author: O’QUINN, Justice.

text:
    PREFERRED RISK MUTUAL INSURANCE COMPANY, Appellant, v. James D. RAVUN et ux., et al., Appellees.
    No. 12593.
    Court of Civil Appeals of Texas, Austin.
    Jan. 18, 1978.
    Rehearing Denied Feb. 8, 1978.

      Burnie Burner, Long, Coleman, Dugger & Cotten, Austin, for appellant.
    Philip L. Spies, Mack Kidd, Austin, for appellees.
   O’QUINN, Justice.

Preferred Risk Mutual Insurance Company brought this action for declaratory judgment to establish that as a matter of fact plaintiff had no valid policy of insurance in effect protecting any persons involved in an automobile accident occurring on the evening of July 23, 1975.

In bringing suit, Preferred Risk made James D. Rabun and wife, Nellie Ruth Ra-bun, defendants, and also sued Cynthia Beth Johnson and Jay Martin Greider, the latter two parties being occupants of the vehicle in collision with the Rabun vehicle on July 23. Greider and Johnson earlier had brought suit against State Farm Mutual Insurance and others (District Court Docket No. 240,525) for personal injuries, which cause later was consolidated with the action brought by Preferred Risk.

Subsequently, prior to trial before the court, the consolidation order was set aside, and trial proceeded on the action for declaratory judgment and the cross action brought by Rabun and wife for damages to the vehicle Rabun was driving at the time of the accident.

In the action by Preferred Risk, issue was joined on whether the Rabun insurance policy, which the company had cancelled, had been effectively reinstated by the company’s local recording agent, Charles Richard Clack. The essential facts were that the insurance policy had been cancelled by the company on June 9, 1975, and notice of premium due, followed by notice of cancellation, had been received by the Rabuns. Afterwards, on the evening of July 19, a conversation by telephone took place upon which the Rabuns relied to show reinstatement by Clack in behalf of the company.

The Rabuns and Clack were close friends, being members of the same church of the Pentecostal faith, and Clack had been the Rabuns’ insurance agent since January of 1974, during which time Clack had sold the Rabuns several policies of Preferred Risk, covering life and casualty contracts. The company conceded, and the trial court found, that Clack was a “local recording agent” as defined by Article 21.14, sec. 2, Texas Insurance Code, “being authorized by an insurance company ... to solicit business and to write, sign, execute, and deliver policies of insurance, and to bind companies on insurance risks . . . ” (Emphasis added).

On the evening of July 19, 1976, Clack called the Rabun residence by telephone to obtain Mrs. Rabun’s services as a babysitter. In the course of the telephone contact, Mrs. Rabun told Clack her husband wanted to get the policy reinstated, and Rabun spoke to Clack and advised him that Rabun had the money to pay the insurance premium and wanted the lapsed policy reinstated.

Rabun testified at trial that Clack stated that his schedule would not permit a meeting for actual payment of the premium until July 24, but told Rabun “not to worry, everything is fine.” From this conversation, the trial court found that both Rabun and his wife expressed their present interest to reinstate their insurance coverage.

On the evening of July 23, 1976, a day prior to the date (July 24) Clack had on July 19 advised Rabun he would be able to meet and receive the premium payment, Rabun was involved in the accident giving rise to this litigation. That same day Mrs. Rabun went to Clack’s home, informed him of the accident, and completed a reinstatement form and paid the required premium. At Clack’s suggestion, both the form and the check in payment of the premium were backdated to serve as a memorandum of the conversation and transaction on July 19, prior to the accident. The record shows the check to be dated July 19 and the form on July 21.

Clack testified that this procedure was followed solely to enable the company to consider sufficiency of the conversation of July 19 to provide coverage during the critical period. When the claim was presented a month later, Preferred Risk declined to pay the damages, found by the trial court to be in the amount of $756.07.

Testimony in the record shows that Clack on previous occasions had sold the Rabuns insurance on the basis of an oral agreement. Their practice was that Clack would return to the Rabuns later and submit a policy dated as of the day the oral binder was made, and the Rabuns would be billed for the premium at a later date. It had been Clack’s practice, in cases of reinstatement, to pick up the premiums at the Rabun home subsequent to their conversation. The trial court found that Clack had reinstated insurance coverage by oral binder for the Ra-buns in the past on other policies of insurance.

Clack’s contract with Preferred Risk expressly provided that an automobile policy was not to be reinstated by oral binder. Clack testified, however, that at the time of the transaction in question, he was not sure what kind of authority he had, since he had not recalled reading such provision in his contract. Clack also testified that after the accident and the company’s reaction, he was “confused” as to whether the Rabuns actually had coverage, and that by backdating the check, he was trying to help the Rabuns and to see that the insurance covered the accident if at all possible, but that he did not really know whether it would.

The trial court found (1) that on the occasion of the telephone conversation, it was Clack’s intent to reinstate the insurance coverage of his friends and clients, if he had that authority; (2) that if Clack had realized a question might be raised as to his authority to reinstate the coverage, he would have made arrangements to go at once and pick up the premium payment; and (3) that it was assumed by both parties, because of their prior custom, that the Ra-buns were in fact reinstating their coverage.

On the basis of its findings, the trial court concluded that the policy was in full force and effect at the time of the accident, protecting against loss, and denied Preferred Risk its prayer for declaratory judgment. The court also awarded the Rabuns recovery of their claim for damages in the sum of $756.07.

Preferred Risk brings fifteen points of error on appeal. We will overrule all points of error and affirm judgment of the trial court.

Preferred Risk at the outset contends that the company was not bound to cover the Rabuns’ loss because the mode of reinstatement was expressly limited to payment of premium. The company’s position essentially is that since the policy called for the formality of payment of premium, an oral binder could not become effective to reinstate the policy.

In general, because the reinstatement provisions are dictated by the insurer, such provisions must be construed against the company and liberally interpreted in favor of the insured. Stipulations in the policy as to the mode of revival being for the benefit of the insurer, the requirements may be waived, expressly or by implication. The implied waiver often occurs when the insurer has reinstated the policy on previous occasions, without the formality required by the policy. In such instances the insurer is held to have waived strict compliance on reinstatement. 3A Appleman, Insurance Law and Practice, secs. 1973, 1974 (1967), and authorities cited.

Courts of this state follow the majority of jurisdictions by dealing with renewal, or reinstatement, of a lapsed policy in terms of “waiver of forfeiture.” In determining whether to apply the doctrines of waiver and estoppel, with respect to renewal of an insurance policy, Texas courts generally have held that any act, declaration, or course of dealing by the insurer, with knowledge of the facts constituting a cause of forfeiture or breach of a condition in the policy, which dealings recognize and treat the policy as still in force, and leads the insured to regard himself as protected, will amount to a waiver of the forfeiture, or to a dispensation of performance of conditions of the policy. Thus the insurer will be estopped to insist upon the forfeiture, or to set up forfeiture as a defense in a suit growing out of a subsequent loss. Cohen v. Continental Fire Ins. Co., 67 Tex. 325, 3 S.W. 296 (1887); Calhoun v. The Maccabees, 241 S.W. 101 (Tex. Comm’n App.1922, jdgmt adopted); Bailey v. Sovereign Camp, W. O. W., 116 Tex. 160, 286 S.W. 456 (1926); National Life & Accident Ins. Co. v. Harris, 130 Tex. 168, 107 S.W.2d 361 (1937). In accord: 43 Am.Jur.2d Insurance, sec. 1092 (1969).

In Bailey the Supreme Court stated the elements which must be present to bring about waiver of a forfeiture: “First. The insurer must have knowledge of the facts constituting the forfeiture of the certificate. Second. The forfeiture must be com-píete and absolute. Third. There must be some unequivocal act on the part of the insurer which recognizes the continuance of the policy, or which is wholly inconsistent with the forfeiture.” 286 S.W. 457, col. 2.

When such unequivocal act occurs, the other elements being present, the insurer also waives the formalities of reinstatement. The waiver of forfeiture implies a dispensation of the reinstatement conditions of the policy. In the case at hand, reinstatement being conditioned on payment of a premium, the unequivocal act of an oral binder gave rise to waiver of forfeiture and also waived the condition of reinstatement. Bailey, 286 S.W. 458.

The doctrine of waiver and the often associated and resultant doctrine of estop-pel have been applied in the situation where an agent agreed orally to renew an insurance policy, but thereafter for some reason failed to do so. Generally the insurer has been estopped to deny renewal of a policy, or authority of the agent to make such agreement, or has been held to have waived the renewal conditions of the policy, particularly with respect to payment of the renewal premium. See 85 A.L.R.2d 1410-1440 (1962) and authorities cited. In such cases, the waiver by, or an estoppel against, an insurer arose from the act, conduct, or knowledge of a duly authorized representative, acting within the scope of actual or apparent authority.

Although the court did not expressly apply the doctrine of waiver by name, it was held in 1941 by the Waco Court of Civil Appeals that, where an insurer’s authorized agent agreed orally to renew a fire insurance policy but through oversight failed to renew, the policy nevertheless was in force. Prudential Fire Insurance Co. v. Williams, 148 S.W .2d 264 (Tex.Civ.App. Waco 1941, writ dism’d jdgmt. cor.). In Orient Insurance Co. v. Wingfield, 49 Tex.Civ.App. 202, 108 S.W. 788 (Austin 1908, writ ref'd), this Court sustained validity of an oral contract and held that payment of the premium was not essential to a contract to renew and that the course of conduct between the agent and the insured may be looked to in order to determine whether payment of the premium had been waived as a condition for reinstatement of the policy.

