author: MASSEY, Chief Justice.

text:
    James E. CANTRELL et ux., Appellants, v. FIRST NATIONAL BANK OF EULESS, Appellees.
    No. 17868.
    Court of Civil Appeals of Texas, Fort Worth.
    Nov. 17, 1977.
    Rehearing Denied Jan. 5, 1978.

      Staples & Foster and Ross T. Foster, Hurst, for appellants.
    Elvin E. Tackett, Bedford, for appellees.
   OPINION ON MOTION FOR REHEARING

MASSEY, Chief Justice.

Our opinion dated September 22, 1977, is withdrawn, with the following substituted therefor.

James E. Cantrell and wife, hereinafter referred to in the singular as Cantrell, brought suit for damages and penalties allegedly applicable against the First National Bank of Euless, hereinafter referred to as Bank. Averred were two separate causes of action.

Following trial to a jury, with verdict returned, the trial court disregarded answers of the jury applicable to Cantrell’s claim under the Texas Business and Commerce Code, Title 2, “Competition and Trade Practices,” Subchapter E, “Deceptive Trade Practices and Consumer Protection,” § 17.41 et seq., the Deceptive Trade Practices — Consumer Protection Act. By the court’s judgment all the relief sought by Cantrell in this cause of action was denied.

Based upon the verdict of the jury as otherwise to be considered, the trial court rendered a judgment granting Cantrell relief which he deemed unsatisfactory and insufficient. The cause of action upon which this judgment was predicated was by the provisions of Y.A.T.S. Title 79, “Consumer Credit,” Chapter 4, “Installment Loans,” Art. 5069-4.01, “Installment loans authorized” and Art. 5069-4.03, “Lender’s duty to borrower”; and Chapter 8, “Penalties,” Art. 5069-8.01, “Contracting for, charging or receiving interest, time price differential or other charges greater than authorized.” Additionally, the cause of action upon which this judgment was furthermore predicated was by the provisions of U.S.C.A., Title 15, “Commerce and Trade,” Chapter 41, “Disclosures,” Part B, “Credit Transactions,” § 1631, et seq.

Cantrell appealed. The Bank filed a cross-appeal.

We affirm judgment of the trial court denying relief upon Cantrell’s cause of action predicated upon provisions of the Texas Business and Commerce Code. We sever therefrom and in part reverse and render and in part and with severance reverse and remand for purposes of trial of attorney’s fees the judgment as applied to Cantrell’s other causes of action.

HISTORY

In June of 1973 Cantrell found himself with a new son-in-law, one Caballero. Caballero was a photographer by trade, and his work consisted in taking children’s photographs at stores in different metropolitan areas. Such work necessitated very frequent moves from city to city. For a month or so the young couple used an automobile and stopped at motels, eating at restaurants. The idea was conceived that if they had a motor home they could make the frequent necessary moves, have living quarters in the motor home, where their meals could also be prepared, with the result a substantial saving. Caballero did not have the necessary financial means by which such a motor home could be purchased.

Cantrell was approached with the problem. By his arrangement with the Bank the financing necessary to purchase the desired motor home was accomplished. In addition to $1,000.00 required as part of the down-payment on the purchase of the desired motor home, an additional amount of $8,000.00 was borrowed on the strength of Cantrell’s credit. Cantrell’s loan transaction with the Bank was accomplished on August 14, 1973.

Without question, at least $2,000.00 of the entire amount of approximately $3,500.00 in Cantrell’s savings account with the Bank was agreed to be “frozen” and not withdrawn from the Bank as security in addition to that of the Bank’s mortgage on the motor home. It is obvious that Cantrell shared the common belief of most motor vehicle purchasers that in the event there was a repossession by the lender on the strength of the mortgage all reciprocal obligations would come to an end and nothing would be thereafter owed by or to the lender. Cantrell did understand that if and in the event of repossession the $2,000.00 “frozen” in his savings account would become the Bank’s if that much should be required to make up any deficiency in the event of a foreclosure. What he did not understand was that either by the law or by his contract with the Bank he could be personally liable for any excess in amount above the $2,000.00 pledged and “frozen” as additional security.

