author: PER CURIAM.

text:
    F. C. GAINES, Jr., Appellant, v. A. R. DILLARD, Jr., Appellee.
    No. 17741.
    Court of Civil Appeals of Texas, Port Worth.
    Dec. 10, 1976.
    Rehearing Denied Jan. 14, 1977.

      Kilgore & Kilgore, James A. Kilgore and W. Stephen Swayze, Dallas, for appellant.
    Sanders, Masters, Watson & Brown, Marvin H. Brown, III, Wichita Falls, Fillmore, Camp & Lee, and H. Dustin Fillmore, Fort Worth, for appellee.
   , OPINION

PER CURIAM.

The plaintiff, F. C. Gaines, Jr., sued the defendant, A. R. Dillard, Jr., to recover $104,221.65 that Gaines had deposited with Dillard as earnest money under a contract for the sale of a ranch in Clay County, Texas. Gaines was the buyer in the contract and Dillard was the seller. Plaintiff’s suit was based on the contention that Dillard, as seller, failed to tender a merchantable title to the lands involved to Gaines, as purchaser, and that for that reason Gaines was entitled to get his earnest money back.

The case was tried non jury. It resulted in the trial court rendering judgment that plaintiff take nothing by his suit. This appeal is brought by the plaintiff from that decree. Findings of fact and conclusions of law were requested by both parties and the trial court adopted as its own the findings of fact and conclusions of law that the defendant had filed in the court papers and requested that the court make.

The plaintiff jointly argues his points of error one through eight, inclusive. We here state the substance of those points.

Point of error No. 1 was that the trial court erred in denying plaintiff a recovery because he became entitled to his earnest money back, since the undisputed evidence showed that the seller failed to furnish in response to requirements 4 and 5 of plaintiff’s title opinion the curative matter there requested which was necessary in order for the seller to comply with the sales contract by which seller was obligated to furnish buyer a merchantable title.

Point No. 2 was: the court erred in making its finding of fact No. 2 stating “ ‘that within 30 days from the submission of the title opinion to Dillard, he furnished to plaintiff curative matter in connection with requirements 4 and 5 of the opinion’ ” because there is no evidence to support it and the finding is contrary to the undisputed evidence.

Point No. 3 was: the court erred in basing its judgment on finding of fact No. 2 referred to in point No. 2 because the undisputed evidence shows that the curative matter submitted by Dillard to plaintiff was inadequate to cure the objections contained in paragraphs 4 and 5 of the title opinion and that such curative matter did not render the title merchantable.

Point No. 4 was: the trial court erred in making and filing its finding No. 18 stating that “ ‘The title data, including abstracts of title and curative matter, submitted by Dillard to Gaines and then examined by Gaines’ attorneys, contain no evidence of an avulsive change of the Big Wichita River where the same bounds the subject property,’ ” because it is undisputed that the title data showed a change, but did not show whether it was the result of avulsion or accretion. Prior to this suit defendant presented no evidence of any kind to plaintiff’s lawyer that would show the cause of the change in the river boundary. For that reason the title was not merchantable according to the title evidence submitted.

Point No. 5 was: the court erred in making and filing its findings of fact Nos. 19 and 20, stating (19) “ ‘that at no time material to this suit has there occurred an avul-sive change in the Big Wichita River where the same bounds the subject lands,’ ” and (20) “ ‘that any such changes as have occurred in the Big Wichita River where the same bounds the subject lands have been the result of . accretion,’ ” because those findings are insufficient to support the judgment rendered. Even if the evidence offered during this trial was sufficient to justify the court’s finding that the change resulted from accretion instead of from avulsion, there was no competent evidence offered during the trial to show that defense counsel submitted any such evidence to the plaintiff prior to the filing of this suit. In that state of the record the plaintiff’s title opinion requirements 4 and 5 remain unsatisfied and the title was not shown to be merchantable.

Point No. 6 was: the court erred in making and filing its findings Nos. 19 and 20 that are quoted in its 5th point for the added reason that a finding in this case by the court that the changes in the river were the result of .accretion instead of avulsion would not make the defendant’s title merchantable, because the court’s findings and judgment based thereon would not be binding on the owners of the opposite side of the river whose title has been affected by the change in the river.

Point No. 7 was: the court erred in making and filing its findings of fact Nos. 34 and 35 reading as follows: “‘(34) That Plaintiff failed to perform under the contract of sale,’ ” and “ ‘(35) That such failure was not due to any unsatisfied title requirement which prevented the defendant’s title from being merchantable.’ ”

Point No. 8 was: the court erred in making and filing its findings of fact Nos. 34 and 35 for the further reason that to the extent such findings involve the facts of this case, the same are contrary to the undisputed evidence.

The undisputed evidence showed that on March 15, 1974 the plaintiff, Gaines, and Jerry Michener contracted in writing with the defendant, Dillard, to buy from Dillard a 3206.82 acre ranch located in Clay County, Texas, known as the Edrington Ranch, for a price of $1,042,216.50. The contracts required the buyers to put up with the seller $104,221.65 as earnest money. Gaines later bought Michener’s interest in the contract. The sales contract contained, among others, the following provisions:

“Seller shall within 30 days from the date hereof deliver to Purchaser abstracts of title complete to date.

“Purchaser shall have 60 days from the date that abstracts are made available in which to examine title to the same and to deliver to Seller title requirements. If title is approved or if there are no title requirements, closing shall be had forthwith. If title requirements are made, Seller shall have 30 days from submission of the title opinion in which to obtain and furnish curative matter. If within such period Seller does not cure said title objections, Seller shall notify Purchaser in writing of his inability or refusal to do so, in which event Purchaser shall have 10 days from receipt of such notice in which either to accept such title as Seller has or reject the title, in which latter event this contract shall terminate and the earnest money shall be refunded, but if title is accepted or title requirements cured, closing shall be had forthwith.

“Should Purchaser fail to perform hereunder except for reason of an unsatisfied title requirement which prevents Seller’s title from being merchantable, Seller shall retain the earnest money as liquidated damages and not as penalty.”

The parties stipulated that the abstracts referred to in the contract were delivered by seller to buyer on April 12, 1974, and that on June 8, 1974, the plaintiff’s attorneys, Kilgore & Kilgore, delivered their title opinion to the defendant, Dillard. Paragraphs 4 and 5 of that title opinion and the requirements listed under each are as follows:

“4. The patent to the S. L. Palmer Survey was issued on February 27, 1973, although the patent recites that it was issued pursuant to the application of S. L. Palmer, filed in the General Land Office on December 27, 1881. The field notes contained in the foregoing patent have as the northwest boundary thereof the Big Wichita River as such river is presently situated. However, a comparison of the field notes in the patent and the official land office map for Clay County, dated December 24, indicates that the river has meandered over the years and that its present location is substantially different than it was in 1924, and presumably in 1881 when the land was originally located.

“REQUIREMENT: Since the original field notes filed in 1881 for the S. L. Palmer Survey would control over the field notes contained in the patent, and since there may be a conflict with the John W. Massie Survey to the west, a copy of such field notes should be obtained to determine the actual land conveyed by such patent. Also, a copy of the statement of facts and patent for the John W. Massie Survey should be obtained.

“5. A comparison of the field notes contained in the patents to the F. W. Grasmeyer, C. H. Stearns and S. L. Palmer Surveys (all of which have as their northern or northwest boundaries the east bank of the Big Wichita River) and the lands described in the Contract of Sale indicate that (as discussed in paragraph 4 above) there has been over the years a substantial movement in the position of the Big Wichita River. If such movement was occasioned by the gradual accretion and erosion of the land on the banks of such river caused by the natural flow of the river, all present lands on the east side of the river would accrue to the present owner of the Grasmeyer, Stearns and Palmer Surveys, even though not originally described in the patents. On the other hand, if such change in the river resulted from a sudden movement of the river out of its original banks into a new channel leaving clearly defined lands on the east side of the river which were originally on the west side, such lands between the old river course and the new river course would continue to be owned by the owners of the lands on the west bank of the river, all of which are in the John W. Massie Survey. Thus, the ownership of those lands now on the east side of the river, but not within the lands described in the original surveys of the Grasmeyer, Stearns and Palmer Surveys depends upon a factual determination as to how and why the Big Wichita River moved from its previous location to its present location.

“REQUIREMENT: There should be obtained quitclaim deeds from the present owners of the John W. Massie Survey conveying those lands originally located within the John W. Massie Survey and now situated on the east side of the Big Wichita River. If such cannot be obtained, there should be obtained a final judgment from a court of competent jurisdiction adjudicating title to such lands.”

The parties stipulated that plaintiff’s title opinion set forth that in the absence of the documents and information required by the title opinion the title to the Edrington Ranch was unmerchantable.

On July 3, 1974, defendant through his attorneys delivered to plaintiff additional documents regarding defendant’s title to the Ranch involved. None of those documents were required by the title opinion and we hold that none of them cured the title defect pointed out by plaintiff in paragraph 5 of the title opinion.

On this same date and at the same time defendant’s attorneys wrote and delivered a letter to plaintiff’s attorneys concerning plaintiff’s title opinion. The letter, among other things, contained the following: “While we cannot agree with your statement that title was unmerchantable prior to the furnishing of the enclosed matters, we nonetheless furnish them in the thought that you may find them useful in satisfying any questions, upon reflection, you might have. Accordingly you are advised that we consider title to the ranch to be merchantable and that all title requirements which might affect merchantability are cured by the enclosures.

“. . . Please let me hear from you to plan details for closing.”

It was undisputed that in the ten day period immediately following July 3, 1974, plaintiff did not communicate to defendant a rejection of the title involved.

On about July 19, 1974, plaintiff and defendant met in Wichita Falls. Plaintiff needed additional time to raise money and defendant’s attorney prepared an instrument which stated that defendant gave plaintiff additional time and that plaintiff “accepts title to the lands ... as merchantable.” Plaintiff said he would take the instrument and get his attorney to look at it. The parties never did sign it or agree to its terms.

On August 19, 1974, defendant wrote plaintiff a letter advising him that he owed plaintiff no further obligations under the contract and to send his abstracts back.