The Supreme Court in 1887 expressly held that though the policy be forfeited by failure to pay the premiums, an agent duly authorized may waive the forfeiture by a parol contract and thereby reinstate the obligation, “. . . although it may be stipulated on the face of the instrument itself that this shall not be done.” Cohen et al. v. Continental Fire Ins. Co., supra, 3 S.W. 297. It is apparent that Texas courts recognize that reinstatement by parol contract can constitute an “unequivocal act” giving rise to waiver of forfeiture.

In Orient Insurance this Court stated that “. . . in ascertaining whether the premium has been paid or waived the habit and custom and course of dealing between the assured and the agent of the company may be looked to.” (Emphasis added). 108 S.W. 792, col. 1. Courts in other jurisdictions have held that the agent’s previous course of dealing, under which the agent renewed the policy before payment of the requisite premium, was sufficient to justify the insured in believing that he had credit and coverage on the basis of an oral renewal agreement. Baldwin v. Phoenix Ins. Co., 107 Ky. 356, 54 S.W. 13 (1899). A federal court held that exigencies of modern business require and justify reliance on oral insurance renewal agreements before a formal policy is issued. Massachusetts Bonding & Ins. Co. v. R. E. Parsons Electric Co., 61 F.2d 264 (8th Cir.1932).

On the issue of whether Clack as agent for Preferred Risk had authority to waive forfeiture, we find it settled that he did have such authority under the facts of this case. Texas courts have held that if a local recording agent (under Article 21.14 of the Insurance Code) acts within his statutory authority to bind the company on risks, the agent may waive stipulations and conditions of the policy, and so bind his principal by the waiver. Morrison v. Insurance Co. of North America, 69 Tex. 353, 6 S.W. 605 (1887); Carolina Insurance Co. v. Christo pher, 130 Tex. 245, 106 S.W.2d 138 (1937). The rule is based on the proposition that an insurance company cannot limit its power to contract in any lawful manner through its authorized agents acting within the scope of their authority as local recording agents. Home Ins. Co. of New York v. Roberts, 129 Tex. 178, 100 S.W.2d 91, 93 (1937).

In the language of the Supreme Court, as found in Cohen v. Continental Fire Ins. Co., supra, “There can be no doubt that an insurance company, through its authorized agent, may contract by parol for the renewal of a policy, although it may be stipulated on the face of the instrument itself that this shall not be done. There is no peculiar sanctity attached to such provision in contracts of this character, which makes them an exception to the general rule that parties to an agreement may, by mutual concurrence, change its terms at any time after its execution, so as to meet their pleasure or interests.” 3 S.W. 297.

Reverting to and applying the test stated in Bailey, the three elements required to constitute waiver of forfeiture are found in this cause: first, the insurance company had knowledge of the forfeiture, since it had cancelled the policy; second, the forfeiture was complete upon cancellation and notice to the Rabuns; and, third, Clack’s oral assurances to the Rabuns constituted an unequivocal act which recognized continuance of the policy. Clack’s act and assurances were made unambiguous and sincere by reason of the prior course of dealing under which the Rabuns in the past had been covered by oral binders. As the local recording agent, Clack had authority to bind the company by waiver of the stipulation that the insurance could be reinstated only by payment of the premium.

On appeal Preferred Risk meets the issue of waiver with the argument that the Rabuns, for the first time on appeal, expressly employed the term “waiver” and did not plead waiver by specific designation as required under Rule 94, Texas Rules of Civil Procedure. We overrule the contention. Under Rule 94, the defensive plea must set out every necessary element of estoppel or waiver, if such is the defense. Crews v. Gulf Grocery Co., 107 Tex. 604, 182 S.W. 1096 (1916). But if the elements of the defense are alleged, it is not necessary to allege the legal conclusion that plaintiff is barred by “estoppel” or by “waiver.” Richards v. Frick-Reid Supply Corp., 160 S.W.2d 282 (Tex.Civ.App. Fort Worth 1942, writ ref’d w. o. m.). See 2 McDonald, Texas Civil Practice, sec. 7.38 (1970).

The Rabuns, in their answer to Preferred Risk’s petition, alleged that (1) the agent agreed to pick up the premium at their home, (2) the premium was then “due and owing,” (3) there was a complete “agreement and accord” that the policy was in effect at the date of the telephone conversation, and (4) such agreement was consistent with a prior course of dealing between the agent and the Rabuns. These allegations in effect are allegations of the three requirements of waiver of forfeiture, being knowledge of forfeiture, completeness of forfeiture, and the unequivocal act inconsistent with forfeiture.

Even if it be said that these allegations fall short of establishing the defense with sufficient particularity, it is clear from the evidence, the findings of fact and conclusions of law that the case was tried on a theory of waiver of forfeiture. Preferred Risk made no proper objection, and the defense of waiver was tried by express or implied consent. Davant v. Lane, 273 S.W.2d 897 (Tex.Civ.App. Texarkana 1954, writ ref’d n. r. e.); Hamon v. Allen, 457 S.W.2d 384 (Tex.Civ.App. Corpus Christi 1970, no writ). See 2 McDonald, Texas Civil Practice, sec. 7.38, p. 266, n. 65 (1970).

We hold that the policy had been duly reinstated and was in full force and effect at the time of the accident on July 23,1975, and the trial court correctly denied Preferred Risk a declaratory judgment that the policy was not in effect.

Judgment of the trial court in all things is affirmed.

Affirmed.


source: Caselaw Access Project

author: CIRE, Justice.

license: Public Domain

text:
    COUNTY OF HARRIS, Texas, Appellant, v. James EATON et al., Appellees.
    No. 1735.
    Court of Civil Appeals of Texas, Houston (14th Dist.).
    Jan. 18, 1978.
    Rehearing Denied Feb. 8, 1978.
    Joe Resweber, County Atty., J. Robert Hobgood, Asst. County Atty., Houston, for appellant.
    Roland B. Darby, Larry W. Harrison, Houston, for appellees.
   CIRE, Justice.

Harris County appeals from an adverse judgment which awarded the appellees, James Eaton, Doris Jean Burk, John C. Hall, and Nancy W. Hall $10,700.00 damages for personal injuries suffered when their car overturned after striking a large chughole in a road maintained by appellant.

On February 29, 1976 the appellees were traveling on the 12,000 block of Riceville School Road in a 1976 Mercury Capri driven by appellee Doris Jean Burk. They were proceeding in the southbound lane at about 35 miles per hour when the vehicle hit a large hole in the road. The driver lost control and the car overturned, causing personal injuries to the four appellees.

Approximately one week after the accident the appellees gave notice to Harris County of their claim for damages under the Texas Tort Claims Act, art. 6252-19 (1970). The appellees then filed suit alleging negligence on the part of Harris County in failing to properly maintain the road and in failing to place warning devices to apprise travelers of the defect in the road. Harris County answered asserting inter alia, a general denial, a denial that the appellees had any cause of action pursuant to the Texas Tort Claims Act, and a claim that the failure of the driver to use the proper degree of care under the circumstances was a proximate cause, or sole proximate cause of the accident. The case was tried to the court. On April 7, 1977 the trial court entered its judgment for the plaintiffs and in its Findings of Fact and Conclusions of Law found that the County knew or should have known of the holes in sufficient time to repair them or warn travelers of their existence, and that the accident was proximately caused by the combined negligence of Harris County and the driver, Doris Jean Burk. The court apportioned seventy percent negligence to.Harris County and thirty percent negligence to Ms. Burk.

Harris County appeals and assigns seven points of error.

The County, in points one, two, and five, contends that there is no evidence or insufficient evidence to support the findings of the trial court concerning knowledge on the part of the county, negligence and causation. All of these points are overruled. The photographs of the hole, introduced by the plaintiffs, evidence its size and the risk created by its presence. It is also apparent that a hole of this size must have been present for at least several days. W. A. Addison, a deputy sheriff for Harris County, testified that the hole was approximately ten inches in depth and made the road unsafe for travel at the maximum legal speed of 35 miles per hour. The photographs and other testimony show that the hole spanned almost the entire width of the road. It was common knowledge to anyone familiar with the road that chugholes were the “rule of the day.” There is further evidence that employees of the precinct traveled the roads in their jurisdiction daily and it was their duty to report holes or other defects. We are of the opinion that there is sufficient evidence to support the court’s finding of negligence and proximate cause.

In point of error four Harris County asserts that the hazard is open and obvious, and, as a result, the County owed no duty to warn of the defect. The facts in this case are analogous to those in Adam Dante Corporation v. Sharpe, 483 S.W.2d 452 (Tex.Sup.1972). There the plaintiff knew about the presence of water but not about the slippery film on the floor. The court said:

When one speaks of a condition as being open and obvious, the phrase means that there is no dispute in the evidence or the facts which will charge an invitee with knowledge and full appreciation of the nature and extent of danger. It means that knowledge and appreciation of the danger are considered as proved as a matter of law.