Caballero made the first of the contracted 59 payments in the amount of $189.55 (on the total of $11,375.00 agreed indebtedness to the Bank ultimately to accrue) approximately ten days after it became due. Subsequent payments, also late, were made by Cantrell in the form of agreed transfers of amounts out of the excess in his savings account above the “frozen” $2,000.00. During the period intervening prior to foreclosure Cantrell did use for his own purposes the excess in his savings account above the $2,000.00 which was “frozen”. Within a very few weeks the Caballeros had financial and marital difficulties. The young couple separated and the motor home was parked at Cantrell’s premises in Tarrant County where it remained for some further weeks until, in part because of Cantrell’s request, there was repossession by the Bank on February 26, 1974. At such time there was an installment owing on Cantrell’s note which was eleven days overdue.

Following repossession, the Bank had repairs done to the motor home and undertook the expense to sell the same at private sale for $5,200.00. There is no attack upon the propriety of sale for such amount nor upon the Bank’s computation that, after application of all credits, including the entire amount in Cantrell’s savings account, it sustained a loss of something under $100.00 (i. e., the Bank’s loss under its entitlement had it been fully paid what it was due on Cantrell’s note). The Bank did not sue to recoup its loss, apparently having “written it off as a bad debt.”

In making application to the retirement of Cantrell’s indebtedness the Bank took not only the “frozen” $2,000.00 in Cantrell’s savings account, but it also took the remainder thereof in the sum of $1,234.44.

Part of the litigation here involved (under the Business and Commerce Code) was born in the Bank’s transfer, on April 4, 1974, of the $1,234.44 out of the Cantrell savings account. Cantrell deemed himself aggrieved, indeed believing that the Bank had contracted with him not to demand or take anything from him over and above the agreed amount of $2,000.00. On this, however, Cantrell predicated no part of his complaint. There was no pleading or evidence tending to prove that the Bank had thus contracted or which sought to reform the contract to provide as Cantrell believed.

ON THE BANK’S MOTION TO DISMISS THE APPEAL

One ground of the Bank’s motion to dismiss is the failure of Cantrell to file any motion for new trial as a predicate for his appeal from judgment in a case tried by jury. Cantrell had no need to file any motion for new trial. What he desired of the trial court by his motion for judgment in the case was that he deemed his entitlement by the jury’s verdict. What he seeks by his appeal is a rendition of a judgment on the verdict. In this situation there is no requirement that Cantrell have filed any motion for new trial as predicate for appeal.

Another ground of the Bank’s motion to dismiss is by reason of the language of the judgment from which the appeal was perfected. The Bank contends that there has been no final judgment to be appealed. The language in the judgment upon which the Bank relies reads, as follows: “IT IS, THEREFORE, ORDERED, ADJUDGED AND DECREED that JAMES E. CANTRELL and Wife, LAYERNE CANTRELL, Individually and as Assignee of John P. Caballero, do have and recover of and from the Defendant, FIRST NATIONAL BANK OF EULESS, the sum of $2,000.00, provided Plaintiffs file a remittitur of any greater amount claimed by them on Plaintiffs’ Attorney’s Fees.” (Emphasis supplied.) The instrument in which the language is found was labeled “Judgment,” and was “signed and rendered” by the court in its official capacity. The contention of the Bank is without merit and its motion to dismiss the appeal is overruled.

On what is above last written we hold that the trial court’s act was entry of a final and appealable judgment and that the language “provided Plaintiffs file a remitti-tur of any greater amount claimed by them on Plaintiffs’ Attorney’s Fees” is surplus-age and meaningless. The ministerial act of entry of a final judgment was accomplished in this case. It was not a mere interlocutory judgment because there was not left for future determination some material question connected with it. It would have been fatal to Cantrell’s appeal to have treated it as interlocutory; it was a final and appealable judgment. State v. Starley, 413 S.W.2d 451 (Tex.Civ.App.-Corpus Christi 1967, no writ history).

ON THE PART OF THE JUDGMENT AFFIRMED

The Deceptive Trade Practices—Consumer Protection Act, Texas Business and Commerce Code under Title 2, “Competition and Trade Practices,” § 17.41, et seq., provides by § 17.50, “Relief for Consumers” that a consumer (including an individual who acquires any goods or services by purchase) has a cause of action he may maintain if he has been adversely affected by: “(1) the use or employment by any person of an act or practice declared to be unlawful by Section 17.46 of this subchapter; ... (3) any unconscionable action or course of action by any person; . . . .” If he prevails by his suit he may obtain: “(1) three times the amount of actual damages plus court costs and attorneys’ fees reasonable in relation to the amount of work expended; . . . (Emphasis supplied.)