On August 29, 1974, plaintiff’s attorneys wrote defendant a letter advising that the title defects he had pointed out rendered the title unmerchantable and that he was unwilling to waive such defects and that since defendant was either unable or unwilling to cure them, he demanded a return of his earnest money.

On September 4, 1974, defendant wrote plaintiff advising that he would not return the earnest money and this lawsuit then followed.

Did the abstracts involved show a merchantable title?

The defendant’s witness, Ross H. Corlett, Jr., was a licensed State Land Surveyor and a professional engineer. Corlett surveyed the land involved at the time the defendant, Dillard, acquired such land in 1972. In connection with that survey Corlett had prepared a plat of the land which plat was made a part of the stipulation (Ex. S thereto) that the parties had agreed on and such plat was introduced into evidence during the trial. The parties stipulated that a copy of this plat and survey had been furnished to plaintiff in connection with the proposed sale. The plat and survey contained the calls along the meanders of the river as they were located in 1972. The Big Wichita River, as shown by the plat, formed a part of the northwest boundary of the land involved.

Corlett’s plat is as follows:

The field notes contained in the sales contract between the parties are the same as those furnished by Corlett in connection with his 1972 survey and are the same as those reflected by Corlett’s plat shown above as Ex. S to the stipulation.

We construe the sales contract involved to require the seller to furnish abstracts of title to the land involved that showed a merchantable title of record.

The following is from Patton on Titles (Second Edition), Sec. 47, starting on page 172: “However, a purchaser’s contract is seldom silent as to the character of title which he is to receive. Even when there is no express provision for a record title, the obligation is frequently created by an agreement that the vendor is to furnish an abstract. Under such a contract, merely a marketable title as defined by the equity courts will not suffice; its character as such must appear from the abstract. And, since in this country, an abstract covers only those muniments of title which are of record, such contracts are construed as requiring a marketable title of record.”

Cases supporting the text quoted from Patton on Titles are: Friedrich v. Seligmann, 22 S.W.2d 749 (Tex.Civ.App., San Antonio, 1929, writ dism.), and Wright v. Glass, 174 S.W. 717 (Tex.Civ.App., Texarkana, 1915, no writ hist.).

One question for our determination at this point is whether the burden rested on the buyer to show, or upon the seller to negative, that the defects of title pointed out by the buyer were such as were reasonably calculated to render the title unmer-chantable.

In cases where the seller is (as was true in this case) required to furnish abstract showing merchantable title, and purchaser is required within a stipulated time to point out the title defects shown in the abstract so furnished, and does so, the burden rests on the seller to cure the claimed defects or else show they are not such as would impair the merchantability of title. But if the purchaser raises objections on defects not disclosed by the abstract, the burden rests on him to show that those defects are such as impair the merchantability of the title. Holding the law to be as we have just stated it is Spencer v. Maverick, 146 S.W.2d 819 (Tex.Civ.App., San Antonio, 1941, no writ hist.).

In this case the contract of sale between the parties contained the field notes reflected by Corlett’s 1972 survey and plat (Ex. S to the stipulation). An examination of the field notes contained in the patents to the F. W. Grasmeyer, C. H. Stearns, and S. L. Palmer Surveys as contained in the abstracts, and a comparison of them as against the field notes contained in the contract of sale show the defects in title pointed out in Gaines’ 4th and 5th objections in his title opinion.

Since the title defects pointed out by the buyer, Gaines, in his title objections numbered 4 and 5 were disclosed by the abstracts that the seller was required by the contract to furnish, we hold that the burden in this case was on the seller, Dillard, to cure the defects or to show that such defects are not such as would render the title unmerchantable. See Spencer v. Maverick, supra.

The title defects complained of are demonstrated by the plat (Ex. S to the stipulation). The plat shows the location of the river in 1972 when the witness, Corlett, surveyed it. The river forms the northwest boundary of the ranch involved. Corlett testified that he then took the patents and corrected field notes from the F. W. Gras-meyer, C. H. Stearns and S. L. Palmer Surveys and transposed those calls, showing the location of the river at the time those patents were issued, into his plat (Ex. S to the stipulation). The calls last mentioned are represented by the dotted lines on the plat in the area of the river. When the location of the dotted line is compared with the location of the river as it is shown on the plat, it is apparent that there has been substantial movement in the bed of the river that forms the northwest boundary of the ranch involved between the times when the original patents were issued and the present date.

That fact is further corroborated by comparing the location of the river in that area as it is shown on PI. Ex. 5 with the present location of the river as is shown on Corlett’s plat (Ex. S to the stipulation). Plaintiff’s Ex. 5 was in evidence. It purports to be a map of Clay County and to be from the General Land Office Records and bears date of December, 1924.

The record indicates that the curative matter required by plaintiff in connection with its objection 4 was furnished by Dillard to plaintiff. But that is not true of the requirements under objection 5 in plaintiff’s title opinion. The requirements made by plaintiff in connection with his objection 5 were not furnished. Dillard did furnish certain data to plaintiff but it was legally insufficient to cure the title defects pointed out by plaintiff in its objection 5.

We hold that Dillard did not discharge his burden of showing that his abstracts did show that he had a merchantable title of record to the ranch involved.

As a matter of law the abstracts submitted to Gaines failed to show a merchantable title to the ranch in question.

The following is from Owens v. Jackson, 35 S.W.2d 186 (Tex.Civ.App., Austin, 1931, writ dism.): “Marketable title is not dependent upon whether the purchaser, if sued, could successfully defend such title against those suing. If the record of his title as shown by the abstract discloses such outstanding interests in other parties than his vendor, as would reasonably subject him to litigation, or compel him to resort to evidence in parol, not afforded by the record, to defend his title against such outstanding claims, it is not marketable.”

In this case the abstracts showed that the location of the river bed at the time the surveys in question were patented is substantially different from where it is presently located and that the parts of the ranch shown on Ex. S to the stipulation as shaded areas was not included in the Gras-meyer, Stearns and Palmer Surveys at the time they were patented. Since the land in the shaded areas was not a part of the named surveys, and since the bed of the river has changed, it appears that the land in the shaded areas was part of the surveys that were located on the northwest or other side of the river (Massie Survey) at the time the patents were issued.

To rebut these facts shown by the record title requires a resort to parol evidence. We are convinced that the defect referred to raises such doubts as to the record title of Dillard to the part of the ranch in question as would deter a reasonably prudent man from accepting such title as marketable. Owens v. Jackson, supra.

Texas courts have uniformly held that a limitation title is not a merchantable title.

In discussing the reason for-that rule the Court in Owens v. Jackson, at page 188, had the following to say: “The period of limitation is not the basis of such rule; but the fact that resort to matters aliunde the record must be had to establish such title. The contract herein sought to be specifically enforced made no reference to a limitation title, but provided that a ‘merchantable title’ shown by the abstract be furnished. That is, that the record title be merchantable; and a limitation title does not meet that requirement.”

We construe the contract involved here to require that the seller would furnish abstracts to plaintiff showing a merchantable title to the ranch of record. In order to establish and determine whether or not the land in the shaded areas of Ex. S to the stipulation got on the northeast side of the river by accretion or by avulsion requires a resort to parol evidence outside of the abstracts.

We hold that where abstracts show that a part of the land in question attached to such land either by accretion or avulsion, without showing how it attached, that such abstracts do not show merchantable title of record to such land.

For the same reasons that a limitation title is not a merchantable title of record, a title to land acquired by accretion does not constitute a merchantable title of record, because in both instances there must be resort to matters outside the record or abstracts in order to establish such titles. See Blomstrom v. Wells, 239 S.W. 227 (Tex. Civ.App., San Antonio, 1922, writ dism.), wherein the Court said at page 230 the following: “ ‘If the contract provides that the abstract shall show a marketable title, the vendor will not be permitted to show by-evidence aliunde that the title is good, nor will the purchaser be required to go outside of the abstract in examining title.’ ” The Court also said on the same page: “You cannot force a proposed purchaser to accept a title upon a contract to supply a marketable title, when that title has to be supported aliunde the record by parol testimony difficult to assemble in support of the same.”

See also on this, Wright v. Glass, 174 S.W. 717 (Tex.Civ.App., Texarkana, 1915, no writ hist.).

For the reasons hereinabove indicated we sustain the plaintiff’s points of error No. 1, No. 7 and No. 8.

The 7th point of error was that the court erred in making and filing its findings of fact Nos. 34 and 35. By No. 34 the court found that the plaintiff failed to perform under the contract of sale. This fact was undisputed. The court’s finding of fact No. 35 was that such failure was not due to any unsatisfied title requirement which prevented defendant’s title from being merchantable. In plaintiff’s 8th point of error he attacks finding No. 35 as being contrary to the undisputed evidence. We agree and sustain that 8th point of error.

In the case of Owens v. Jackson, 35 S.W.2d 186 (Tex.Civ.App., Austin, 1931, writ dism.), the seller was contending that the buyer did not reject the title because of title defects, but that he rejected it because there had been a decline in the value of the property. On this the Court said: “The appellees sought to specifically enforce their contract on the ground that they had tendered to Owens a merchantable title. Their right of recovery depended upon that issue. If their title were merchantable, they were entitled to recover. If it were not, then Owens was not required to accept it. What other motives, if any, may have prompted him to refuse to accept same thus became immaterial.”

Defendant makes a similar contention in this case. What the Court said in the Owens v. Jackson case reference to that contention is equally applicable here. Defendant had contracted to furnish a merchantable title, but did not do it. For that reason plaintiff was entitled to a refund of his earnest money, and the fact that the price of land had gone down is immaterial.

Plaintiff in his title opinion pointed out the title defect involved and made a requirement which was not satisfied by defendant. He again pointed out to defendant in a letter on August 29, 1974 that defendant had failed and refused to cure the title defects so as to render the title merchantable and demanded a return of the earnest money on the grounds that the title was unmerchantable.

