995 are for the use of plaintiff in maintaining venue outside of the county in which the defendant has its residence, and such Subdivisions are not for the use of a defendant in seeking to have the case moved from the county in which suit was filed by the plaintiff. The one exception is a Subdivision which has a mandatory provision that suit “must” be brought in a particular county, such as Subdivisions 14 and 18. The rule is stated in 1 McDonald, Texas Civil Practice, Sec. 4.03.2, as follows:

“ * * * One having no residence in Texas, or a foreign entity without a registered office or place of business in the State, has no right to be sued in any particular county, unless the venue of the action is controlled by some mandatory provision of the statute.”

This was the holding by the Court in Delaporte v. Currey, 486 S.W.2d 114 (Tex.Civ.App.-Waco 1972, no writ), where the Court said:

“Article 1995, and Rule 86, Texas Rules of Civil Procedure, provide that a defendant ‘who is an inhabitant of this State’ may, by the filing of a proper plea of privilege, (1) require that any suit against him be tried in the county of his residence unless plaintiff’s case falls within one of the exceptions enumerated in Article 1995; or (2) require that the suit be tried in a county in which venue of the case is made mandatory by statute. Shell Petroleum Corporation v. Grays, 122 Tex. 491, 62 S.W.2d 113, 115 (1933); Jefferies v. Dunklin, 131 Tex. 289, 115 S.W.2d 391, 393 (1938); Tunstill v. Scott, 138 Tex. 425, 160 S.W.2d 65, 70 (1942).
“Of course, the statutory privilege accorded a resident defendant by Article 1995 to be sued in the county of his domicile is not available to a nonresident defendant. Peacock v. Bradshaw, 145 Tex. 68, 194 S.W.2d 551, 554 (1946). * * * "

The exact Subdivision relied upon by the Appellant was discussed by the Court in Mergenthaler Linotype Co. v. Herrmann, 211 S.W.2d 633 (Tex.Civ.App.-Fort Worth 1948, no writ). The Court in that case said:

“Section 27 refers to foreign corporations, which provisions are substantially the same as section 23. Exceptions to the venue- statute granting a plaintiff right to sue in another than county of defendant’s domicile were not enacted for the purpose of establishing citizenship by a defendant, therefore cannot be relied upon to support a plea of privilege by a defendant because it becomes immaterial whether or not defendant had an agent in Dallas County under the provisions of such exceptions as would give the plaintiff a right to sue in Dallas County, but defendant’s right to change venue on a plea of privilege depends entirely upon whether it has a residence in a county in Texas at the time the plea of privilege is filed. Appellant affirmatively pleads that it is a resident of New York and nowhere does it plead that it is a resident of Texas. Such pleadings constitute judicial admissions. It is the general rule that a corporation is an inhabitant of the state under whose law it is incorporated but that it has a residence wherever it conducts its ordinary business. * * * ” ******
“By reason of the fact that appellant failed to allege or prove that it maintained a residence in Texas, the judgment of the trial court in overruling its plea of privilege is affirmed.”

By its last point of error, the Appellant asserts that the trial Court erred in overruling its plea of privilege because the Appellee failed to timely file his controverting plea as required by Rule 86, Tex.R. Civ.P. Having previously concluded that the Appellant’s plea of privilege is fatally defective, the time of filing of the controverting plea would be immaterial. Nevertheless, we note that there is no evidence in the record as to when counsel for Appellee received the plea of privilege, and thus, we cannot determine the date on which the controverting plea was required to be filed. We also note that this issue was not raised at the trial level, and it has been waived. Mobile Comity Mutual Insurance Company v. Southern Agent Corporation, 619 S.W.2d 186 (Tex.Civ.App.-Houston [14th Dist.] 1975, no writ).

The Appellant’s three points of error are overruled. The order of the trial Court overruling the Appellant’s plea of privilege is affirmed.


author: MASSEY, Justice.

text:
    Opal CLARK et al., Appellants, v. HARRIS HOSPITAL, Appellee.
    No. 17806.
    Court of Civil Appeals of Texas, Fort Worth.
    Nov. 12, 1976.

      Steves, Morgan & Harper, and Sterling W. Steves, Fort Worth, for appellants.
    Wynn, Brown, McConnico, Mack, Renfro & Thompson, and Tom Renfro, Fort Worth, for appellee.
   OPINION

MASSEY, Justice.