Quoting from § 17.46, “Deceptive Trade Practices Unlawful,” is found provision that “The term ‘false, misleading, or deceptive acts or practices’ includes, but is not limited to, the following acts: . (12) representing that an agreement confers or involves rights, remedies, or obligations which it does not have or involve, or which are prohibited by law; . . . Under § 17.46 there are many more unlawful actions specified, but (12) appears the only one of these which could possibly have application to Cantrell’s case. Neither do we perceive how (12) has application. It is only by a distortion of the facts to which there was testimony in the case—directed and intended to constitute proof of the Bank’s misrepresentation relative to limitation of Cantrell’s security liability in the event it became necessary to foreclose upon the motor home and the $2,000.00 in his savings account—that the answers of the jury which were disregarded by the trial court would find support.

The disregarded answer to Special Issue No. 3 was the affirmative answer of the jury to the question: “Do you find from a preponderance of the evidence that Everett Pelton [agent for the Bank] represented to James E. Cantrell that only $2,000 of his savings account was being assigned as security for the loan?”

As a matter of fact the evidence in the record is conclusive that only $2,000.00 of Cantrell’s savings account was assigned as security. Cantrell understood this and so did the Bank. It was the $2,000.00 which was “frozen”. The remainder of Cantrell’s savings account was his own, and he did make withdrawals therefrom so that as of the time of the Bank’s foreclosure there was an excess (above the “frozen” $2,000.00) of only the $1,234.44. The time of the purported conversion (and we hold there was no actual conversion by the action of the Bank) would have had no necessary relation to the time the loan was made to Cantrell unless there was in fact a contract by the Bank that in the event of foreclosure it would not reduce to possession and application upon Cantrell’s debt any remainder in Cantrell’s savings account. (By the evidence in the case there was no such contract.)

Noted is that there was no special issue submitted to the jury inquiring whether the Bank had thus contracted, so that its seizure of the remainder in Cantrell’s savings account would constitute a breach of the parties’ contract; indeed there was nothing in Cantrell’s pleadings for any reformation of the parties’ contract to make it conform to one of such character. Apart from any necessity for reformation of the contract the jury’s answer to Special Issue No. 3 did not, in and of itself or in combination with the answers to Special Issues Nos. 4 and 5, constitute a basis for his recovery. The court properly disregarded the jury’s answers to all three issues.

Special Issue No. 4, conditioned upon affirmative answer to the preceding issue, inquired whether the representation that only $2,000.00 of Cantrell’s savings account was being assigned as security for the loan by the Bank was a deceptive trade practice.

Special Issue No. 5 inquired what was the amount of Cantrell’s damages. That the jury did attempt by its answers to both to find for Cantrell was nevertheless ineffective.

Furthermore, apart from consideration of any inadequacy in Cantrell’s special issues, the situation could not have supported suit by Cantrell for damages. In the eyes of the law he could not have sustained any common law damages. He merely paid an amount to the Bank justly owing by him and no more. To require redelivery of any part of the $1,234.44 to Cantrell without honoring the Bank’s entitlement to have his indebtedness paid would be to unjustly enrich him at the expense of the Bank. There was no statutory exemption applicable to the $1,234.44. Upon foreclosure the Bank was in position of a lender holding money of his borrower whose matured indebtedness was of greater amount than that which was held. The indebtedness in this case matured by foreclosure upon the security of Cantrell to the extent of the deficiency remaining owing by him to the Bank. To the extent of the deficiency it was lawful that the Bank take and apply thereto that which it had been theretofore holding for Cantrell; when it did so no right of action accrued because thereof.

Stated in the negative: An action for money had and received, although one at law, is equitable in its nature, and action to recover such may not be maintained by one person against another unless in equity and good conscience such other ought to pay it over. 6 Tex.Jur.2d, the section entitled “Assumpsit,” and especially p: 551, § 6, “Money had and received.” See also 14 Tex.Jur.2d, p. 51, “Conversion,” § 51, “Creditors and levying officers.”

We hold that the actual damages meant by Texas Business and Commerce Code, in the aforementioned § 17.50, are common law damages only. Any right of Cantrell because of some statutory right to damages would not be proper to be considered.