The court’s fact finding No. 2 that is complained of in plaintiff’s point of error No. 2 is immaterial. The curative matter furnished to plaintiff by defendant was legally insufficient to cure the defect pointed out in ground No. 5 of the plaintiff’s title opinion. The undisputed evidence was that the curative matter furnished by Dillard did not render his title merchantable and we sustain the 3rd point of error for that reason.

The trial court’s findings of fact Nos. 18, 19 and 20 that are complained of in plaintiff’s points of error Nos. 4, 5 and 6, all of which are hereinabove referred to, are immaterial. Such findings are not of facts that make Dillard’s title merchantable.

Plaintiff’s points of error Nos. 9 through 20, inclusive, relate to defendant’s plea of waiver.

In his 9th point of error plaintiff contends that the trial court erred in rendering judgment against him because there is no evidence to support defendant’s plea of waiver. In the 17th point of error plaintiff contends that the court erred in making its finding of fact No. 7 to the effect that plaintiff knowingly gave up his right to reject title to such property within ten days from July 3, 1974, because there is no evidence to support such finding. The 20th point of error was that the trial court erred in basing its judgment on findings of fact Nos. 4, 5, 6 and 7.

We sustain each of those points of error.

Defendant pleaded that plaintiff’s failure to reject title to the property within ten days after being notified of defendant’s failure or refusal to cure the title defects constituted a waiver of his right to recover earnest money.

Defendant’s contention is that by virtue of the provisions of the sales contract plaintiff waived his right to have the earnest money returned to him by failing to expressly reject defendant’s title within the ten day period immediately following July 3, 1974 (the date when defendant notified plaintiff of his inability or refusal to cure the title defects).

We disagree with that contention. When the contract involved is properly construed the plaintiff did not, by its terms, lose or waive his right to a refund of his earnest money by remaining silent for a period of more than ten days immediately following July 3, 1974.

The applicable provisions of the contract are set out earlier in this opinion.

Here the defendant furnished the abstract within the required thirty days. The buyer furnished defendant his title opinion making title requirements within the sixty allotted days. The seller did not cure the title defects pointed out in the title opinion. He did within thirty days after receiving the title opinion notify the buyer of his inability or refusal to cure the title defects. This notification was given on July 3, 1974.

The contract provided in substance that: when seller’s inability or refusal to cure the title defects was communicated to the buyer, the buyer shall'have ten days thereafter in which to either accept such title as seller had or reject the title; that if buyer then rejected the title the contract terminated and buyer was entitled to his earnest money back; that if the buyer accepts the title or if the title defects are cured the contract remained in force and the deal will be closed.

The contract requirement for a merchantable title was for the buyer’s benefit. The effect of the provisions giving the buyer an additional ten days, after the seller had notified the buyer of his inability or refusal to cure the title objections, in which to accept such title as the buyer had, even though it was not merchantable, was to give the buyer the option during that additional ten day period of accepting seller’s title even though it was not merchantable. See Creson v. Christie, 328 S.W.2d 772 (Tex. Civ.App., Beaumont, 1959, ref., n. r. e.), and Alexander v. Murray, 405 S.W.2d 217 (Tex. Civ.App., Waco, 1966, ref., n. r. e.). This provision also gave the buyer the right to immediately terminate the contract and get his earnest money back by rejecting the title.

It will be noted that the contract provided that if the buyer accepted such title as the seller had the contract shall remain in effect and the deal shall be closed. It provided that if buyer rejected the title during the ten days the contract would be terminated and the earnest money refunded. In this case the buyer neither accepted nor rejected the title within the ten day period. The buyer remained silent during that period and did nothing. The contract did not expressly provide for that contingency, but it did contain the following provision: “Should Purchaser fail to perform hereunder except for reason of an unsatisfied title requirement which prevents Seller’s title from being merchantable, Seller shall retain the earnest money as liquidated damages and not as penalty.”

We hold that under the contract involved the plaintiff, buyer, did not waive his right to a return of his earnest money under the facts of this case. When the contract is construed as a whole, it gave the buyer a right to reject the title and recover his earnest money on the ground that defects in the title existed that rendered the title unmerchantable, even though the title was not expressly rejected until after the ten days expired.

We overrule plaintiff’s 10th and 11th points of error complaining of the court’s 4th and 5th findings of fact. The 4th finding was that defendant within such 30 day period notified the plaintiff of defendant’s inability or refusal to cure the remaining title defects, and the 5th was that the plaintiff understood defendant’s July 3, 1974 letter to be notice to that effect. We are convinced the evidence supported those findings but hold that they did not entitle defendant to the judgment appealed from.

Plaintiff contends in his 12th and 13th points of error that the court erred in making its finding of fact No. 6 to the effect that plaintiff did not reject title to the property within ten days from the receipt of such notice. We overrule the 12th point of error because the undisputed evidence shows that the plaintiff remained silent during that period. We do hold that the contract in question did not impose an obligation on the buyer to reject the title within the ten day period just following July 3, 1974, and that the contract in question did not make it a condition precedent to plaintiff’s right to recover his earnest money, that he reject the title within the ten day period. Finding of fact No. 6 did not entitle defendant to the judgment he was awarded.

The 14th point of error is that the trial court erred in making finding No. 9 to the effect that within the ten day period no such notification was given defendant that requirement No. 5 remained unsatisfied. We overrule that point but deem the finding to be immaterial because the undisputed evidence showed that requirement No. 5 had been made in the title opinion and that the curative matter required had not been furnished by defendant.

The 15th point of error is that the court erred in making its finding of fact No. 10 stating “‘that within the 10-day period from Defendant’s notification ... of his refusal to cure title objections, the only advice from Plaintiff . regarding unsatisfied title requirements concerned the sufficiency of the Statement of Facts furnished by the General Land office.’ ” We overrule the point of error. The evidence supports the finding, but we deem the finding to be immaterial and insufficient to support the judgment.

The 16th point of error is that the court erred in making its finding of fact No. 11, stating “ ‘that Plaintiff communicated to Defendant his rejection of title for the first time in his August 29, 1974 letter.’ ” We overrule the point, but hold that finding No. 11 is insufficient to entitle defendant to the judgment he was awarded in this case.

We overrule plaintiff’s 18th point of error because we are convinced that defendant’s letter of July 3, 1974, did notify plaintiff that defendant was refusing to take any further steps toward curing title.

Plaintiff’s 19th point of error was that the court erred in basing its judgment on finding of fact No. 7, stating “ ‘that Plaintiff knowingly gave up his right to reject title to such property within ten days from July 3, 1974,’ ” because there was no evidence to support such finding. We sustain that point. We have hereinabove discussed our reasons.

In plaintiff’s 21st point of error he contends that the trial court erred in rendering the judgment against him on the grounds of estoppel because there is no evidence to support the defendant’s plea of estoppel.

We sustain that point of error. The doctrine of estoppel is not applicable to the undisputed facts of this case.

The court’s findings of fact Nos. 1,12,13, 14, 15, 16 and 17 are the findings that are applicable to the estoppel theory of the case.

It was undisputed that the plaintiff had submitted to defendant his title opinion pointing out in paragraph 5 the title defect complained of. Thereafter defendant advised plaintiff that he would furnish no further curative matter because he considered his~ title to be merchantable. This latter advice was given to plaintiff on July 3, 1974. For more than ten days after that date plaintiff remained silent. After the ten days had lapsed plaintiff and defendant talked in defendant’s office. Plaintiff made it known that he could use some more time in order to raise all sums of money he needed to close. At that time he made no mention of the title requirement No. 5. On this occasion defendant submitted to plaintiff for signature a written agreement that he had previously had his attorney prepare, which proposed agreement provided that defendant would give plaintiff some additional time in which to close the deal and in consideration for the extension the plaintiff would accept the title as it was, thus waiving the title requirement that he had previously made. At that time plaintiff refused to sign or make such an agreement saying he would take the proposed written agreement and get his attorney to check over it. The plaintiff did not communicate with defendant from that time until August 19, 1974. On August 19, 1974, the defendant wrote plaintiff and advised him that he had no further obligation to plaintiff under the sales contract involved. On August 29, 1974 plaintiff replied and told defendant that he was disturbed by his letter, that he was unwilling to waive the title requirements he had made in his title opinion and that he asserted his right to have a refund of his earnest money.

Those facts were undisputed. As a matter of law these facts did not estop plaintiff on his claim for return of his earnest money-

The court’s finding of fact No. 1 stated that after March 15,1974, the market value of the property substantially declined.

Plaintiff contends in his point of error No. 21 that there is no evidence to support this finding of fact No. 1. We overrule that point as there was evidence to that effect. We also hold that the finding is not against the overwhelming weight of the evidence as is contended in point of error No. 22.

Plaintiff’s 24th point of error is that the court erred in making its finding of fact No. 12, stating “ ‘that after the expiration of such 10-day period, Plaintiff knowingly led Defendant to believe that the title to such property was acceptable to Plaintiff’ ” because there is no evidence to support such finding. We sustain that point of error.

We also sustain plaintiff’s 26th, 28th, 31st, 33rd and 35th points of error wherein he contends that there was no evidence to support the court’s findings of fact Nos. 13, 14, 15, 16 and 17.

Cases supporting our decision that defendant was not entitled to judgment on the grounds of estoppel are: Gulbenkian v. Penn, 151 Tex. 412, 252 S.W.2d 929 (1952); Astro Sign Company v. Sullivan, 518 S.W.2d 420 (Tex.Civ.App., Corpus Christi, 1974, ref., n. r. e.); Echols v. Bloom, 485 S.W.2d 798 (Tex.Civ.App., Houston 14th Dist., 1972, ref., n. r. e.); Farley v. Clark Equipment Company, 484 S.W.2d 142 (Tex.Civ.App., Amarillo, 1972, ref., n. r. e.); Newton v. Town of Highland Park, 282 S.W.2d 266 (Tex.Civ.App., Dallas, 1955, ref., n. r. e.); and Herbert v. Denman, 44 S.W.2d 441 (Tex.Civ.App., Texarkana, 1931, writ ref.); and see 22 Tex.Jur.2d 668, Estoppel, Sec. 8.

We are convinced that as a matter of law the plaintiff was entitled to a refund of his earnest money under the facts of this case.