483 S.W.2d at 459. Here, there was evidence that the hole was visible for a distance of approximately 200 feet, but that does not mean that its depth was ascertainable at that distance. Knowledge and appreciation of the danger were not established as a matter of law.'

In point of error number six, Harris County claims that the Texas Tort Claims Act does not allow recovery for such accident. Appellant, in its brief, claims that this is a premise defect and, as such, the only duty imposed upon the state is the duty of a licensor to a licensee. See Tex.Rev.Civ.Stat.Ann. art. 6252-19 § 18(b) (1970). The danger not being open and obvious, we believe that the County owed a duty to warn even a licensee of this dangerous condition. Harvey v. Seale, 362 S.W.2d 310 (Tex.Sup.1962). See Harris County v. Dowlearn, 489 S.W.2d 140 (Tex.Civ.App.-Houston [14th Dist.] 1972, writ ref’d n. r. e.). But this is not a premise defect. A hole ten inches deep and spanning almost the entire width of the road is an obstruction. Obstructions on roads or highways are special defects and the ordinary standard of negligence governs. See Tex.Rev.Civ.Stat.Ann. art. 6252-19 § 3 (Supp.1978) and § 14(12) (1970); City of Houston v. Jean, 517 S.W.2d 596 (Tex.Civ.App.-Houston [1st Dist.] 1974, writ ref’d n. r. e.); Harris County v. Dowlearn, 489 S.W.2d 140 (Tex.Civ.App.-Houston [14th Dist.] 1972, writ ref’d n. r. e.); Gabbert v. City of Brownwood, 176 S.W.2d 344 (Tex. Civ.App.-Eastland 1943, writ ref’d). Harris County’s negligence in failing to repair the chughole or in failing to warn travelers of its existence constitutes a compensable claim under the Texas Tort Claims Act.

Point of error seven complains of the trial court’s refusal to make a requested finding that:

At the time of the accident in question the condition of the roadway at or near 12130 Riceville School Road, Harris County, Texas, was or was not unreasonably hazardous to persons traveling on said road using that degree of care as would have been exercised by a person of ordinary prudence in the exercise of ordinary care under the same or similar circumstances.

This requested finding is not necessary to the judgment rendered by the trial court.

All other points of error asserted by appellant, but not here discussed, have been considered and are hereby overruled. The judgment of the trial court is affirmed.

Affirmed.


author: PER CURIAM.

text:
    The AMERICAN NAZI PARTY et al., Appellants, v. Marvin ZINDLER, Appellee.
    No. 1801.
    Court of Civil Appeals of Texas, Houston (14th Dist.).
    Jan. 18, 1978.
    Appellant’s and Appellee’s Rehearings Denied Feb. 15, 1978.

      Michael Anthony Maness, Houston, for the American Nazi Party.
    James M. Shatto, Houston, for Southwestern Bell Telephone Co.
    Joe Pelton, Robert 0. Pelton, Houston, for appellee.
   PER CURIAM.

In November 1977 Marvin Zindler, the appellee, sued Southwestern Bell Telephone Company and the American Nazi Party, both appellants herein, seeking to restrain them from playing, or allowing to be played, a recorded telephone message which was then available to callers to the American Nazi Party’s listed telephone number. On December 8, 1977, following a hearing, the district court granted the ap-pellee’s request for a temporary injunction. The order temporarily enjoined the appellants from playing or causing to be played on the telephone the following recorded phrases and portions of messages:

(1) “In order to meet this problem head on, we are now offering a $5,000 prize for every non-White carcass killed while attacking a White person. We offer this reward in order to alleviate some of the legal problems of fellow White people. But we are encouraging mass executions of non-Whites in order to make their stay in this country an unhealthy one.”
(2) “if you desire to bring in your carcass”
(3) “We are beginning the battle by offering a $5,000 prize for every nonWhite killed during an attack on a White person.”
(4) “to claim your reward for the carcasses of any non-White killed during an attack, or”

The appellants assign several points of error in their interlocutory appeal from that injunction. One of the points presents the threshold question of whether the appellee has standing to prosecute this suit. The appellee contends that he may receive such relief under the general injunction statute, Tex.Rev.Civ.Stat.Ann. art. 4642 et seq. In order to invoke the court’s jurisdiction, however, he must show a justiciable interest in the subject matter of this litigation; he must show a special injury peculiar to himself. Thiel v. Oaks, 535 S.W.2d 1, 2 (Tex.Civ.App.—Houston [14th Dist.] 1976, no writ). This is a traditional requirement of courts of equity which has been established in Texas since 1888. City of San Antonio v. Stumburg, 70 Tex. 366, 7 S.W. 754 (1888); Holland v. Taylor, 153 Tex. 433, 270 S.W.2d 219 (1954).

Recognizing the hurdle created by this principle, the appellee sought to demonstrate a special injury by testifying that he is Jewish and a television personality who presents a particularly attractive target for the vitriol of the appellant American Nazi Party. Additionally, he argues that his investigative reporting amounts to an “attack” in some instances. Despite this argument, we find that his interest in this matter is insufficient to constitute a special injury as defined by the authorities. Thiel v. Oaks, supra.

The indignation and resentment which the appellee feels as a result of the language involved in this matter is both understandable and justified. The language is vicious, disgusting and repugnant to all decent persons. If, beyond that, it amounts to illegal conduct, appropriate officials are authorized to initiate action on behalf of the public to control it and punish those responsible for it.

Because the appellee lacks a justiciable interest in the subject matter of the litigation, we do not reach the question of whether the language employed is entitled to protection as free speech under the First and Fourteenth Amendments of the Constitution of the United States or under the provisions of Article 1, Section 8 of the Constitution of the State of Texas.

The judgment of the trial court is reversed, the temporary injunction dissolved, and the cause dismissed.


author: MURRAY, Justice.

text:
    Simon ANGUIANO and Elva Anguiano, Appellants, v. JIM WALTER HOMES, INC., Appellee.
    No. 15922.
    Court of Civil Appeals of Texas, San Antonio.
    Jan. 18, 1978.
    Rehearing Denied Feb. 15, 1978.

      Barry Snell, San Antonio, Hector Gonzalez, Sinton, for appellants.
    Morris Atlas, Gary R. Gurwitz, Atlas, Hall, Schwarz, Mills, Gurwitz & Bland, McAllen, M. K. Woodward, Austin, for ap-pellee.
   MURRAY, Justice.

This is an appeal from a summary judgment in an action for statutory penalties under the Texas Consumer Credit Code, Tex.Rev.Civ.Stat.Ann. art. 5069-6.01 et seq. (1971). This suit was brought by appellants, Simon Anguiano and wife, Elva An-guiano, against appellee, Jim Walter Homes, Inc. in which both sides moved for summary judgment. The trial court granted the summary judgment of appellee and overruled the summary judgment of appellants and appeal has been perfected to this Court.

On March 8, 1976, the appellants entered into a contract with appellee which provided that the appellee would build a new house on the appellants’ unencumbered and unimproved property in Alice, Texas for the cash price of $13,910.00 plus a finance charge of $15,124.00 for a total of $29,034.00. The total amount was to be repaid in 180 monthly installments of $161.30 each and the contract disclosed that the annual percentage rate was 11.4 percent. To secure the payment of this debt, the appellee was given a first lien on the appellants’ property. This financial arrangement is a “time price differential” and is not an “interest” transaction, and if the contract is a contract for the sale of goods or services, then it is governed by Chapter 6. If the negotiations between a buyer and a seller involve a bona fide quotation of both a cash price and a credit price, the transaction does not involve usury, even though the quoted credit price is such as to exceed the cash price plus lawful interest thereon. Lamb v. Ed Maher, Inc., 368 S.W.2d 255 (Tex.Civ.App.-Dallas 1963, no writ); Rattan v. Commercial Credit Co., 131 S.W.2d 399 (Tex.Civ.App.—Dallas 1939, writ ref’d). If the transaction is actually a device to evade the usury law, it is not saved by any attempted difference between a claimed “cash” price and a claimed “credit” price. Bradford v. Mack, 359 S.W.2d 936 (Tex.Civ.App.—El Paso (1962, writ ref’d n. r. e.); 91 C.J.S. Usury § 18 (1955). In 1967, the Legislature enacted the Credit Code which preserved the time-price doctrine but which imposed various disclosure requirements and limitations when time-price differential was charged. Art. 5069-6.01 et seq. On the other hand, Chapter 1 of the Credit Code allows interest up to 10 percent per annum, and imposes no disclosure requirements nor prohibitions. Art. 5069-6.-01 et seq. By the Credit Code, sellers are permitted to choose between interest up to 10 percent per annum, free of restrictions (Chapter 1); or to charge time-price differential at a much higher yield and be subject to closer regulations (Chapter 6).

By appellants’ first point and appellee’s first counterpoint the question is presented whether or not a contract to build a new home is governed by Chapter 6 of the Texas Credit Code.

Art. 5069-6.08 provides in part:

This Chapter shall apply exclusively to retail installment transactions as defined in Article 6.01 hereof.