A Mrs. Willie M. Mays, deceased, was the mother of Opal Clark, et al. On September 7, 1971, Mrs. Mays was admitted as a patient in Harris Hospital where she was treated by her physician. She sustained a fall on September 15, 1971. As result of the fall she sustained injuries, and from the complications ensuing she died on October 7, 1971.

Opal Clark, et al. brought suit against the hospital for damages resulting from negligent tort because there was failure to restrain Mrs. Mays in her bed by use of a “posey belt”. They alleged that Mrs. Mays either fell out of the bed and sustained her injuries or was thereby negligently permitted to climb out of the bed so that she afterward fell and sustained her injuries.

On trial the jury returned its answer “We do not” to the special issue inquiring whether the failure to restrain Mrs. Mays was negligence. On the issues upon damages there was no answer returned which would entitle plaintiffs to a judgment even if negligence on the part of the hospital had been found.

A take nothing judgment was rendered upon the verdict from which the plaintiffs appealed.

We affirm.

The sole point of error brought to this Court is complaint that on trial there was wrongful exclusion of evidence desired to be produced by plaintiffs. Such evidence, but for the exclusion would have shown that Mrs. Mays’ nurses at the hospital were from foreign countries and were not nurses licensed as such by the State of Texas. On the complaint made we have concluded that even if the exclusion was erroneous it became completely immaterial in view of the jury’s verdict and could in no event furnish an occasion to reverse the judgment.

The only issue in the case to which the complaint could have application would be the special issue in answer to which the jury declined to find negligence. According to plaintiffs the according of an affirmative answer to the special issue on negligence because of failure to properly restrain Mrs. Mays was compelled, or was established as a matter of law. If we assume the contention to be sound, and that the hospital’s failure was negligence per se the plaintiffs nevertheless must be deemed to have lost their case by the implied finding to support the judgment of the trial court to the unanswered conditionally submitted special issue upon proximate cause. There was waiver of right to have the jury answer such issue because there was no complaint because the proximate cause issue was not unconditionally submitted and where the contention is that there is negligence per se as a matter of law and the contention is sustainable there must be an insistence in the trial court that the proximate cause issue be unconditionally submitted. Strauss v. LaMark, 366 S.W.2d 555 (Tex.Sup., 1963); Webb v. Jorns, 530 S.W.2d 847, 854 (Tex.Civ.App., Fort Worth, 1975, writ ref., n. r. e.). In our opinion there was raised by the evidence a simple issue upon negligence; negligence per se because of the failure to restrain Mrs. Mays by “posey belt” was not established.

The complaint because of exclusion of plaintiffs’ proffered evidence that the hospital’s agent nurses to whom it had entrusted Mrs. Mays’ care were unlicensed by Texas law was based upon V.A.T.S., Title 71, “Health — Public”, Ch. 7, “Nurses”, Art. 4518, et seq.

Negligence, if any, in the hospital’s entrustment of the care of Mrs. Mays to these nurses would be material only if there was in addition some negligence on the part of the nurses which was the proximate cause of the event bringing about her injuries. So far as the jury in the case was concerned it proceeded to answer the special issue in the assumption that there was no want in qualification of the nurses. Measuring the degree of care given Mrs. Mays by the nurses as apparently licensed by Texas law the jury nevertheless found no negligence on their part. Obvious is it that the exclusion of evidence that the nurses were unlicensed was, even if erroneous, not such error as would be reasonably calculated to cause and did probably cause the jury to return an answer to the special issue other than the answer it would have returned had the evidence been admitted. Therefore the exclusion did not constitute reversible error by test of T.R.C.P. 434, Texas’ “harmless error rule”.

Even if there was negligent “en-trustment” of Mrs. Mays’ care to the nurses the fact would avail plaintiffs nothing. This is true whether such negligence was a matter of fact or as a matter of law. Development of the negligent entrustment doctrine has not enlarged the liability of a defendant so that it could be greater than a defendant’s liability because of an agent’s acts under the doctrine of respondeat superior. In every instance where there is imposition of vicarious liability it is a requirement that there be negligence of the agent or of the one to whom there has been negligent entrustment. Furthermore the negligence must amount to a proximate cause of the event resulting in injury. Such is true even where there had been negligent entrustment of a vehicle to one known to be an unlicensed operator. Mundy v. Pirie-Slaughter Motor Co., 146 Tex. 314, 206 S.W.2d 587 (1947). See also 20 Arkansas Law Review (1966), p. 101, “Negligent Entrustment, etc.”; Tri-State Truck and Equipment Co., Inc. v. Stauffer, 24 Md.App. 221, 330 A.2d 680 (Ct. Special Appeals of Maryland, 1975); 11 Trial Lawyers Forum, No. 2, October-December, 1976, p. 23, “Negligent entrustment revisited: developments”.