The trial court’s judgment is reversed and judgment is here rendered that plaintiff recover from the defendant the sum of $104,221.65 with interest thereon at the legal rate from August 29, 1974.


source: Caselaw Access Project

author: MASSEY, Chief Justice.

license: Public Domain

text:
    Jack E. HARRIS, Appellant, v. E. R. GUNNER et al., Appellees.
    No. 17788.
    Court of Civil Appeals of Texas, Fort Worth.
    Dec. 3, 1976.
    Rehearing Denied Jan. 14, 1977.

      Hill, Branham & Graham, and Frank W. Hill, Harris & Harris, and Ulis L. Whitecot-ton, Arlington, for appellant.
    Thompson, Knight, Simmons & Bullion, David Noteward and Thornton Hardie, III, Dallas, for appellees.
   OPINION

MASSEY, Chief Justice.

Plaintiffs E. R. Gunner and Clayhill Farms, Ltd., domiciled in England, brought suit against defendant Jack E. Harris for damages for breach of contract to purchase certain livestock.

Following a jury trial judgment was rendered for plaintiffs based upon the difference between the price contracted and the market value at the times prescribed for delivery of the livestock less the $1,000.00 deposit advanced by defendant to plaintiffs. From this judgment defendant appealed.

We affirm.

As we view the case the most important question relates to the measure of damages appropriate to be allowed in a suit for livestock agreed to be sold and delivered as commodities where the suit is predicated upon anticipatory breach of contract to purchase.

The measure of damage applied by the trial court in the submission of the case to the jury was that prescribed by the Uniform Business and Commerce Code, V.T. C.A. Art. 2.708, “Seller’s Damages for NonAcceptance or Repudiation.” By the section is provided “the measure of damages for non-acceptance or repudiation by the buyer is the difference between the market price at the time and place for tender and the unpaid contract price together with any incidental damages provided in this chapter (Section 2.710), but less expenses saved in consequence of the buyer’s breach.”

Our holding is that by the stamp of approval of the Legislature in adopting the Uniform Commercial Code, including Art. 2.708, the seller is entitled in a suit for damages because of anticipatory breach of contract by the buyer to await the time for the tender by buyer of the contract price and recover the difference between the contract price and the market value then ascertainable.

By annotation under Art. 2.708 having possible bearing upon the question we find only the case of Henderson v. Otto Goedecke, Inc., 430 S.W.2d 120 (Tex.Civ.App., Tyler, 1968, writ ref., n.r.e.). Therein are statements, undoubtedly correct prior to the effective date of the Code (September 1, 1967), that the measure of damages in such cases is the difference between the contract price and the market value or price (of the article or right) at time of the breach in instances of anticipatory breach of contract. It is impossible to determine whether the aforementioned case was tried after September 1, 1967; even if it was thereafter tried the breach sued upon had occurred long prior to the Code’s effective date. The appeal followed a second trial of the same case after an earlier appeal.

Anyway we have concluded that enactment and adoption of the Code in Texas did not necessarily foreclose the use of the former measure of damages appropriate to a suit for anticipatory breach of contract, but certainly supplied the additional option to a plaintiff to await the time for performance by the buyer and prove the difference as of that time between the market price and the contract price as a measure of the damages to which he is entitled.

Since we do not perceive any possibility of error in the dates selected by the trial court in submission of the case upon special issues relating to damages by Art. 2.708 of the Code, nor in the amounts found as market values by the jury in response, we are able to conveniently shorten the opinion.

In the instant case it is found that plaintiffs were engaged in the breeding of purebred French Charoláis cattle in England in 1969. Defendant, interested in acquiring heifer calves of that breed at the approximate age of six months, entered into a contract with plaintiffs in early 1969, as follows:

“. . .1 agree to take two (2) pure French heifers each year from you for the next three (3) years, said heifers to be paid for in full when they leave the farm and after they have passed any tests that have been required on the farm . . .. The method of selection shall be as follows: I shall be given the right to select three (3) heifers and you shall have the right to veto any one of my selections . . .. I agree to make the selection on or before the date the heifers are six (6) months old . I further agree that I will make a deposit of $1,000.00 for the following year.”

By usage and practice of persons in the business in which plaintiffs were engaged, shown by the evidence without dispute, the appropriate times for performance by both parties were June/July in 1970, 1971, and 1972. These times were when defendant contracted to receive and accept at a prescribed uniform price per animal, the several “sets” of animals, in all a total of six.

The defendant and plaintiffs consummated their contract for the first two animals. There was failure to consummate the contract relative to the second and third “sets.” It was because of the failure on the part of the defendant to consummate these purchases in 1971 and 1972 that plaintiffs brought suit for breach of contract.

When the language of the plaintiffs’ petition is viewed the important portion to be considered recites: “However since that time (the time when defendant accepted the first animals) Defendant has failed to comply with said contract and agreement and has failed to purchase the heifers due to be purchased in 1971 and 1972, all to Plaintiffs’ damage.” Defendant filed no exception to plaintiffs’ pleadings.

By reason of the language quoted defendant contends that he went to trial on pleadings of simple breach of contract and was confronted with proof of anticipatory breach of contract; and that over his objection he suffered submission of the case by the court to the jury as a suit for anticipatory breach of contract.

Defendant’s pleadings, in addition to his general denial, was that as applied to the second set of animals contemplated by the contract it was the plaintiffs’ inability to perform which occasioned his own failure in respect thereto, and that as applied to the third set of animals it was plaintiffs and not defendant who breached the contract.

When we look to the manner by which the case was submitted to the jury we find only two special issues bearing upon defendant’s liability for breach of contract in the court’s charge. These were:

“QUESTION NO. 1: Do you find from a preponderance of the evidence that on or about June 22,1971 there arose reasonable grounds for insecurity on the part of plaintiffs with respect to the anticipated performance of the contract by defendant?
“Answer ‘We do’ or ‘We do not.’
“Answer: ‘We do.’
“QUESTION NO. 2: Do you find from a preponderance of the evidence that defendant failed within a reasonable time to give to plaintiffs assurance that he would fulfill his obligations under the contract in question?
“Answer ‘We do’ or ‘We do not.’
“Answer: ‘We do.’ ”

It appears to us that the above findings would be incomplete as a finding of anticipatory breach in the absence of some further finding proper to be added in supplement. As part of the “cluster of issues” of which these would be included authority existed for the trial court to make such further finding. That the court did make any necessary additional finding would be implied. T.R.C.P. 279, “Submission of Issues.” See dissertation by former Chief Justice Alexander on “Omitted issues and presumed findings” under “General Commentary” appended to T.R.C.P. 279 in Vernon’s Texas Rules Annotated. In this case there was no objection because of a failure to submit issues other than or in addition to those quoted above.

By the theory that the case was one based upon the defendant’s anticipatory breach of contract there would be entitlement of the court to make the further necessary findings supported by the evidence. There was evidence that defendant had so evidenced that he would breach his contractual obligations arisen and/or to arise prior to such time that the plaintiffs, on or about June 22, 1971, were justified in treating the contract as breached by the defendant. There was evidence that the plaintiffs did exercise their option to so treat the contract as breached. By the findings made by the jury and impliedly made by the court, plaintiffs were excused from tender of any further performance after June 22, 1971.

By issues submitted the jury found against the defendant’s contentions relative to why his contract to take the second set of animals was not consummated. There was not a submission of any special issues making inquiry to settle defendant’s contentions relative to why there was failure to consummate purchase of the third set of animals, and no complaint is advanced by reason of any absence of issues.

By the evidence in the record it is clear that defendant was not and could not have been surprised by plaintiffs’ proof of the acts of defendant constituting anticipatory breach of contract. Relative to a proper construction of a plaintiff’s petition where there is complaint similar to defendant’s in the instant case it is said that, in contradistinction to the rule of construing a pleading against the pleader in test by special exception, every reasonable intendment will be indulged, and the pleading is to be construed as liberally as possible in favor of the pleader when there is no objection to it. 46 Tex.Jur.2d, p. 150, “Pleading”, Sec. 261, “Liberal construction — Seeking intendment of pleader.” Indeed, if at the evidence stage of the trial there had been objection to plaintiffs’ evidence on the ground that there were no pleadings to support the anticipatory breach of contract theory, it would, nevertheless, have been proper to have submitted the evidence. There would not have been such a material variance between pleading and proof to occasion exclusion of the evidence, for the variance did not go down to the structural nature of the cause of action declared upon. 46 Tex. Jur.2d, p. 167, “Pleading”, Sec. 271, “Application of rule as limited by reasons therefor.”

The intendment of T.R.C.P. 90, “Waiver of Defects in Pleading”, was to broaden the procedural rules theretofore pertaining, but even antecedent thereto in the test of a pleading to determine whether it supported a cause of action pleaded the inquiry would be directed to two points: Was the averment of which the omission is complained of essential to the particular cause of action or defense? If so, could the averment be found by implication in the pleading?

It was proper for the trial court to construe plaintiffs’ pleading as alleging a cause of action for anticipatory breach of contract on the part of the defendant, to submit the case to the jury on this theory, and to found judgment upon the answers returned by the jury plus any necessary additional implied findings. If defendant was surprised by the evidence of plaintiffs and by the special issues he must be held to have waived right of complaint of the pleadings because of the absence of objection. Further, defendant did not object on ground of surprise to any of the evidence and at no time sought any delay so that he could seek any countering evidence of his own before there was a submission of the case to the jury.

In further contention upon the proposition that plaintiffs do not have a proper judgment on the theory of anticipatory breach, defendant directs our attention to the record where there is indication that despite any right on the part of plaintiffs at some prior time to treat the breach by defendant as anticipatory breach of contract, they subsequently evidenced their election to keep the contract alive after and despite defendant’s repudiation. It is defendant’s contention that by reason of this plaintiffs destroyed any right then existent to proceed on the theory of anticipatory breach of contract.