Art. 5069-6.01(e) provides:

“Retail installment transaction” means any transaction in which a retail buyer purchases goods or services from a retail seller pursuant to a retail installment contract or a retail charge agreement, as defined in this Article, which provides for a time price differential, as defined in this Article, and under which the buyer agrees to pay the unpaid balance in one or more installments, together with a time price differential.

Art. 5069-6.01(a) provides:

“Goods” means all tangible personal property when purchased primarily for personal, family or household use and not for commercial or business use, including such property which is furnished or used at the time of sale or subsequently, in the modernization, rehabilitation, repair, alteration, improvement or construction of real property so as to become a part thereof whether or not severable therefrom.

Art. 5069-6.01(b) provides:

“Services” means work, labor, or services of any kind when purchased primarily for personal, family or household use and not for commercial or business use

The Mechanic’s Lien Contract which was signed in conjunction with this transaction provides in part:

Builder agrees to build, construct, and complete above mentioned improvements within 180 days from this date in a good, substantial, workmanlike manner, and to furnish and provide all labor and material used in the construction and erection thereof.

Clearly, if a contract is one to furnish goods in the construction of a new home, it is within Chapter 6 of the Credit Code. Likewise, if a contract is to furnish services to construct a new home, it is within Chapter 6 of the Credit Code. We hold that a contract to provide both goods and services in the construction of a new home is within Chapter 6 of the Credit Code. Such a contract fits squarely within the definition of “retail installment transactions.” Art. 5069-6.01(e). Appellee contends that the statute before us should be restricted in its application to work done on a pre-existing structure and not to the initial erection of the structure itself because of the rule of ejusdem generis. This rule is sometimes employed in the construction of ambiguous statutes and means that when a list of specific words is followed by some general terms the general terms are not to be construed in their broadest sense but are held to apply to things of the same kind of class as specifically mentioned. Black’s Law Dictionary 608 (4th Ed. 1968). Art. 5069-6.01(a) defines “goods” as tangible personal property, including such property which is furnished in the “modernization, rehabilitation, repair, alteration, improvement or construction of real property so as to become a part thereof whether or not severable therefrom.” The appellant resists the application of the rule of ejusdem generis because the words “improvement” and “construction” are no more general than the other enumerated words, i. e., “modernization,” “rehabilitation,” “repair,” “alteration.” Whatsoever may be the merits of this legal sparring we need not determine because the statute, as we read it, is plain, clear, and unambiguous, and hence, the aid of rules of construction is not helpful or required, and in fact, their use under such circumstances would be improper. Ex parte Roloff, 510 S.W.2d 913 (Tex.1974); Second Injury Fund v. Keaton, 162 Tex. 250, 345 S.W.2d 711 (1961); State Board of Insurance v. Betts, 158 Tex. 612, 315 S.W.2d 279 (1958). By this statute it is our opinion that the Legislature intended that Chapter 6 should apply to the initial erection of structures as well as preexisting structures. The language of the statute, framed entirely in the disjunctive, seems to admit of no other construction.

Appellee, in his reply no. 3, alleges that if Chapter 6 of Art. 5069 is applicable to the transaction involved in this suit, it is unconstitutional because the title to the Act does not comply with § 35, Art. Ill of the Texas Constitution. § 35 of Art. Ill provides:

No bill, . . . shall contain more than one subject, which shall be expressed in its title. But if any subject shall be embraced in an act, which shall not be expressed in the title, such act, which shall not be expressed in the title, such act shall be void only as to so much thereof, as shall not be so expressed.

The purpose of § 35 is to require that the bill give notice to both the Legislature and the general public of statutes they might wish to oppose and to prevent surprise and fraud. Beck v. Winegeart, 471 S.W.2d 422 (Tex.Civ.App.-Amarillo 1971, no writ); Yeary v. Bond, 384 S.W.2d 376 (Tex.Civ.App.-Amarillo 1964, writ ref'd n. r. e.) Appellee contends that the caption of Art. 5069 failed to give notice that the statute applied to the business in which the appel-lee is engaged. The caption of Art. 5069, H.B.No. 452, 60th Texas Legislature (1967) reads as follows:

An act rearranging, reorganizing, revising, and amending provisions of Title 79 ‘Interest’ of the Revised Civil Statutes of Texas, 1925, and certain other laws relating to loans and lenders, and providing for additional legislation relating to loans and lenders in accordance with the provisions of Section II of Article XVI of the Constitution of Texas, which authorizes the Legislature to classify loans and lenders, license and regulates lenders, define interest and fix maximum rates of interest, and further defining and limiting the charges imposed by retail vendors of goods and services in credit sales, and providing for additional legislation to protect the public from deceptive and abusive trade practices in both cash and credit consumer transactions, so as to create a revised Title 79 to be known as Title 79, ‘Interest-Consumer Credit-Consumer Protection,’

There is no merit in appellee’s contention of unconstitutionality. As previously stated, a contract to provide both goods and services in the construction of a new home is within Chapter 6 of the Credit Code. The caption is clear in providing limitations to “charges imposed by retail vendors of goods and services in credit sales” and to the protection to the public from “deception and abusive trade practices” in “credit consumer transactions.” Art. III, § 35 requires only that the title state the general subject and it need not explain the details. Robinson v. Hill, 507 S.W.2d 521 (Tex.1974). The caption of the act is not defective and does not violate Art. Ill of § 35.

Appellant contends that if Chapter 6 of the Texas Consumer Credit Code imposes requirements and prohibitions with regard to the building of new homes pursuant to contracts which provide for a time price differential, while failing to impose the same requirements and prohibitions with regard to the building of new homes pursuant to contracts which charge interest, then Chapter 6 is unconstitutional.

Art. I, § 3 of the Texas Constitution, the equal protection clause provides:

All free men, when they form a social compact, have equal rights, and no man, or set of men, is entitled to exclusive separate public emoluments, or privileges, but in consideration of public services.

A state may classify its citizens into reasonable classes without violating the equal protection clause of the Fourteenth Amendment. Bjorgo v. Bjorgo, 402 S.W.2d 143 (Tex.1966). In passing upon constitutionality of a classification, the test to be applied by courts is whether the classification made by the legislature is essentially arbitrary, unreasonable, and not based upon reality. American Transfer & Storage Co. v. Bullock, 525 S.W.2d 918 (Tex.Civ.App.—Austin 1975, writ ref’d). The classification is reasonable and allows all builders to decide whether they will charge interest up to 10 percent per annum and be relatively free of restrictions, or charge time-price differential as high as 21.5 percent per annum and be subject to the requirements and prohibitions of Chapter 6. We hold that the classification has a reasonable relationship to the purpose of the statute in question and operates equally on all those who charge time-price differential and is therefore constitutional.

Appellee next contends that penalty provisions of Art. 5069-8.01 (twice the finance and default charges and reasonable attorney’s fees fixed by the Court) constitute “excessive fines” in violation of Texas Constitution Art. 1, § 13. The Legislature has found a need for firm and effective penalties for usury and other prohibited practices in credit transactions. The penalty provision is not designed to compensate the consumer for actual damages but instead is to deter violators and to encourage enforcement of the Code by private litigants, rather than placing the entire enforcement burden on the Consumer Credit Commissioner. In this manner, the expense of enforcement is placed on those who violate the law rather than on the taxpaying public. The penalty provision of the Texas Consumer Credit Code might well be considered high. The problems which the Legislature attempts to regulate by the enactment of the Texas Consumer Credit Code are also great. By the declaration of legislative intent our Legislature has found a great need for the Texas Consumer Credit Code. In prescribing fines, penalties, and other punishment, the Legislature has wide discretion. State v. Laredo Ice Co., 96 Tex. 461, 73 S.W. 951 (1903). In State v. Laredo Ice Co., our Supreme Court has stated:

Prescribing fines and other punishments which may be imposed upon violators of the law is a matter peculiarly within the power and discretion of the Legislature, and courts have no right to control or restrain that discretion, except in extraordinary cases, where it becomes so manifestly violative of the constitutional inhibition as to shock the sense of mankind.

Considering the abuses attempted to be regulated by the Texas Consumer Credit Code, we are not able to say that the penalty imposed is so excessive as to “shock the sense of mankind.” We conclude that Chapter 8 of the Texas Consumer Credit Code is not unconstitutional.

Among the numerous violations alleged by the appellants in this case the following are established by the summary judgment record as a matter of law: (1) The contract provides for a first lien on the real estate, in violation of Art. 5069-6.05; (2) the contract was not designated “retail installment contract,” in violation of Art. 5069-6.02.

Art. 5069-6.05 provides in part:

No retail installment contract or retail charge agreement shall:
* * * * * *
(7) Provide for or grant a first lien upon real estate to secure such obligation, except such lien as is created by law upon the recording of an abstract of judgment.

Art. 5069-6.02 provides in part:

The contract shall be designated ‘Retail Installment Contract’

Appellee takes the position that prohibition against first liens in retail installment transactions violates Texas Constitution, Art. XVI, §§ 37 and 50, pertaining to mechanics and materialmens liens and liens on homesteads. We disagree. The Code does not attempt to deny materialmen their lien, it simply prohibits them from taking such lien as a first lien in a retail installment transaction. The affect of the statute is to limit first lien transactions to 10 percent interest or less. By this scheme creditors are permitted to chose between higher rates and less security or lower rates and greater security.