It being unnecessary to proper decision of the appeal we decline to consider whether the hospital entrustment of Mrs. Mays to the care of nurses who did not have a Texas license could amount to negligence per se.

There is, additionally, necessary af-firmance of the judgment because there was no jury finding entitling plaintiffs to any damages even if plaintiffs were able to present reversible error in the verdict and judgment as related to complaint of wrongful exclusion of evidence. Such excluded evidence did not have a relation to any issue on damages.

Judgment is affirmed.


author: CHADICK, Chief Justice.

text:
    CORPORATE PERSONNEL CONSULTANTS, Appellant, v. WYNN OIL COMPANY, INC., Appellee.
    No. 8402.
    Court of Civil Appeals of Texas, Texarkana,
    Nov. 16, 1976.

      Edith L. James, Dallas, for appellant.
    William Woodburn, Woodburn & Sullivan, Dallas, for appellee.
   CHADICK, Chief Justice.

This is a suit by an employment agency to collect a fee for services rendered in furnishing a job applicant, subsequently hired, to an employer. In a non-jury trial judgment was rendered that the agency take nothing. The judgment of the trial court is affirmed.

Mr. Scott Morgan entered into a written contract with Corporate Personnel Consultants, an employment agency, which obligated the agency to assist Morgan in securing a position and required Morgan to pay a fee for such service in accordance with a schedule in the agreement. Incidental services to Morgan, as the agency interpreted the contract, included effort to set up interviews for him with prospective employers.

Shortly after the contract was signed Mr. M. R. Kendall, employed by the agency as a counselor, investigated Morgan’s qualifications and undertook to assist him by making a cold or blind telephone call to Wynn Oil Company, Inc. The call appears to derive description from its chanceful nature as it was made to a firm with which the agency was a stranger with no referral or other previous relationship. The purpose of the call was to determine whether an accountant was needed by the company. The business of Wynn Oil Company, Inc. was operated out of a one-girl office by the company president and his personal secretary. Kendall talked with the president’s secretary, Mrs. Carolyn Sue Kelley, who informed him that the company was not looking for an accountant but that she would check with the company president, Mr. R. C. Wynn, and see if he was interested.

Kendall continued to call and in the course of the calls gave a description of Morgan and his former employment. He asked if the company would be interested in talking to Morgan. Mrs. Kelley finally returned one of Kendall’s calls and told him Wynn would interview Morgan. Thereafter Morgan presented himself at Wynn’s home for an interview and was eventually employed. Additional facts will be stated when pertinent in connection with issues discussed.

Though other grounds were plead, the agency ultimately relied for recovery upon the doctrine of quantum meruit, a contract implied in law also denominated a quasi-contract by legal writers. A concise but comprehensive definition of the principle or body of principles enfolded in the doctrine would be very difficult to formulate. In the context of this case, the doctrine may be said to subsume a rule that a request for or acceptance of service commonly performed for pay implies a promise of reasonable remuneration. See Suderman-Dolson Co. v. Hope, 118 S.W. 216 (Tex.Civ.App.1909, no writ); Crockett v. Sampson, 439 S.W.2d 355 (Tex.Civ.App.Austin 1969, no writ); Colbert v. Dallas Joint Stock Land Bank of Dallas, 129 Tex. 235, 102 S.W.2d 1031 (1937) 98 C.J.S. Work and Labor §§ 8 and 55; 66 Am.Jur.2d, Restitution and Implied Contracts, Sections 21 and 22; 13 Tex.Jur.2d, Contracts, Sections 6 and 304.

The agency requested Tex.R.Civ.P. 296 findings of fact and conclusions of law. The trial judge found that the oil company did not seek the services of the agency. The finding is the subject of the agency’s second point of error. The issues of no evidence and that the finding is contrary to the great weight and preponderance of the evidence are presented. The finding’s effect is similar to a jury verdict upon the issue. Unless there is no evidence to support the finding or unless the finding is so contrary to the great weight and preponderance of the evidence as to be clearly wrong this court may not set it aside. See Paul v. Johnson, 314 S.W.2d 338 (Tex.Civ.App.Houston 1958, writ dism’d); 4 McDonald’s Texas Civil Practice, Sec. 16.05.