One answer to this lies in the evidence itself. It is contradictory and such as to entitle the jury to conclude either way, i.e., that there either had or had not been an election by plaintiffs to reinstate or keep the contract alive. Another answer is that there was never any offer by defendant to consummate the contract — even if it were possible for plaintiffs to deliver six-month old calves after the time had expired when they would be anywhere near such age— with an accompanying agreement by plaintiffs to render return performance on his part. Restatement of the Law, Contracts, Sec. 309, “Re-Creation of Duty by Performance or Acceptance of Performance.” Any right, theretofore arisen, to prosecute a cause of action for anticipatory breach of contract therefor would persist. Here plaintiffs’ right to prosecute such a cause of action arose and was not thereafter extinguished.

We have concluded that the special issues which were submitted were all supported by the evidence, and likewise the supplemental findings on the part of the court which are to be implied found support; and that of these actual or implied findings none were so contrary to the greater weight and preponderance of the evidence as to be clearly erroneous.

Our discussion, hereinabove, covers most if not all of the points of error advanced by defendant. In any event we have severally considered all of the defendant’s points of error and overrule all of them whether specifically discussed or not.

Judgment is affirmed.


author: ROBINSON, Justice.

text:
    Glenna ROGERS et al., Appellants, v. Mary GUNN et al., Appellees.
    No. 8664.
    Court of Civil Appeals of Texas, Amarillo.
    Dec. 20, 1976.

      Howard Traweek, Matador, Williams, Broughton & Forbis; John T. Forbis, Chil-dress, for appellants.
    Heatly & Heatly, W. H. Heatly, Paducah, for appellees.
   ROBINSON, Justice.

The question to be determined in this trespass to try title suit is the effective date of a deed to separate property of a married woman, Mary Hall, signed by her and her husband. The deed in question was dated at a time when the grantee, Raido Martin, was single and was acknowledged by Mary Hall and her husband and filed for record on later dates, all of which were at times when Raido Martin was married to Allie Martin. Plaintiffs, as the heirs at law of Allie Martin, contend that the conveyance was not effective until privily acknowledged by the married woman grantor and that the property in question is, thus, presumed to have been the community property of the spouses, Raido and Allie Martin.

Defendants and cross plaintiffs, as heirs at law of Raido Martin, contend that the conveyance was effective on the date of the deed recited in its body, and was, thus, the separate property of Raido Martin. The facts are undisputed. The trial court entered summary judgment for defendants and cross plaintiffs. Plaintiffs, heirs at law of Allie Martin, appeal. Affirmed.

Defendants’ summary judgment evidence includes an affidavit by Mary Hall that the deed was executed by her and her husband on the date of the deed, January 16, 1946, and delivered to Raido Martin on that date; that it was their intention that the deed take effect January 16, 1946, and that Rai-do Martin took possession of the property on that date. She stated that after the execution and after the delivery of the deed, it was called to their attention that the deed was not properly notarized. There is no summary judgment evidence to the contrary.

In the absence of evidence to the contrary, a deed will be presumed to have been delivered on the date of its execution and acknowledgment. Lerman v. Implement Dealers Mutual Insurance Company, 382 S.W.2d 285 (Tex.Civ.App. — Houston 1964, writ ref’d n. r. e.); Lichtenstein v. F & M National Bank of Kaufman, 372 S.W.2d 716 (Tex.Civ.App. — Dallas 1963, no writ). And where a deed is dated one date and the acknowledgment is on a different date, it will be presumed that it was delivered on the date of the deed and not on the date of the acknowledgment in the absence of evidence showing the date it was actually delivered. Popplewell v. City of Mission, 342 S.W.2d 52 (Tex.Civ.App. — San Antonio 1960, writ ref’d n. r. e.).

Plaintiffs do not deny that this is the general rule, but contend that it does not apply to the facts before us because Tex. Laws 1897, Ch. 40, § 1, at 41,10 H. Gammel, Laws of Texas 1095 (1897), later repealed but in effect at the time, provided with regard to a conveyance by a married woman as follows:

. . and no such conveyance shall take effect until the same shall have been acknowledged by her privily and apart from her husband before some officer authorized by law to take acknowledgments to deeds for the purpose of being recorded, and certified to in the mode pointed out in Article 4621.”

An analogous case is Halbert v. Hendrix, 26 S.W. 911 (Tex.Civ.App.1894, writ ref’d). There the wife executed a power of attorney to her husband to sell her separate property. When she learned that the deed so executed was insufficient to pass title, she signed the deed herself and made a privy acknowledgment. The court said that until then no title had passed, but when she executed the deed and made the privy acknowledgment, no third party interest having intervened, the title related back to the time of the original delivery of the deed.

The nature of property, separate or community, is determined as of the time of the incipiency of the right in the property. Williamson v. Williamson, 457 S.W.2d 311 (Tex.Civ.App. — Austin 1970, no writ); Bryan v. Bryan, 262 S.W.2d 736 (Tex.Civ. App. — Texarkana 1953, writ ref’d n. r. e.).

We conclude that the summary judgment evidence establishes as a matter of law that the effective date of the deed in question was before the marriage of Raido and Allie Martin, and that the property in question was the separate property of Raido Martin.

Appellants plaintiffs conceded in oral argument that they could not prevail on their first two points of error; therefore, we will not discuss those points in this opinion.

Each of appellants’ points of error is overruled. The judgment of the trial court is affirmed.

      . Last codified as Vernon’s Ann.Civ.St. art. 1299 (1962).


author: DUNAGAN, Chief Justice.

text:
    HUDSON & HUDSON REALTORS et al., Appellants, v. Jimmie E. SAVAGE et ux., Appellees.
    No. 975.
    Court of Civil Appeals of Texas, Tyler.
    Dec. 23, 1976.
    Rehearing Denied Jan. 27, 1977.

      William M. Rippey, James K. Peden, III, Strasburger, Price, Kelton, Martin & Unis, Dallas, for appellants.
    Roger D. Sanders, Jarvis, Grisham, Sanders & Emerson, Sherman, for appellees.
   DUNAGAN, Chief Justice.

This is an appeal from an order overruling appellants’ pleas of privilege. This suit was instituted by the appellees in the District Court of Grayson County, Texas, against Hudson & Hudson, Realtors, James S. Hudson, Alex D. Hudson, Jr., Daniel G. Little and R. Scott Stone, appellants. Additional defendants are Aldridge-Pinnell Realtors, A. Ben Pinnell, Jr. and James Aldridge who are not involved in this appeal. The suit grew out of a real estate transaction involving property in Grayson County and is one for damages allegedly resulting from alleged fraud, misrepresentation, deception and breach of fiduciary obligation in the course of the transaction.

Appellants, being five of the eight defendants, each filed a plea of privilege seeking transfer of the case to Dallas County, Texas, the residence of all appellants. From the court’s order overruling said pleas of privilege, this appeal was duly perfected.

Jimmie E. Savage and his wife, Betty L. Savage, reside in Grayson County, Texas, on a 400-acre tract of land. The Savages, appellees, engaged the services of Aldridge-Pinnell Realtors through a verbal exclusive listing agreement whereby Aldridge-Pinnell would attempt to sell the 400-acre tract of land for a 6% commission. A short time later Aldridge-Pinnell was contacted by Hudson & Hudson Realtors about a possible purchase of the property. There is evidence that Hudson & Hudson had no purchaser in mind, but that the company was contemplating purchasing the land for resale when another purchaser could be found, and, as such, it was a speculative-type venture.

A short time later a contract was submitted to the Savages on behalf of “David G. Little, Trustee, and/or assigns.” This was the first of two contracts. Mr. Ed Gillespie, an attorney employed by the Savages to represent them, then negotiated a final contract ultimately signed by all parties on June 7,1973. The final contract was signed by the Savages as sellers, David G. Little, Trustee and/or assigns, as purchaser, Frank M. Aldridge, Jr., on behalf of Al-dridge-Pinnell Realtors as principal agent, and R. Scott Stone on behalf of Hudson & Hudson Realtors as cooperating agent. David G. Little testified that customarily a cooperating agent is “where we would share in the commission of the principal agent, whereby we would represent the purchaser and they would represent the seller.”

The contract of sale provided for a purchase price of $700,000.00. There was placed in escrow $10,000.00, which, at the time of closing, would be applied to the required cash down payment of $70,000.00. The balance of the purchase price was to be in the form of a $630,000.00 promissory note for a term of 15 years bearing interest at a rate of 7½% per annum from the date of closing. The note would provide for annual payments of interest only in advance for the first eight years of the note, with the first annual payment being due at the time of closing. The principal of the note was to be repaid in seven annual installments, the first installment being due October 1, 1981. The contract specifically provided that the purchaser would have no personal liability on the note, and that the Savages’ only recourse in the event of default would be the exercise of their remedies under the vendor’s lien and deed of trust securing the note.

The contract additionally provided that the Savages would pay to the “principal agent” 6% of the total sales price under the contract, with 3% to be paid at the time of closing and the remaining 3% to be paid in three annual installments of $7,000.00 plus 7½% interest. The contract provided that the principal agent could divide the commission with any other licensed brokers, including any cooperating agent named in the contract, but further provided that the Savages would be fully protected by paying all commissions to the principal agent.

According to Scott Stone’s explanation of the nature of the transaction between David Little and the Savages, Little, who was a partner in Hudson & Hudson, entered into the contract as “Trustee, and/or assigns” in order to control the property. By putting up $10,000.00 in earnest money, control could be gained of the property in hopes of finding a buyer for the property, either a syndicate or an individual. It was a speculative situation, and if no buyer could be found, the purchaser was prepared to walk away from the contract and forfeit the earnest money. In fact, prior to the closing of the sale from the Savages to Little, Pete Goldman (who allegedly represented a group of purchasers) was found as a purchaser for the property. An agreement was reached for Goldman to purchase the property from Little for $742,000.00. As a part of that agreement, there was a negotiated commission of $42,000.00 to be taken out of the purchase price and split between Hudson & Hudson and Goldman. Additionally, Goldman and Hudson & Hudson agreed to split any commission which Hudson & Hudson received on the sale of the Savage property to David Little. Goldman received a commission because he was actually representing a group which would buy the property from Little.