Appellee relies on the doctrine of de minimus non curat lex for the failure of the contract to be designated as “retail installment contract,” as required by the Code. This doctrine stands for the proposition that the law does not care for or take notice of very small or trifling matters. It has been invoked to excuse minor deviations from the letter of the law. Thornhill v. Sharpstown Dodge Sales, Inc., 546 S.W.2d 151 (Tex.Civ.App.-Beaumont 1976, no writ). In Thornhill the purchaser of an automobile signed a note for $6,695.64 to be paid in 42 monthly installments of $159.42 each, and thus contended that he was charged 42 cents too much interest on the principal balance with the credit extending over a 42 month period. This amounted to an excessive charge of one penny per month. The Beaumont court held, and we agree, that such a slight excess should be disregarded. It is the duty of the Legislature to decide what should be contained in a retail installment contract and for the courts to decide that such a plain requirement as contained in the Code is very small or a trifling matter would be to encroach into the exclusive domain of the Legislature, and this is not the proper function of the court. Ex parte Salter, 452 S.W.2d 711, 713 (Tex.Civ.App.-Houston 1970, writ ref’d).

For the violation of the Texas Consumer Credit Code, appellants are entitled to recover under art. 5069-8.01, “. . . twice the amount of interest or time-price differential . . provided for under the contract.

Since the interest charged or price differential provided for the contract (the “finance charge”) is $15,124.00, appellant is entitled to judgment in the sum of $30,-248.00 for the violation by appellee of the Texas Consumer Credit Code.

The portion of the trial court judgment granting appellee motion for summary judgment and denying appellants’ motion for summary judgment is reversed, and judgment is here rendered that appellants recover from appellee the sum of $30,248.00.

The portion of the judgment below denying appellants’ claim for attorney’s fees is reversed, and the portion of the plaintiff’s claim relating to attorney’s fees is severed from the remainder of this case and is remanded to the trial court for the purpose of determining the amount which would constitute reasonable attorney’s fees under the facts and circumstances of this case.

      . (1) Many citizens of our State are being victimized and abused in various types of credit and cash transactions. These practices impose a great hardship upon the people of our State.
      (2) Credit in its various forms is one of the most essential and vital elements of our economy. It can be truly said that credit affects every citizen every day. Credit transactions in our State amount to many billions of dollars per year.
      (3) Credit abuses now existing in our State stem from the fact that many types of credit transactions are not now subject to effective public regulation and control and the penalties imposed for usury do not provide effective or workable safeguards in this vital area of economic activity.
      (4) Such abuses are especially prevalent in the area of consumer transactions both cash and credit. Unscrupulous operators, lenders and vendors, many of whom are transient to our State, are presently engaged in many abusive and deceptive practices in the conduct of their businesses. These unregulated practices bring great social and economic hardship to many citizens of our State. They impose intolerable burdens on those segments of our society which can least afford to bear them — the uneducated, the unsophisticated, the poor, and the elderly.
      (5)These facts conclusively indicate a need for a comprehensive code of legislation to clearly define interest and usury, to classify and regulate loans and lendors, to regulate credit sales and services, and place limitations on charges imposed in connection with such sales and service, to provide for consumer education and debt counseling, to prohibit deceptive trade practices in all types of consumer transactions, and to provide firm and effective penalties for usury and other prohibited practices. Tex.Rev.Civ.Stat.Ann., Art. 5069, Declaration of Legislative Intent (1971).


author: WALTER, Justice.

text:
    Francis B. MILES, Individually and d/b/a Miles Pallet Company, Appellant, v. W. C. ROBERTS LUMBER COMPANY, INC., Appellee.
    No. 5081.
    Court of Civil Appeals of Texas, Eastland.
    Jan. 19, 1978.
    Rehearing Denied Feb. 16, 1978.
    George Whittenburg and Mack Whitten-burg, Amarillo, for appellant.

      Barry D. Peterson, Stokes, Carnahan & Fields, Amarillo, for appellee.
   WALTER, Justice.

W. C. Roberts Lumber Company, Inc. recovered a judgment on its sworn account against Francis B. Miles for $21,575.53 plus $3,500.00 attorney’s fees. The judgment provides Roberts added service charges to Miles’ account at an annual interest rate in excess of 10 percent but less than 20 percent per annum and that Miles was entitled to recover from Roberts $2,249.38, being twice the amount of service charges added to Miles’ account by Roberts plus $2,000.00 attorney’s fees. This was allowed as a credit on Roberts’ judgment against Miles. Miles has appealed.

The jury found against Miles on his claim for damages as a result of a temporary restraining order and a writ of garnishment, before judgment, placed on his accounts at the request of Roberts. We find the jury’s negative answer to special issue number seven (7) regarding Miles’ damages was made on conflicting evidence and the record contains some evidence of probative force to support such answer. We have examined the entire record and find the jury’s answer to issue number 7 is not against the great weight and preponderance of the evidence.

Appellant’s first four points of error are as follows:

“POINT OF ERROR NO. 1
The trial court erred in refusing to forfeit the principal of the debt as required by Article 5069-1.06(2) and to award appellant judgment pursuant thereto for the total principal amount of the open account in addition to the other penalties since the jury found that appel-lee charged appellant interest of more than eight times the amount allowed by law on an open account. (Germane to Assignment of Error No. 1.)
POINT OF ERROR NO. 2
The trial court erred in granting appel-lee a directed verdict for the amount of the open account and in awarding appel-lee any recovery on the open account since appellant properly pleaded and proved a defense of confession and avoidance based on usury. (Germane to Assignments of Error Nos. 1(a) and 3.)
POINT OF ERROR NO. 3
The trial court erred in awarding ap-pellee any attorneys’ fees for the prosecution of its suit on the open account since appellee charged and was demanding from appellant an amount of interest constituting usury, its demands were therefore illegal, and appellant was justified in resisting appellee’s demands. (Germane to Assignments of Error Nos. 2 and 2(a).)
POINT OF ERROR NO. 4
The trial court erred in refusing to submit to the jury appellant’s requested explanatory instructions defining the terms ‘charge’ and ‘charged’ as meaning any action constituting or implying a demand for payment, such as including an amount in a statement or court petition submitted to the debtor. (Germane to Assignment of Error No. 4.)”

Our usury laws applicable to this case are as follows:

“Article 5069-1.01. Definitions
(a) ‘Interest’ is the compensation allowed by law for the use or forbearance or detention of money; provided however, this term shall not include any time price differential however denominated arising out of a credit sale.
(b) ‘Legal Interest’ is that interest which is allowed by law when the parties to a contract have not agreed on any particular rate of interest.
(c) ‘Conventional Interest’ is that interest which is agreed upon and fixed by the parties to a written contract.
(d) ‘Usury’ is interest in excess of the amount allowed by law.
(e) ‘Person’ means an individual, partnership, corporation, joint venture, trust, association or any legal entity, however organized.”
“Article 5069-1.02. Maximum rates of interest
Except as otherwise fixed by law, the maximum rate of interest shall be ten percent per annum. A greater rate of interest than ten percent per annum unless otherwise authorized by law shall be deemed usurious. All contracts for usury are contrary to public policy and shall be subject to the appropriate penalties prescribed in Article 1.06 of this Subtitle.” “Article 5069-1.03. Legal rate applicable
When no specified rate of interest is agreed upon by the parties, interest at the rate of six percent per annum shall be allowed on all written contracts ascertaining the sum payable, from and after the time when the sum is due and payable; and on all open accounts, from the first day of January after the same are made.”
“Article 5069-1.06. Penalties
(1) Any person who contracts for, charges or receives interest which is greater than the amount authorized by this Subtitle, shall forfeit to the obligor twice the amount of interest contracted for, charged or received, and reasonable attorney fees fixed by the court provided that there shall be no penalty for a violation which results from an accidental and bona fide error.
(2) Any person who contracts for, charges or receives interest which is in excess of double the amount of interest allowed by this Subtitle shall forfeit as an additional penalty, all principal as well as interest and all other charges and shall pay reasonable attorney fees set by the court; provided further that any such person violating the provisions of this section shall be guilty of a misdemeanor and upon conviction thereof shall be punished by fine of not more than One Thousand Dollars. Each contract or transaction in violation of this section shall constitute a separate offense punishable hereunder.”

The jury found (1) reasonable attorney’s fees for Roberts to be $3,500.00; (2) Miles paid on service charges made by Roberts $70.53; (3) Roberts knowingly and intentionally charged Miles on his account as interest for the period beginning November 20, 1974 and ending July 16, 1975 $1,124.69; (4) the amount charged as interest was not at an annual rate in excess of 20%; and, (5) the amount of interest charged for the period in question was at an annual rate in excess of 10%.

Dean Barnett, manager for W. C. Roberts Lumber Company, testified substantially as follows:

I was aware there was some finance charges made against Francis Miles’ account with Roberts Lumber Company. This is standard procedure throughout the industry. We charge one percent per month service charge on the past due balance. Most places charge one and one-half percent. I knew what the service charge was, the company new about it and we intended to do it that way.

Miles testified:

“Q Did W. C. Roberts Lumber Company extend you credit?
A Yes, they did.
Q In other words, you would buy this material and they would charge it to you?
A Yes.
Q Now, did you have to pay anything for that credit?
A They had a service charge on it.”