Testimony relevant to this issue, that is, whether or not the oil company sought the services of the agency, is from interested sources, the oil company’s employees on one hand and the agency’s on the other. The agency’s counselor acknowledged that the agency had a duty to seek interviews for its client Morgan with prospective employers. The secretary to the president of the company said the agency made several calls and invited company representatives to interview Morgan. At the president’s direction the secretary called the agency and arranged for an interview. The finding made by the trial judge implies that the judge on consideration of all evidence in the record found that arranging the interview was an acceptance of the agency’s invitation that company representatives interview its client; and that acceptance of the invitation was not a request by the company that, the agency perform a service for the company by sending its client to the company for an interview. This construction of the evidence appears reasonable. There was no evidence or suggestion of custom or a practice in the employee placement field that an employer remunerate an employment agency for referring job applicants to it or assumes liability for agency fees on mere acceptance of an invitation to interview an agency client. The evidence supports the trial court’s finding. An when the entire record is considered the finding is not so contrary to the great weight and preponderance of all evidence as to be clearly wrong.

The trial court also found that all services performed by the agency were performed for Morgan pursuant to the agency’s contract with Morgan. Appellant’s third point of error makes the same attack on this finding as made in the finding previously discussed. The conclusion previously reached controls in this instance also. Accepting an invitation to interview the agency’s client is not a solicitation that the agency perform a service for the company nor an acceptance of a service rendered by the agency to the company which is customarily performed for pay. In another context, interviewing an agency client is the equivalent of a prospective buyer’s consent to examine goods a seller has on display. The trial judge’s construction of the evidence is reasonable and the evidence supports the finding. See Thompson v. Atlantic Refining Company, 295 S.W.2d 289 (Tex.Civ.App. Waco 1956, writ dism’d).

Counsel for the agency asked the president of the company, while a witness, this question: “Well, whom did you expect to pay the fee?” Objection to an answer was sustained. This action of the trial court is the subject of the agency’s fourth point of error. The agency argues that the question was to develop the witness’s state of mind at a particular time and that a truthful answer would have revealed that the president of the company expected the company to pay the fee. The answer to,the question, in the context shown, is generally considered admissible and admitted into evidence. 2 McCormick & Ray, Texas Law of Evidence, Sections 1391 and 1428. However, no objection was made to the court’s ruling nor does the record show by bill of exception or otherwise the witness’s answer to the precise question. On further examination by the agency’s counsel the witness testified that he did not know the policy of other employers but that it was the policy of his company not to pay agency fees. When the entire record is considered, it appears that error in excluding the witness’s answer is harmless, but harmless or not, failure to preserve error as required by Tex.R.Civ.P. 372 and 373 deprives this court of a basis for review. See Field v. Sosby, 226 S.W.2d 484 (Tex.Civ.App.Waco 1950, writ ref’d); LeNoble v. Weber, Hall, Cobb and Caudle, Inc., 503 S.W.2d 321 (Tex.Civ.App.Tyler 1973, no writ); Wood, The Bill of Exceptions as Basis for Review, in State Bar of Texas, Appellate Procedure in Texas, Sec. 9.8(3) (1964). The point of error is overruled.

A discussion of the agency’s first point of error is omitted. Should the point have merit and be sustained such consequence would not change disposition of the appeal. No error is found requiring reversal of the trial court judgment. Accordingly, judgment is affirmed.


author: HALL, Justice.

text:
    Dr. N. L. WEST, Appellant, v. Mrs. Kathryn HUGHES, Appellee.
    No. 5610.
    Court of Civil Appeals of Texas, Waco.
    Nov. 18, 1976.

      W. C. Haley, Waco, for appellant.
    John Gano, Houston, for appellee.
   HALL, Justice.

This is a venue case involving Subdivision 4 of Article 1995, Vernon’s Ann.Civ.St. It stems from a medical malpractice suit brought by appellee in McLennan County against Dr. Eldon B. Fine, who resides and practices medicine in McLennan County, the appellant (Dr. N. L. West), who resides and practices medicine in Hill County, and two other medical doctors and a hospital, all of Bell County. After a hearing without a jury, appellant’s controverted plea of privilege to be sued in Hill County was overruled. He appeals. We reverse and render.