Closings of the Savage-Little and Little-Goldman transactions occurred in Gillespie’s office on the same day, October 5, 1973. Present at the closing were Scott Stone, David Little, the Savages, James Aldridge, Mr. Gillespie, and Mr. Copley (not elsewhere identified in the record). At the time of the closing the Savages received a $70,-000.00 down payment, a note for $630,000.00 as provided for in the contract, the first year’s interest payment of $47,250.00, and additionally executed as lessees a lease on the property for $2,000.00 per year as provided for in the contract of sale. The Savages were aware that the note they were taking imposed no personal liability on the purchasers of the property, and were aware that the purchasers could at any time deed the property back to the Savages.

As mentioned previously, the transaction whereby David Little, Trustee, conveyed the property to Goldman was closed on the same day that the Savage-Little conveyance was closed. A split of the commission which the Savages were to pay was arranged between Aldridge-Pinnell and Hudson & Hudson whereby Aldridge-Pinnell, Hudson & Hudson and Goldman shared in the commission paid by the Savages. At the time of the closing of the Savage-Little deal, the Savages were not aware that Goldman would receive a portion of the commission paid by them. Goldman purchased the land from David Little for $42,-000.00 more than the Savages received from David Little.

By October, 1974, when the second interest payment to the Savages became due, and, presumably when the second interest payment from the Goldman group to Little as trustee became due, property values in Grayson County had sharply declined. Since cheaper property existed in the same area, the interest payments were not made. Thereafter there were foreclosures on the property, and it was deeded back to the Savages by the Goldman purchasers.

Aldridge-Pinnell Realtors was the principal agent, representing the Savages as sellers pursuant to their oral exclusive listing agreement. David Little was a partner in Hudson & Hudson, a fact known to Frank and James Aldridge. His relationship to the Savages was that as purchaser in the capacity of “Trustee and/or assigns.” Scott Stone, on behalf of Hudson & Hudson Realtors, was the cooperating agent representing Little as purchaser. Stone and Hudson & Hudson are conceded to have been the cooperating broker in the Savages’ pleadings and were identified as such to the Savages by the Aldridges. The uncontro-verted testimony is that, as cooperating agent, Hudson & Hudson represented the purchaser in the transaction. Equally uncontested is the fact that there was no contact between Hudson & Hudson, Alex Hudson, James Hudson, Scott Stone or David Little and the Savages prior to closing of the transaction, and no representations were ever made by the appellants to the Savages at any time.

Appellees in their first amended controverting affidavit defended venue in Gray-son County under subdivisions 4, 5, 7, 23 and 29a, Art. 1995, Tex.Rev.Civ.Stat.Ann. and also under Art. 17.56, Tex.Bus. & Comm.Code Ann. (Deceptive Trade Practices — Consumer Protection Act).

The order overruling the plea of privilege did not specify the basis for holding venue in Grayson County. Appellants through its points of error therefore covered all of the appellees’ basis for venue as alleged in the controverting affidavit. The appellees’ brief presents counterpoints contesting all of appellees’ points of error. However, in their argument appellees in their briefs only defended venue under subdivisions 4, 23 and 29a, Art. 1995, V.A.T.C.S., and Art. 17.55, Tex.Bus. & Comm.Code Ann., and do not offer support for maintaining venue under subdivisions 5 and 7, Art. 1995, although they state that they “do not concede the same.” We will, however, discuss the application of subdivision 7 of Art. 1995 to the case as reflected by the record before us.

The Savages contended that the situation and alignment of parties was misrepresented to them, and that through fraud and misrepresentation there was a breach of fiduciary duty.

Mrs. Savage testified that prior to the signing of the contract of sale on June 7, 1973, she and her husband engaged the services of Mr. Ed Gillespie, an attorney, who looked after their interest and helped negotiate the sale prior to the signing of the contract of sale; that the contract of sale was signed in his office; that he continued to represent them from June 7,1973, up until October 5, 1973, when the closing was held; and that he represented the Savages at the closing of the transaction. She also gave the following testimony:

“Q. And Mr. Savage could have asked questions of anybody in that room if he had so desired. Isn’t that correct?
“A. Yes.
“Q. Did he ask at that closing, before these papers were signed who these people were that were sitting across the table from him?
“A. No.”

In order to establish venue under subdivision 7, Art. 1995, it is necessary to establish by a preponderance of the evidence all elements of an actionable fraud committed by the party asserting the plea of privilege, including a showing of actual damages. Coalson v. Holmes, 111 Tex. 502, 240 S.W. 896 (1922); Safeway Stores, Inc. v. Amburn, 380 S.W.2d 727 (Tex.Civ.App.— Fort Worth 1964, writ dism’d w. o. j.); Sanders v. Select Insurance Co., 406 S.W.2d 937 (Tex.Civ.App. — Dallas 1966, n. w. h.); Guerra v. Texas Employers Insurance Assn., 480 S.W.2d 769 (Tex.Civ.App. — Corpus Christi 1972, n. w. h.).

Similarly, under subdivision 23, Article 1995, it is necessary to establish by a preponderance of the evidence all elements of the cause of action being asserted against the party as to which venue is alleged. This is true whether the party is asserting venue based upon a cause of action arising in the county of suit, Victoria Bank & Trust Co. v. Monteith, 138 Tex. 216, 158 S.W.2d 63 (1941); Lloyds Casualty Insurer v. McCrary 149 Tex. 172, 229 S.W.2d 605 (1950), or the presence of an agent or representative in the county of suit. Texas Auto Services, Inc. v. Kemp, 478 S.W.2d 646 (Tex.Civ.App. — Austin 1972, n. w. h.); Paris Milling Co. v. Wooldridge, 473 S.W.2d 224 (Tex.Civ.App. — Amarillo 1971, no writ); Lary v. American Indemnity Co., 297 S.W .2d 357 (Tex.Civ.App. — Dallas 1956, n. w. h.).

The elements of actual fraud were outlined in Moore & Moore Drilling Co. v. White, 345 S.W.2d 550, 555 (Tex.Civ.App.— Dallas 1961, writ ref’d n. r. e.);

“Actionable fraud has certain fundamental characteristics; (1) there must be a misrepresentation as to material facts, either positive untrue statements, or concealment or failure to disclose facts within the knowledge of the parties sought to be charged, and as to which the law imposed upon such party a duty to disclose; (2) the complaining party must be shown to have relied upon the alleged misrepresentation to his damages; and (3)the complaining party must, himself, not have failed to exercise reasonable care to protect himself . . . .”

It seems from the testimony presented that the transaction out of which this lawsuit arose cannot be said to be an uncommon real estate transaction. There is no evidence of probative force that the transaction involved fraud on the part of any party to it. Appellants as either purchaser or agent for the purchaser were under no obligation to make any disclosure to the Savages. Further, all facts material to the transaction were clearly disclosed in the contract of sale executed by the parties. Hawkins v. Campbell, 226 S.W.2d 891 (Tex. Civ.App. — San Antonio 1950, writ ref’d n. r. e.), which we think is very similar to the case at bar, supports the appellants’ contention that no fraudulent conduct has been established by the evidence.

If the evidence did show that there had been fraud with respect to the Savages, the Savages incurred no damages as a result. Only Mrs. Savage provided testimony with regard to damages. According to her testimony, “We could have made sales to other people who perhaps would have been much more solid and who would have continued with the payments.” Additionally, “It has been difficult for us financially, and it has been difficult for both of our nerves and health.”

This is the only evidence with regard to damages in the record; and no damages of the type described are recoverable in an action for fraud. In an action for fraud damages are limited to the actual loss which is a direct and proximate result of the fraud. Speculative losses and lost profits are not recoverable in such an action. George v. Hesse, 100 Tex. 44, 93 S.W. 107 (1906); Booth v. Coward, 265 S.W. 1026 (Tex.Com.App.1924, jdgmt. adopted). While no Texas case has been found discussing the point, courts in other jurisdictions have consistently held that damages for mental anguish, humiliation, pain and suffering are not recoverable in an action for fraud. Harsche v. Czyz, 157 Neb. 699, 61 N.W.2d 265, 272 (1953); Ellis v. Crockett, 51 Haw. 45, 451 P.2d 814, 820 (1969); Newman v. Smith, 77 Cal. 22, 18 P. 791 (1888); Chandler v. Ziegler, 88 Colo. 1, 291 P. 822, 824 (1930); Aaron v. Hampton Motors, Inc., 240 S.C. 26, 124 S.E.2d 585, 591 (1962); Kantor v. Comet Press Books, 187 F.Supp. 321, 323 (S.D.N.Y.1960).

Remote damages, or those purely conjectural, speculative, or contingent, are too uncertain for ascertainment and cannot be recovered in an action for fraud. Success Motivation Institute, Inc. v. Lawlis, 503 S.W.2d 864 (Tex.Civ.App.—Houston [1st Dist.] 1973, writ refd n. r. e.).

Under the record there is simply no evidence of any damage or loss incurred by the Savages. To the contrary, the evidence reveals a profit to them in the transaction. At the time of closing, they received a $70,000.00 down payment, plus a year’s interest of $47,250.00, and paid out a commission of $21,000.00, for a net cash gain to them of $96,250.00. Slightly more than a year later the land which the Savages conveyed was returned by the purchaser to them. The land having been returned to the Savages, in accordance with the terms and conditions of the note they accepted, it cannot be said that they have incurred any loss as measured by the difference between what they surrendered and what they received.

Because there was no evidence to establish fraud on the part of appellants, and because there is no evidence of damages recoverable in an action for fraud, venue as to appellants cannot be sustained under subdivision 7, Article 1995. Nor can venue be sustained as to Hudson & Hudson Realtors under subdivision 23, Article 1995 or as to the remaining appellants under subdivision 29a, Article 1995.

Appellees also contend that venue of this case is established in Grayson County under Sec. 17.56, Tex.Bus. & Comm.Code (Deceptive Trade Practices Act) if they have pleaded a cause of action under the act and that no proof of that cause of action is necessary.