The ledger of Roberts, introduced as Defendant’s Exhibit No. 3, includes the charges, credits and balance due on Miles’ account. The ledger also lists the service charges at a rate of one percent per month on the past due balance from November, 1974, to July, 1975.

Miles relies on Article 5069-1.03 for the rate of interest allowed on an open account. This article is applicable to open accounts only where the parties have not agreed upon a specified rate of interest.

Miles had the burden of establishing no agreement was made. No special issues were requested or submitted concerning an agreement. The evidence does not conclusively establish there was no agreement. Miles has waived any recover under Article 5069-1.03. Rule 279, Texas Rules of Civil Procedure.

The maximum rate of interest allowed under Article 5069-1.02 is ten percent per annum unless otherwise fixed by law. Based on the jury’s findings, Roberts charged interest greater than the amount allowed by Article 5069-1.02, but not in excess of double that amount. The trial court properly imposed the penalties under Article 5069-1.06(1).

The trial court granted Roberts’ motion for directed verdict on its open account under Rule 185, Texas Rules of Civil Procedure, Rule 185 provides:

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

Roberts complied with the requirements of Rule 185. Miles filed a sworn general denial including a defense of confession and avoidance based on usury. Under Rule 185, Miles had to file more than a sworn general denial. He had to deny the justness of the claim and set out the specific terms of the unjustness. McDonald v. Newlywed’s Inc., 483 S.W.2d 334 (Tex.Civ.App.-Texarkana 1972, writ ref. n. r. e.). By not substantially complying with Rule 185, Miles admitted that the account was correct. Akins v. Coffee, 376 S.W.2d 953 (Tex.Civ.App.-Dallas 1964, writ dism’d). We held in Collins v. Kent-Coffey Manufacturing Co., 380 S.W.2d 59 (Tex.Civ.App.—Eastland 1964, writ ref’d):

“. . . Appellant, having failed to ‘file such affidavit’, as required by Rule 185, he could not deny appellee’s claim and there was no genuine issue of material fact as to whether appellant was lawfully chargeable with a portion of the account or whether he was entitled to the alleged offset . .”

The trial court did not err in directing a verdict on the open account for Roberts. Miles could still maintain his defense of confession and avoidance and his counterclaim by the court’s order of separate trial on those issues. Rule 174, Texas Rules of Civil Procedure.

Tex.Rev.Civ.Stat.Ann. art. 2226 (1971) allows a recovery of attorney’s fees for persons “. . . having a valid claim against a person ... for . . suits founded upon a sworn account . if, at the expiration of 30 days thereafter, the claim has not been paid or satisfied, and he should finally obtain judgment for any amount thereof . . . ” Roberts brought suit only for the principal due under the sworn account and not for any interest charged thereunder. Roberts’ entire claim for the principal due was valid and enforceable. Miles’ failure to pay the principal due Roberts activated article 2226 allowing Roberts to recover its attorney’s fees for prosecution of its claim. After obtaining the directed verdict on the principal due, Roberts was entitled to attorney’s fees under Article 2226.

The pleadings and evidence referred to the amounts charged as interest as “service charges”. The amounts charged were undisputed. Under the facts of this case, the jury could properly interpret the meaning of the words “charge” and “charged” by their common and ordinary usage. Golden v. Stevens, 138 S.W.2d 243 (Tex.Civ.App.—Eastland 1940, writ ref’d).

We have carefully examined all of Miles’ points of error and find no merit in them. They are overruled.

Roberts concedes the trial court erred in not awarding Miles an additional offset in the amount of $70.53 as found by the jury. In this respect, the trial court’s judgment is modified and as modified, is affirmed.


author: MOORE, Justice.

text:
    Richard P. KORDUS et al., Appellants, v. The CITY OF GARLAND, Texas, et al., Appellees.
    No. 1083.
    Court of Civil Appeals of Texas, Tyler.
    Jan. 19, 1978.
    Rehearing Denied Feb. 16, 1978.
    Laurence E. Bergman, Bergman & Crowl, Garland, for appellants.
    Merril E. Nunn, Asst. City Atty., Garland, 0. Earl Luna, Thomas V. Murto, III, Luna & Murto, Dallas, for appellees.
   MOORE, Justice.

Plaintiffs Richard Kordus and Gordon Spalding, individually and as a class on behalf of the tax-paying property owners of the City of Garland, instituted this suit against defendants the City of Garland and the Garland Chamber of Commerce, seeking to recover $10,000.00 which the City donated through its wholly-owned power corporation, the Garland Power & Light Co., to the Garland Chamber of Commerce. They alleged-that the gift was in violation of provisions of the Texas Constitution which prohibit donations to private corporations. They also sought the recovery of an unspecified number of past payments in the amount of $3,000.00 per year, representing annual membership dues paid by the City to the Chamber of Commerce, on the grounds that such payments were likewise in violation of the Texas Constitution. In addition, plaintiffs sought a permanent injunction prohibiting the City from expending a sum in the amount of $40,000.00 per year pursuant to an alleged illegal agreement with the Chamber of Commerce, and further prohibiting <the City from making future payments of membership dues to the Chamber of Commerce.

Defendants, the City of Garland and the Garland Chamber of Commerce, filed, respectively, a plea in abatement and a plea to the jurisdiction, contending that the plaintiffs’ pleadings failed to demonstrate a justiciable issue in the matter and that the plaintiffs therefore lacked standing to sue. The trial court granted the pleas of both defendants and dismissed the cause, from which ruling plaintiffs duly perfected this appeal.

We affirm in part and reverse and remand in part.

At the request of the plaintiffs the trial court filed findings of fact and conclusions of law, finding among other things that: (1) plaintiffs are citizens, residents and taxpayers in the City of Garland; (2) plaintiffs do not have standing to bring the suit; (3) the pleadings do not show that plaintiffs have a justiciable interest in the subject matter of the suit; and (4) plaintiffs’ petition does not allege any damage peculiar to themselves.

Plaintiffs alleged in their petition that at the regularly scheduled council meeting of the City of Garland on August 20,1974, said council adopted a resolution which authorized the City, through its wholly-owned power corporation, to expend the sum of $10,-000.00 as a donation to the building fund of the Garland Chamber of Commerce, a Texas corporation. They alleged that such sum was paid to the Chamber of Commerce in violation of Art. Ill, sec. 52, and Art. XI, sec. 3, of the Texas Constitution, which prohibit donations to private corporations. Plaintiffs also alleged that the City had paid for a considerable period of time the sum of $3,000.00 per year as membership dues to the Chamber of Commerce in violation of the foregoing provisions of the Texas Constitution.

Article III, sec. 52, of the Texas Constitution provides in pertinent part:

“The Legislature shall have no power to authorize any county, city, town or other political corporation or subdivision of the State to lend its credit or to grant public money or thing of value in aid of, or to any individual, association or corporation whatsoever, or to become a stockholder in such corporation, association or company;

Article XI, sec. 3 provides:

“No county, city, or other municipal corporation shall hereafter become a subscriber to the capital of any private corporation or association, or make any appropriation or donation to the same, or in anywise loan its credit; . . . .”

On appeal plaintiffs argue that they had a right to maintain a cause of action to recover the alleged illegal donation of $10,000.00 to the Chamber of Commerce either on behalf of themselves or the City. They also contend that they are entitled to maintain a cause of action on behalf of themselves and other taxpaying citizens to recover the past payments by the City to the Chamber of Commerce in the amount of $3,000.00 per year, representing annual membership dues. We cannot agree with these propositions. While the Texas Constitution clearly prohibits donations and expenditures of this nature, the established rule in Texas is that a taxpayer does not have standing to bring suit to recover public funds already illegally expended by the city. Hoffman v. Davis, 128 Tex. 503, 100 S.W.2d 94 (1937); First Nat. Bank of Bellaire v. Prudential Ins. Co. of America, 551 S.W.2d 112 (Tex.Civ.App.—Houston [14th Dist.] 1977, writ ref’d n. r. e.). The right of action to recover funds already spent belongs exclusively to the municipality. Scott v. Graham, 156 Tex. 97, 292 S.W.2d 324 (1956); Glass v. City of Austin, 533 S.W.2d 411 (Tex.Civ.App.—Austin 1976, no writ). Therefore, we hold that the court did not err in granting the defendants’ dilatory pleas and decreeing that plaintiffs lacked standing to sue for the recovery of the $10,000.00 donation and the $3,000.00 annual membership dues to the Chamber of Commerce already expended by the City. Accordingly, this portion of the judgment must be affirmed.

Appellants contend, however, that the cause of action alleged here falls within an exception to the foregoing rule, relying on the following statement in Osborne v. Keith, 142 Tex. 262, 177 S.W.2d 198 (1944):

“When a public official or a public body is given by law the right to institute a suit in behalf of the state or a county or a municipality, a determination of whether or not such suit shall be instituted involves the exercise of discretion and, in the absence of bad faith in the exercise thereof, a taxpaying citizen cannot institute such suit.” (Emphasis supplied). 177 S.W.2d at 201.