Subdivision 4 of Art. 1995 provides, “If two or more defendants reside in different counties, suit may be brought in any county where one of the defendants resides.” It is settled that to obtain the benefits of this venue provision against a nonresident defendant, the plaintiff must (1) plead and prove that one defendant resides in the county of suit; (2) allege in his petition a joint cause of action against the resident and nonresident defendant, or at least a cause against both defendants growing out of the same transaction and so intimately connected that the two may be joined under the rule intended to avoid a multiplicity of suits; and (3) prove the cause of action pleaded against the resident defendant. Richardson v. D. S. Cage Co., 113 Tex. 152, 252 S.W. 747, 749 (1923). It is equally settled that only the allegations in the plaintiff’s petition, and not independent proof, are looked to in determining whether venue fact number (2), above, has been established; but that independent evidence is looked to on (1) and (3). Stockyards Nat. Bank v. Maples, 127 Tex. 633, 95 S.W.2d 1300, 1304 (1936).

In his first point of error, appellant asserts appellee failed to prove a cause of action against Dr. Fine, the resident defendant. We agree.

The proof adduced on the plea of privilege shows that appellee began having severe pain in her hip and leg while at work on June 20, 1972; that the next day she went to see Dr. Fine at his office in McLen-nan County for diagnosis and treatment, and saw him intermittently thereafter through July 27, 1972; that during that time she was hospitalized by Dr. Fine; that Dr. Fine diagnosed her problem as “low-back pain with sciatica” and treated her for it in standard fashion with muscle relaxants, analgesics, anti-inflammatory medication, and wet and dry heat; that during the time she was seeing Dr. Fine, and thereafter, she was also consulting Dr. West at his office in Hill County and the other doctors at the hospital in Bell County for the same problem; that they also diagnosed and treated her problem as low-back pain and sciatica; that none of the doctors knew she was seeing the others while they treated her; that, in October, 1972, it was learned from an X-ray (made for the first time while the appellee was in a standing position) that the femur in her left hip was broken; and that surgery was then performed on the hip from which she gained relief. Dr. Fine readily conceded that the treatment he prescribed for appellee while she was seeing him from June 20th through July 27th, would not have been proper for a broken hip. Other evidence shows that the examination and treatment of appellee by Dr. Fine involved detailed physical and neurological testing and findings such as tracing and investigating nerve paths and anatomical nerve distribution, heel and toe walking by appellee, hip rotation, interpretation of back X-rays made in his office and back and hip X-rays made in the hospital, drug therapy, and other technical medical procedures.

The gist of appellee’s cause of action against Dr. Fine is that she in fact had a fractured hip when she first went to him in June, 1972, and that he negligently failed to diagnose it and negligently treated it. The only evidence that the hip was fractured when appellee first went to Dr. Fine is her testimony based upon the location and intensity of pain at that time, lack of relief from his treatment and ultimate relief from the surgery, and the manner in which she believed she injured the hip. There is no medical proof that Dr. Fine’s diagnosis of low-back pain with sciatica was negligence, or that his treatment based upon that diagnosis was negligence.

A plaintiff has no cause of action against a doctor for malpractice, either in diagnosis or recognized treatment, unless he proves by a doctor properly qualified by his school of practice to give evidence on the matter that the diagnosis or treatment complained of was such as to constitute negligence, and that it was a proximate cause of the patient’s injuries; and without the expert testimony, there is no evidence of malpractice in cases of this nature. Hart v. Van Zandt, 399 S.W.2d 791, 792, 797 (Tex.Sup.,1966); Bowles v. Bourdon, 148 Tex. 1, 219 S.W.2d 779, 782 (1949).

The remaining points of error, which deal with questions of limitation and whether appellee pleaded a joint or “intimately connected” cause of action against appellant and Dr. Fine, are without merit and are overruled. Appellee's petition is worded in very general language and was not excepted to. Considered most favorably toward appellee’s position, it must be reasonably construed as setting forth a single transaction, joint cause of action against all of the defendants (although independent proof on the venue hearing shows this is not so). The limitations question goes to the merits of the case and cannot be used to defeat a venue exception otherwise proved against a defendant on a plea of privilege hearing. Newman v. Texas Farm Products Company, 346 S.W.2d 151, 152 (Tex.Civ.App.-Beaumont 1961, no writ hist.); 60 Tex.Jur.2d 22-23, Venue, § 200.

Because appellee failed to prove a cause of action against the resident defendant, the order overruling appellant’s plea of privilege is reversed, and judgment is rendered transferring the cause alleged against the appellant to the District Court of Hill County.