The Texarkana Court of Civil Appeals in Doyle v. Grady, 543 S.W.2d 893, which opinion was filed by the court on November 16, 1976 (unreported), held that under the venue provision of the Deceptive Trade Practices Act the plaintiff or plaintiffs must follow the general rule and both plead and prove a cause of action to support venue. We are in accord with this decision. Appellees failed to prove a cause of action under the Deceptive Trade Practices Act.

It is essential that the application of any exception relied upon must clearly appear in the record. Goodrich v. Superior Oil Co., 150 Tex. 159, 237 S.W.2d 969 (1951).

Venue may not be established by implication. Saigh v. Monteith, 147 Tex. 341, 215 S.W.2d 610 (1948).

It is well settled that in order to overcome the plea of privilege in statutory form, plaintiff, must make out a case against the defendant as one of the facts necessary to be established to confer venue in the county where the suit is pending. Kirby Lumber Corp. v. Treadway, 382 S.W.2d 316, 319 (Tex.Civ.App. — Beaumont 1964, writ dism’d); Colman v. H. Dittlinger Roller Mills Co., 181 S.W.2d 604, 606 (Tex. Civ.App. — Galveston 1944, n. w. h.); Taylor v. Whitehead, 88 S.W.2d 716 (Tex.Civ.App. —Fort Worth 1935, n. w. h.); Compton v. Elliott, 126 Tex. 232, 88 S.W.2d 91, 93 (Tex. Com.App.1935, opinion adopted); 60 Tex. Jur.2d Venue secs. 206 & 218.

After a very careful review of all the evidence in this case we have concluded that the appellees have failed to prove a cause of action against appellants under any of their allegations and have failed to allege or prove any resulting damages. Therefore appellees have failed to establish a basis for venue as to appellants in Gray-son County, Texas.

Accordingly, we reverse the judgment of the trial court and herein render judgment sustaining the pleas of privilege of the appellants. We order venue as to the appellants only transferred to a District Court in Dallas County, Texas, in accordance with Rule 89, T.R.C.P.

Reversed and rendered with instructions.


author: McDONALD, Chief Justice.

text:
    Dorothy Harper MITCHELL, Individually and as Executrix, Appellant, v. Robert G. CARTER, Appellee.
    No. 5651.
    Court of Civil Appeals of Texas, Waco.
    Dec. 23, 1976.
    Rehearing Dismissed Jan. 27, 1977.

      Danny R. Barfield, Pasadena, for appellant.
    Leonard L. Gorin, Waco, for appellee.
   OPINION

McDONALD, Chief Justice.

Plaintiff Mitchell appeals from summary judgment she take nothing in suit against defendant Carter for damages.

In this case No. 25,828 plaintiff sued defendant Carter and other devisees of the will of H. P. Harper, deceased alleging: 1) the defendants entered into a conspiracy to distribute fraudulently the Harper Estate, and 2) that attorney Carter wrongfully refused to remove himself as attorney in cause No. 25,680.

Thereafter plaintiff nonsuited all devisee defendants leaving appellee Carter as the only defendant.

Defendant Carter answered that all matters in controversy in this case were litigated to final judgment in cause No. 25,680.

Both plaintiff and defendant moved for summary judgment.

The trial court overruled plaintiff’s motion; granted defendant’s motion; and rendered judgment plaintiff take nothing.

Plaintiff appeals on 2 points:

1) The trial court erred in overruling plaintiff’s motion for summary judgment.
2) The trial court erred in granting defendant’s motion for summary judgment by finding there was no genuine issue as to any material fact.

Plaintiff Dorothy Harper Mitchell employed defendant attorney Carter to probate her father’s will which named her as Executrix, and of which she was one of the devisees. Attorney Carter probated the will in Falls County Court and plaintiff was appointed Executrix on July 11, 1973. After probate of the will plaintiff became dissatisfied with attorney Carter, employed other counsel, and on December 8, 1973 discharged him as attorney for the estate. On August 13, 1974, (and after attorney Carter was discharged), the other devisees of the will, represented by attorney Carter, filed cause No. 25,680 in the District Court of Falls County for partition of the property in the Harper Estate, for partition of properties in the Estate of Mrs. H. J. Harper, and for an accounting, against Dorothy Harper Mitchell.

During the course of such trial Dorothy Harper Mitchell filed a “Motion for Removal of Plaintiff’s Attorney of Record” on the grounds of conflict of interest, and violation of the Code of Professional Responsibility for Attorneys. Answer was filed to such motion; it was heard and overruled by the trial court. Thereafter all parties in cause No. 25,680 entered into a settlement of all matters involved in the case and stipulated in open court in writing to a division, distribution and partition of both estates between the parties. The trial court entered an interlocutory judgment and appointed Commissioners to partition the real estate, who did in fact partition such real property, file their report, and by final judgment the properties were partitioned between the parties.

Dorothy Harper Mitchell filed motion for new trial assigning as error the action of the trial court in refusing to remove attorney Carter as plaintiff’s attorney. The motion was overruled; no appeal was taken; and the judgment in cause No. 25,680 is now final.

On May 20,1975 Dorothy Harper Mitchell filed this cause against attorney Carter and the other devisees in the H. J. Harper will, but as noted nonsuited as to all defendants except attorney Carter.

Appellant’s 1st point complains the trial court erred in overruling her motion for summary judgment. Such motion and supporting affidavits, if any, are not before the court having not been brought forward by appellant. Under such circumstances appellant cannot demonstrate error.

Appellant’s 2nd point complains the trial court erred in granting defendant’s motion for summary judgment.

Defendant’s motion for summary judgment asserted the judgment in cause No. 25,680 was res judicata of all plaintiff’s claims in the present case.

In the instant case plaintiff sought damages on two grounds: 1) Carter and the other devisees of the Harper will conspired to distribute fraudulently the assets of the Estate; 2) Carter should have removed himself as attorney in the case.

Both above grounds were raised judicially and overruled in the prior suit No. 25,680. The first by an agreed settlement and judgment distributing the Estate, and the second by overruling of the motion to remove Carter as attorney. The judgment in cause No. 25,680 was not appealed from and is final.

Res Judicata is the doctrine that a right, question or fact, put in issue and determined by a court of competent jurisdiction cannot be further litigated in a subsequent suit between the same parties or their privies. Davis v. First National Bank of Waco, 139 Tex. 36, 161 S.W.2d 467. The rule of Res Judicata bars litigation of all issues connected with a cause of action or defense which, with use of diligence, might have been tried in a former case, as well as those which were actually tried. Ogletree v. Crates, S.Ct., 363 S.W.2d 431. And the rules of res judicata rest upon the policy of protecting a party from being twice vexed for the same cause, together with that of achieving judicial economy in precluding a party who has had a fair trial from reliti-gating the same issue. Benson v. Wanda Petroleum Co., S.Ct., 468 S.W.2d 361.

Thus, both the rules of res judicata and collateral estoppel bar plaintiff’s claims.

Plaintiff’s points and contentions are overruled.

AFFIRMED.

ON REHEARING

Opinion and judgment were rendered in this case December 23, 1976. Motion for rehearing was thus due to be filed no later than January 7, 1977. Rule 458 TRCP.

Motion for rehearing was filed January 10, 1977.

Such filing on January 10, 1977 would have still been timely (under Rule 5 TRCP) if the motion had been mailed no later than January 6, 1977. But such motion was deposited in the mail on January 7, 1977, and such fact is reflected by both the POST MARK, and the letter of transmittal accompanying the motion.

Under Rule 21c TRCP appellant had 15 days following January 7,1977 to reasonably explain failure to timely file such motion. Such 15 days expired January 24, 1977 (since January 22, 1977 fell on Saturday). No motion of explanation was filed.

Appellant’s motion for rehearing is accordingly dismissed.

DISMISSED.


author: CORNELIUS, Justice.

text:
    Richard T. McCONATHY, Appellant, v. DAL MAC COMMERCIAL REAL ESTATE, INC., et al., Appellees.
    No. 8410.
    Court of Civil Appeals of Texas, Texarkana.
    Dec. 28, 1976.
    Rehearing Denied Feb. 1, 1977.

      Ken R. Davey, Kerry P. Fitzgerald, Dallas, for appellant.
    W. Ted Minick, Winstead, McGuire, Se-chrest & Trimble, Dallas, for appellees.
   CORNELIUS, Justice.

Appellant, Richard T. McConathy, brought suit against appellees, Dal Mac Commercial Real Estate, Inc., Richard M. Romano and J. W. Davis under Article 581-33 of the Revised Civil Statutes of Texas seeking recision of his purchase of an interest in the “Pioneer Road Joint Venture,” which venture was stated in the agreement to be for the purpose of “holding for investment and capital appreciation” a tract of 23.3 acres of land in Irving, near Dallas, Texas. Appellant alleged that he had purchased a security, that the security had been sold to him by means of misrepresentations or omissions, that the security was required to be but was not registered with the Texas Securities Commissioner, and that the persons making such sale to the appellant were not licensed as security dealers. Appellees defended on grounds that the interest sold was not a security, that if it was a security no misrepresentation had been made by appellees, and that the transaction was exempt from registration by the provisions of Article 581-5 of the Texas Securities Act. At the conclusion of appellant’s case, Appellee Davis moved for a directed verdict which was granted. The remaining appellees then proceeded with their testimony. At the conclusion of all of the testimony the court granted the appel-lees’ motion for instructed verdict and rendered a take-nothing judgment against appellant.

Appellant contends the trial court erred in rendering a take-nothing judgment because (1) the interest he purchased was an “investment contract” or a “profit sharing agreement” and was therefore a security within the meaning of Article 581 — 4, and (2) the security was not an exempt security under the terms of the Securities Act, or if it was an exempt security, a fact issue was made on the question of whether the sale was made by means of public advertising, thus bringing the transaction within the provisions of the Securities Act despite its otherwise exempt status. Appellant did not plead or seek recovery for common law fraud or misrepresentation.