Appellants argue that their petition clearly alleges bad faith on the part of the City and that, under the holding in Osborne, a taxpaying citizen has standing to institute suit to recover public money illegally spent when bad faith is alleged.

Appellants’ reliance on Osborne is misplaced. In Osborne, the suit brought by the taxpayer was not one to recover money already illegally expended, but rather was an injunction proceeding to prevent payment of funds under an alleged illegal contract. As will be discussed later, the rules with regard to standing to sue are different in a suit to restrain the illegal expenditures of funds not yet expended. For this reason, the holding in the Osborne case is not applicable in a situation where, as here, a taxpayer seeks to recover funds which have already been illegally expended. We have found no Texas case permitting a taxpayer to bring suit to recover funds already illegally expended, irrespective of the fact that the municipality may have acted in bad faith in refusing to make an effort to recover the funds. See First National Bank of Bellaire v. Prudential Ins. Co. of America, supra.

We turn now to that portion of plaintiffs’ pleading seeking injunctive relief from payments by the City to the Chamber of Commerce in the future. Plaintiffs alleged that at a City Council meeting on September 29, 1976, the City entered into an illegal agreement with the Chamber of Commerce whereby the Chamber of Commerce would receive in the future payments from the City in the amount of $40,000.00 per year. They further alleged that this expenditure, as well as the probable future expenditures of annual dues to the Chamber of Commerce, would be illegal as violations of the above enumerated constitutional provisions. Consequently, they assert that the trial court erred in sustaining the appellees’ plea in bar. They insist that they are entitled to a hearing on their application for a permanent injunction to enjoin the City from making such future expenditures to the Chamber of Commerce.

The authorities make a distinction between suits by a taxpayer to recover public funds already illegally expended and suits to restrain the illegal expenditure of public funds. While the courts of this state hold that a taxpayer has no justiciable interest or standing to sue to recover public funds already expended, our courts have held that a taxpayer has a justiciable interest sufficient to give him standing in a suit to enjoin the expenditure of public funds not yet expended under an agreement in violation of the Constitution or otherwise illegal. Calvert v. Hull, 475 S.W.2d 907 (Tex.1972); Osborne v. Keith, supra; Hoffman v. Davis, supra; Terrell v. Middleton, 187 S.W. 367 (Tex.Civ.App.—San Antonio 1916), writ ref’d per curiam 108 Tex. 14, 191 S.W. 1138, reh. den. 108 Tex. 14, 193 S.W. 139 (1917); City of Austin v. McCall, 95 Tex. 565, 68 S.W. 791 (1902); First Nat. Bank of Bellaire v. Prudential Ins. Co. of America, supra, 551 S.W.2d at 113.

Consequently, we hold that the portion of plaintiffs’ petition seeking to enjoin the City from making donations or paying membership dues to the Chamber of Commerce clearly shows that the plaintiffs had a justiciable interest sufficient to give them standing to sue for injunctive relief. Since plaintiffs alleged a cause of action for in-junctive relief, the trial court erred in sustaining defendants’ dilatory pleas without a trial on the merits.

We cannot agree with appellees’ argument that plaintiffs had no justiciable interest sufficient to give them standing to seek injunctive relief in that their pleading failed to show an injury peculiar to themselves and alleged only a public as opposed to a private right. The cases cited by the appellees find no application to the facts presented here since they either do not involve an injunction proceeding, e. g., Marshall v. City of Lubbock, 446 S.W.2d 740 (Tex.Civ.App.-Amarillo 1969, no writ), or do not involve the illegal expenditure of public funds, e. g., City of San Antonio v. Strumburg, 70 Tex. 366, 7 S.W. 754 (1888); City of West Lake Hills v. State ex rel. City of Austin, 466 S.W.2d 722 (Tex.1971); San Antonio Conservation Society v. City of San Antonio, 250 S.W.2d 259 (Tex.Civ.App.—Austin 1952, writ ref’d); Tri County Citizens Rights Organization v. Johnson, 498 S.W.2d 227 (Tex.Civ.App.—Austin 1973, writ ref’d n. r. e.). The argument advocated by appellees does not apply to a suit by a taxpayer to enjoin the illegal expenditure of public funds raised by taxation. See Hoffman v. Davis, supra, 100 S.W.2d at 96; Franks v. Welch, 389 S.W.2d 142, 146 (Tex.Civ.App.—Houston 1965, writ ref’d n. r. e.).

Accordingly, we hold that the trial court erred in dismissing plaintiffs’ cause of action for injunctive relief, and the judgment must be reversed and remanded for trial on the merits on such cause of action for a permanent injunction. In all other respects the judgment is affirmed.

Affirmed in part, reversed and remanded in part.

      . And see Tex.Att’y Gen. Op. No. H-397 (1974), which holds that a county may not become a dues-paying member of an incorporated chamber of commerce.


author: BISSETT, Justice.

text:
    Leonor L. MORIN v. Manuel P. MORIN.
    No. 1257.
    Court of Civil Appeals of Texas, Corpus Christi.
    Jan. 19, 1978.
    Rehearing Denied Feb. 9, 1978.
    J. Marvin Ericson, Corpus Christi, for appellant.
    William L. Hardwick, George West, for appellee.
   OPINION

BISSETT, Justice.

Leonor L. Morin, hereinafter called “Leonor”, brought suit for divorce in the District Court of Bee County, Texas, against Manuel P. Morin, hereinafter called “Manuel”. The trial court granted the divorce and made a division of property between the parties. Leonor appeals that part of the judgment pertaining to the distribution of property. We affirm.

Leonor was awarded the following property: one bed with mattress, one small desk, living room suite consisting of sofa, occasional chair, coffee table, and end table; a bank account standing in her name; personal effects in her possession and all personal property, if any, presently in her name. Manuel was awarded: Lot 8 of the First Registered Subdivision of the Bor-roum Ranch, in Bee County, Texas; “Morin’s Lounge”, located on the aforesaid lot, together with all inventory, fixtures and equipment situated therein;' a Chevrolet automobile, a bank account standing in his name, personal effects in his possession, personal property, if any, presently in his name.

There is no statement of facts in this case. There are no findings of fact made and filed pursuant to Rule 296, T.R.C.P. However the judgment does set out certain findings. Those which bear on this appeal are summarized, as follows:

(1) Manuel, on or about January 19, 1970, entered into a contract to purchase a tract of land described as Lot 8 of the First Registered Subdivision of the Bor-roum Ranch of Bee County, Texas, paying down the sum of $675.00, the deferred consideration of $13,455.00 being payable and to be paid in 261 monthly installments;
(2) Thereafter, in February, 1970, in response to Manuel’s proposal and promise of marriage, Leonor, believing such proposal and promise, and not knowing of any impediment to its performance, began living with Manuel in San Antonio, Texas;
(3) At some later date, Manuel, for the first time, disclosed to Leonor that he was not yet divorced from another woman; but promised that as soon as his divorce was granted, he would marry her (Leonor);
(4) Manuel and Leonor were married ceremoniously on July 6, 1973;
(5) Prior to such ceremonial marriage, the parties held themselves out to the public as being married;
(6) When the parties began living together they established a joint bank account, styled “Mr. or Mrs. Manuel P. Morin”, in a San Antonio Bank, which was maintained until sometime after the ceremonial marriage of the parties in July, 1973;
(7) Prior to the ceremonial marriage of the parties all of Leonor’s earnings and a portion of Manuel’s earnings were deposited in the joint bank account;
(8) At least one half of the monthly installment payments on the purchase price of Lot 8, of the First Registered Subdivision of the Borroum Ranch, in Bee County, Texas, during the existence of the joint bank account was made from personal earnings of Leonor;
(9) The contract of sale and purchase of said Lot 8 was current and in full force and effect on April 28, 1977⅛ when the judgment was signed;
(10) Manuel’s “earning ability” from his present employer is “$11,000.00 to $12,-000.00 per year”, and his net income from the operation of the “Morin’s Lounge” is $125.00 per week;
(11) Leonor’s “earning ability” is $5,000.00 per year.

Leonor, in overlapping points of error (Nos. 1 and 2), complains that the trial court erred in divesting her of “her separate estate interest in real property” and awarding such interest to Manuel. The only real estate involved is Lot 8 of the First Registered Subdivision of the Bor-roum Ranch, in Bee County, Texas, which will henceforth be referred to as “Lot 8”. In point of error No. 3, it is contended that the trial court abused its discretion in awarding “substantially all of the parties’ community property” to Manuel.

When the trial court in its judgment finds generally for one of the parties, but findings of fact are not requested and none are filed pursuant to Rule 296, T.R. C.P., and no statement of facts is brought forward on appeal, there exists little basis for appellate review of the case unless fundamental error appears on the face of the record. In the absence of fundamental error being shown, the appellate court will presume that the judgment was supported by sufficient evidence of probative value. Guthrie v. National Homes Corporation, 394 S.W.2d 494 (Tex.Sup.1965); Armenta v. Nussbaum, 519 S.W.2d 673 (Tex.Civ.App.—Corpus Christi 1975, writ ref'd n. r. e.).