Dal Mac Commercial Real Estate was in the business of organizing joint ventures in real estate. When it became interested in a property it would investigate the location, zoning and price to fair market value ratio before arranging a purchase. It would then sell fractional interests in the joint venture. The Pioneer Road property was purchased for $490,050.00. A total of $46,-750.00 was paid down and a vendor’s lien note for $443,300.00 was executed. Title to the property was taken in the name of J. W. Davis, President of Dal Mac Commercial Real Estate, Inc., as trustee and manager for the joint venture. Dal Mac was paid a 6% commission on the sale of the property to the joint venture, which fact was fully disclosed by the joint venture papers. The appellant purchased a 10% interest in the Pioneer Road Joint Venture for $8,000.00. He purchased his interest on July 17, 1974, from Richard Romano who was a salesman for Dal Mac. The appellant and Romano had been social acquaintances and golfing associates for several years. Over a period of years they had discussed the appellant’s possible investment in some of Dal Mac’s real estate ventures. A proposal for at least one such adventure was submitted by appellant to his attorney for review which resulted in appellant’s decision not to participate in that venture. Appellant and Romano continued to discuss informally the advantage of investing in such ventures. During one such discussion Romano gave appellant a brochure which briefly described the Pioneer Road Venture. Subsequently, appellant advised Romano that he would participate in the venture. On July 17, 1974, Romano and appellant met in Romano’s office where appellant looked over and then signed the joint venture agreement. The testimony of appellant and Romano conflicts with regard to the extent to which appellant investigated the brochures and agreements relating to the joint venture. Appellant contended that he barely looked at them and entered the venture mainly upon the representations and assurances of Romano which he contends were false and misleading. To the contrary, Romano contended that he thoroughly discussed the brochures and related agreements with appellant and that appellant was a sophisticated investor who was fully cognizant of all of the facts concerning the joint venture as well as the representations and provisions of the various agreements. Some twenty-one persons purchased interests in the Pioneer Road Joint Venture. All of the participants resided in or near the Dallas area and were business associates, relatives or friends of Romano and Davis. Dal Mac, Davis and Romano themselves took interests in the venture.

The “Proposal To Form Pioneer Road Joint Venture” stated that the purpose was “of buying and holding this property as an investment which we hope will appreciate in value during the holding period. We anticipate selling the property for a profit at some future date and realizing a capital gain.” The joint venture agreement itself, which was signed by all of the participants, contained the following provisions:

“(b) The Venturers hereby enter into and form this Joint Venture for the .limited purpose of holding and liquidating the Venture Property as an investment only
“(c) The scope of the Joint Venture business shall be limited strictly to sale or liquidation of the Venture Property as an investment, and such property shall be sold only in large tracts and shall not be subdivided, developed, or otherwise held for the sale to customers in the ordinary course of business, and the only improvements which may be made are those which are imperative to make the property salable as an investment. The rights and obligations of the Venturers and the administration and termination of the Joint Venture shall be governed by the Texas Uniform Partnership Act, except where provisions in this Agreement to the contrary appear, . . ” (Emphasis supplied.)

The agreement also contains provisions to the general effect that:

(1) All gains or profits, as well as losses, are shared by the venturers according to their proportionate interests.
(2) Distribution of any profit shall be made only after the property is sold or upon termination of the joint venture.
(3) The venture will be taxed as a partnership under applicable provisions of the Internal Revenue Code.
(4) J. W. Davis was designated as the venture manager.
(5) The venture manager has management of the venture property and has power to execute all necessary documents and to hold title to the property in his name. The venture manager may not sell, mortgage or transfer the property or incur any debt in an amount of more than $2,000.00 unless expressly authorized by vote of 70% of the participants. The venture manager will receive $500.00 per year as an administrative fee.
(6) The remaining participants have the first right of refusal on the sale by any other participant of his interest except in the case of a sale to a family member or family trust. If a venturer dies before the termination of the joint venture, the other participants may buy his interest.
(7) A venturer forfeits his interest if he fails to make a required contribution or if he takes bankruptcy or makes an assignment for the benefit of creditors.
(8) The venture will terminate upon the sale of the property or upon a vote to dissolve by at least 70% of the participants. Upon termination, the assets are to be distributed to the participants in cash or in kind.

Appellant’s principal contention is that the interest he purchased was an investment contract and therefore constituted a security under the terms of the Texas Securities Act. The term investment contract is used in the United States Securities and Exchange Act as well as in numerous state securities regulation statutes. See 15 U.S.C.A. § 77b(l); Uniform Securities Act, Sec. 401(1); Annot., 47 A.L.R.3d 1375, 1378. The term has therefore received considerable interpretation and has come to have a definite meaning. 69 Am.Jur.2d, Securities Regulations — State, Sec. 27, p. 1089; An-not., 47 A.L.R.3d 1375, et seq. It refers to a transaction or scheme whereby a person invests his money in a common enterprise and is led to expect profits solely or substantially from the efforts of the promoter or others. SEC v. W. J. Howey Co., 328 U.S. 293, 66 S.Ct. 1100, 90 L.Ed. 1244; United Housing Foundation, Inc. v. Forman, 421 U.S. 837, 95 S.Ct. 2051, 44 L.Ed.2d 621; SEC v. Glenn W. Turner Ent., Inc., 474 F.2d 476 (U.S.Ct.App. 9th Cir. 1973); Bruner v. State, 463 S.W.2d 205 (Tex.Ct.Cr.App.1970); Koscot Interplanetary, Inc. v. King, 452 S.W.2d 531 (Tex.Civ.App. Austin 1970, writ ref’d n. r. e.); Clayton Brokerage Co. of St. Louis, Inc. v. Mouer, 520 S.W.2d 802 (Tex. Civ.App. Austin 1975), controversy dismissed as moot, 531 S.W.2d 805 (Tex.1975); King Commodity Company of Texas, Inc. v. State, 508 S.W.2d 439 (Tex.Civ.App. Dallas 1974, no writ). Thus, the essential elements of an investment contract as contemplated by the securities laws, are () the investment of money (2) in a common enterprise (3) with a view to profits resulting solely or substantially from the efforts of others. “Efforts” of a promoter or others means operational, managerial or developmental efforts. United Housing Foundation, Inc. v. Forman, supra; SEC v. C. M. Joiner Leasing Corp., 320 U.S. 344, 64 S.Ct. 120, 88 L.Ed. 89; Blackwell v. Bentsen, 203 F.2d 690 (U.S.Ct.App. 5th Cir. 1953); 1 Loss, Securities Regulations, 492 (2d Ed. 1961). It does not include the mere holding of property in anticipation of appreciation in value. Davis v. Rio Rancho Estates, Inc., 401 F.Supp. 1045 (S.D.N.Y.1975); Happy Investment Group v. Lakeworld Prop., Inc., 396 F.Supp. 175 (N.D.Cal.1975); Contract Buyers League v. F & F Investment Co., 300 F.Supp. 210 (N.D.Ill., E.D., 1969); 1 Loss, Securities Regulations, 492 (2d Ed. 1961). In determining whether a transaction is an investment contract, the courts will disregard the form and will look to the substance of the transaction, giving effect to the economic realities of the scheme. Tcherepnin v. Knight, 389 U.S. 332, 88 S.Ct. 548, 19 L.Ed.2d 564 (1967); United Housing Foundation, Inc. v. Forman, supra. Judged by the foregoing principles, the undisputed evidence in this record demonstrates that Pioneer Road Joint Venture was lacking in one of the essential elements of an investment contract. Although there was an investment in a common enterprise, there was no promise or expectation of profits resulting solely or substantially from the efforts of others. The evidence shows only that the parties joined together to purchase land and hold it for possible appreciation in value. The terms of the joint venture agreement, as well as the undisputed testimony, reveal that no development or operations were to be undertaken with regard to the property. Profits, if any, would not be realized until the land was sold and the venture terminated, and then would result only from enhancement in the value of the land because of its location and the normal appreciation of neighborhood land values.

The association of persons in a joint venture to acquire land to be held for them by a trustee for possible enhancement in value at resale is not within the Securities Act, where the essential element of reliance on the managerial, operational or developmental efforts of others is not present. Polk v. Chandler, 276 Mich. 527, 268 N.W. 732 (1936); Wardowski v. Guardian Trust Co., 262 Mich. 422, 247 N.W. 908 (1933); Busch v. Noerenberg, 202 Minn. 290, 278 N.W. 34 (1938); Hanneman v. Gratz, 170 Minn. 38, 211 N.W. 961 (1927); 1 Loss, Securities Regulations, 491-492 (2d Ed. 1961); Rifkind and Borton, SEC Registration of Real Estate Interests: An Overview, 27 Bus.Law 649, 656 (1972). The only management on the part of the managing ven-turer in the Pioneer Road Joint Venture was that of insuring the property, paying the taxes and the like — not for profit, but solely to protect and preserve the investment.

Aside from lacking an essential element of an investment contract, the Pioneer Road Joint Venture was not the kind of transaction or scheme for which the Securities Act contemplates a need for the protection of investors. All of the participants were local people who were friends, business associates or relatives of Davis or Romano. Each had a substantially equal opportunity to initially judge the quality and desirability of the investment. All were close to the land and had ample opportunity to keep abreast of the factors affecting its value and the feasibility of resale. Any sale or other use of the property required the participation of at least 70% of the venturers by interest. There was no reliance on the developmental, managerial or operational skills of a promoter or third party in attempting to make a profit and the venturers shared losses and obligations as well as gains, thus making the arrangement more in the nature of a partnership or true joint venture than a sale of securities. See Brown v. Cole, 155 Tex. 624, 291 S.W.2d 704 (1956); Oxford Finance Companies, Inc. v. Harvey et al., 385 F.Supp. 431 (E.D.Pa. 1974).

Neither would the evidence justify a conclusion that appellant’s investment was a “certificate in or under a profit sharing or participation agreement” as included in the Securities Act. See 79 C.J.S. Supp. Securities Regulation § 15, p. 168, 169 (1974); Rifkind and Borton, SEC Registration of Real Estate Interests: An Overview, 27 Bus.Law 649, 650 (1972).

As appellant based his claim solely upon a violation of the Securities Act, and as the undisputed evidence showed the transaction to be neither an investment contract nor a certificate in a profit sharing agreement, the trial court correctly directed a verdict for appellees.

The judgment is affirmed.