The trial court is not now required to make findings in the judgment upon which the judgment is based, and the better practice is to make such findings in accordance with the provisions of Rules 296-299, T.R.C.P. See Rule 306, T.R.C.P.; Fenlon v. Jaffee, 553 S.W.2d 422 (Tex.Civ.App.—Tyler 1977, writ ref’d n. r. e.); Roberson Farm Equipment Company v. Hill, 514 S.W.2d 796 (Tex.Civ.App.—Texarkana 1973, writ ref’d n. r. e.). In the instant case, findings of fact as authorized by Rule 296, T.R.C.P. were neither requested nor filed. The findings made by the trial court in the judgment do not furnish a basis for the reversal of the judgment, and we must presume that the findings are supported by evidence. Resolutions of the points in Leonor’s favor would require a statement of facts which showed that Leonor owned an interest in Lot 8 as her separate property and that the trial court abused its discretion in dividing the community property in the manner it was divided. As has been stated, there is no statement of facts before this Court. The trial court found that the contract of sale covering Lot 8 was made prior to the time that the parties were married. Leonor did not seek to impress a trust upon the equity in the contract, nor did she ask for a recovery of any money which was paid out of her personal earnings on the monthly installments due under the contract of sale. We indulge every presumption in favor of the trial court’s judgment. Under the record here presented, we have no choice but to affirm the judgment of the trial court.

We have carefully read the transcript. The record before us does not present fundamental error, nor does it present a question of law that is of importance to the general public. See Franke v. Franke, 373 S.W.2d 891 (Tex.Civ.App.-Corpus Christi 1963, no writ). Leonor has not shown reversible error. We have considered all of the points of error brought forward by Leonor, appellant herein, and they are all overruled.

The judgment of the trial court is AFFIRMED.


author: MASSEY, Chief Justice.

text:
    Richard Lindell CHAPMAN et ux., Appellants, v. Edna Gladney HOME, Appellee.
    No. 17945.
    Court of Civil Appeals of Texas, Fort Worth.
    Jan. 20, 1978.

      Clifford Powell, Sherman and Denning Schattman, Fort Worth, for appellants.
    Wynn, Brown, Mack, Renfro & Thompson, and John Randolph Thompson, Jr., and William M. Schur, Fort Worth, for appellee.
   OPINION

MASSEY, Chief Justice.

By arrangement with Mr. and Mrs. Chapman the Edna Gladney Home, a licensed child placement agency, permitted an infant female child to reside in the Chapman home. Anticipation was that after the expiration of a period of six months the Chap-mans would proceed to effect an adoption. Within that six-month period the Gladney Home concluded that such an adoption would not be for the best interests of the child. Gladney Home removed the child from their custody. The Chapmans filed suit because of the removal.

Unimportant, but made an issue, is whether the Chapman suit was one for adoption. The prayer of their petition read:

“WHEREFORE, PREMISES CONSIDERED Petitioners pray:
(1) That the Court order the managing conservator to immediately return the child to the home of Petitioner as a placement for adoption.
(2) That the Court order a social study into the home of Petitioners.
(3) That the Court set a date for hearing of this adoption for such other and further relief either at law or in equity to which they may show themselves justly entitled.”

The judgment of the trial court recited findings that Gladney Home had good cause to refuse to consent to the adoption of the child by the Chapmans; it had refused to so consent; and that the court’s judgment would be for the best interest of the child. The judgment concluded as follows:

“It is, therefore, ORDERED, ADJUDGED AND DECREED that the request of Petitioners [the Chapmans] for the Court to consent to the adoption of the said child is hereby denied; . that the Edna Gladney Home remain as Managing Conservator of the child. It is further ORDERED, ADJUDGED AND DECREED that all other relief sought by Petitioners ... be and the same is hereby denied.”

From this judgment the Chapmans appealed.

We affirm the judgment.

We agree with the Gladney Home that it is appropriate in this case to make certain holdings applicable to the circumstances of this case and we do hold, as it advocates, as follows:

1.In agency adoption situations, consent of the managing conservator must be expressed in writing pursuant to the literal terms of Section 16.05(a), Texas Family Code, and will not be inferred from the fact of placement or subsequent acts allowing a child to remain in the possession of would-be adoptive parents.
2. The trial court may not waive the requirement that the managing conservator consent to the adoption unless the trial court finds both that the managing conservator has withheld or revoked consent without good cause and that waiver of consent is in the best interest of the child.
3. The managing conservator has good cause for withholding consent whenever it has good reason to believe in good faith that the adoptive placement is not working out satisfactorily or that the best interest of the child requires that it withhold or revoke consent.
4. The burden of proof of establishing the managing conservator’s lack of good cause for withholding or revoking consent rests upon the party seeking waiver of the consent requirement.
5. The trial court may, in one hearing, consider whether or not the managing conservator has withheld consent without good cause, whether or not the child should be restored to the possession of the prospective adoptive parents, whether or not the adoption should be granted, and, if not, whether or not the managing conservator should have authority to place the child in the home of third parties pending appeal of an adverse decision by the original prospective adoptive parents.

We do not perceive in the prayer of the petition of the Chapmans that they sought the entry of a decree of adoption. Rather does it appear that what was sought was mandatory injunction compelling the return of the child that thereafter they might proceed to file their petition to adopt her by provisions of Texas Family Code, Title 2, “Parent and Child,” Ch. 16, “Adoption,” § 16.03, “Prerequisites to Petition” — with the ultimate objective accomplishment of adoption as provided by the subsequent § 16.08, “Decree.”

In view of our holding that there was propriety in the judgment denying all relief sought by the Chapmans, it is immaterial that any question exists in this case upon propriety of the adjudication denying “consent to adopt.” It would be otherwise if six months had not expired between date of placement of the child with the Chap-mans. In this case six months had expired. As part of the issues to be tried under the Chapman pleadings there was necessity for a determination of the best interests of the child and the court did determine that it was not in such child’s best interests that the Chapmans have the child restored to them as “a placement for adoption.” Therefore, if we are correct in our conclusion that the judgment and its attendant findings are to be upheld, adoption by the Chapmans would be foreclosed in any event as part of the doctrine of estoppel. Here it would serve no purpose to reform the judgment in denial of an adoption when there would in any event be a denial of the “right to adopt.” The ability to place the child with different prospective parents should not be delayed by a type of legal technicality which might result by any reformation of judgment which could possibly permit a future trial of a petition by the Chapmans to adopt the child whose interests are at stake in this case. Applicable, and more familiar to students, are the principles of law usually treated under articles upon es-toppel by verdict or estoppel by record. See 31 C.J.S. Estoppel §§ 4 to 9, pp. 292-295, inclusive.

Family Code, Ch. 16, “Adoption,” § 16.04, “Residence With Petitioner,” provides that before a petition for adoption of a child shall be granted, such child must have lived with the petitioner for adoption at least six months, with exception where the court might decide it to the best interest of the child that the residence requirement might be waived. See also § 16.05, “Consent Required,” by which there is provision that in the event a managing conservator (other than the petitioner for adoption, etc.) has been theretofore appointed (as is the case here where at an earlier time Gladney Home had been appointed) such managing conservator must consent to the adoption by instrument in writing filed as part of the record of the adoption proceedings. Thereby, applicable to the instant proceeding is the exception, viz: “The court may waive the requirement of consent to the adoption by the managing conservator if it finds that the consent is being refused, or has been revoked, without good cause.”

In this case Gladney Home had never given any consent, certainly not a consent in writing, for the Chapmans to institute or accomplish adoption proceedings. Were the proceedings below those usual in adoption cases the Chapmans would have been obliged to bear the burden of proof to establish that withholding consent by Glad-ney Home was without good cause, for by provision of law they would not in any event be entitled to a decree of adoption unless by allegation and proof they could persuade the court to make that finding against Gladney Home as the managing conservator. This the Chapmans did not establish on the trial below. By the evidence made on trial of the case we would hold, if it be necessary, that even if the burden be considered as cast upon Gladney Home to establish good cause for refusal of consent there was a discharge of the burden. The finding and conclusion of the trial court that there was propriety in Glad-ney Home’s withholding consent to adopt— treating it as actually an issue to be tried— was justified by Gladney’s evidence.

Ten of the Chapmans’ eleven points of error are complaints of various of the court’s findings of fact and conclusions of law. We have examined these. Though some of the findings and conclusions were unnecessary to be made and are immaterial to the determination of a proper judgment, all the findings and conclusions were supported by the evidence and none were so contrary to the greater weight and preponderance of the evidence as to be clearly erroneous.

Only the Chapmans’ point of error No. 7 is to be noticed as distinguishable. Therein is the contention that the Gladney Home did not prove conclusively as a matter of law that it did not have good cause to revoke consent to adopt. We overrule the contention. The Gladney Home had no obligation to discharge the burden assumed as incumbent on it by the point of error, and cause for revocation of consent was not at issue for there had not been any initial consent to adopt as provided by statute.

The parties litigant are well aware of the evidence placed in the record. There is not occasion to write upon it in this opinion.

Save upon the placement of the burden of proof which we consider as elemental, there has not — since enactment of Texas’ Family Code — been definitive statements upon applicable law by Texas appellate courts. Opinions in cases from other jurisdictions and persuasive Texas opinions in cases not involving the precise issues have been considered. There is not sufficient occasion that they be cited in support of our holdings here.

All points of error have been severally considered and are overruled.

Judgment is affirmed.