To be remembered is that Cantrell, not having established right to recover damages by the provisions of § 17.50 of the Business and Commerce Code, would not be entitled to any attorney’s fees. The Bank, not being obligated to pay damages to Cantrell, would be under no obligation to pay him any attorney’s fees under the Deceptive Trade Practices — Consumer Protection Act, § 17.41, et seq., of the Business and Commerce Code.

The take nothing judgment on this cause of action is affirmed.

ON THE PART OF THE JUDGMENT REVERSED

By the jury’s answer to Special Issue No. 2 it was found that the Bank failed to deliver a copy of the promissory note and security agreement to either Cantrell or his son-in-law Caballero on August 14, 1973, when it was executed. It was upon this finding that the trial court rendered judgment for Cantrell for $2,000.00, one-half as damage (or penalty) and one-half as attorney’s fee for successfully establishing his right to recover from the Bank under statutory provision of federal law. By cross point the Bank complains of this judgment and our holding is that the Bank’s complaints are without merit. But the principal complaint thereof is by Cantrell because so small amount was awarded in that he was entitled to additional damages (apart from attorney’s fee) by the provisions of state law. In his complaint we find merit and occasion for reversing the trial court’s judgment as applied to this cause of action. He also complains because of the limited award of attorney’s fees (referring to stipulations with opposing counsel). On this there is occasion for reversal — solely because of our action reversing the trial court in the other aspect and because on the retrial there might be a different damage (or penalty) amount to which the trial court would be required to give consideration in fixing attorney’s fees. On the matter of attorney’s fee, more will be written later.

In effect on August 14, 1973, the time Cantrell effected a loan from the Bank, were the provisions of federal law, U.S.C.A. Title 15, “Commerce and Trade,” Chapter 41, “Disclosures,” Part B, “Credit Transactions,” § 1631, et seq. It was not until some time after August 14, 1973 that Texas, in attempt to bring state law into conformity, obtained near-identical statutory provisions to those in the United States Code by enactment of V.A.T.S. Arts. 5069-14.01, et seq., under Title 79, “Interest.” Thereunder by Art. 5069-14.11 was provided the requirement of disclosure upon extensions of credit to a borrower which was generally otherwise provided to be made by U.S.C.A. § 1638, “Sales not under open end credit plans — Required disclosures by creditor.” Both require — by construction applicable to this case — that the Bank deliver Cantrell a copy of the note and security agreement, subject to penalty upon the Bank, if it failed to do so, of twice the amount of the finance charge, except that the liability should be not less than One Hundred Dollars nor greater than One Thousand Dollars, plus reasonable attorney’s fee as determined by the court trying the case. U.S. C.A. § 1640; Art. 5069-14.19.

However, on August 14, 1973, V.A.T.S. Arts. 5069-14.01, et seq., and Art. 5069-14.-19 were not a part of Texas law. At that time statutes which had application were to be found under V.A.T.S. Title 79, “Interest” provisions under Chapter 4, “Installment Loans,” Art. 5069-4.01, “Installment loans authorized” and Art. 5069-4.03, “Lender’s duty to borrower”; and Chapter 8, “Penalties,” Art. 5069-8.01, “Contracting for, charging or receiving interest, time price differential or other charges greater than authorized.” Therein were provisions relative to the obligation of the lender to make the disclosure which the jury found not to have been made in the instant case (upon the finding that Cantrell was not delivered copy of the note and security agreement), with the applicable “penalty” for non-delivery by Art. 5069-8.01 the forfeiture by the lender to the borrower the calculable sum which would be equal to twice the amount of interest or time price differential and default and deferment charges contracted for, or charged or received, plus reasonable attorney’s fees fixed by the court. Thereby was furthermore provided that there should be no penalty for a violation which results from an accidental and bona fide error. However, existence of accidental and bona fide error in the Bank’s failure of disclosure was not an issue in the instant case.

Noticed is that on August 14, 1973, the limitation of the federal law in Title 15, Chapter 41, Part B, § 1640 to One Thousand Dollars and reasonable attorney’s fee as the penalty to be imposed in favor of the borrower as against the lender did not limit Cantrell’s recovery for there might additionally be imposition of the penalty provided by Texas law; by the latter was limitation only by computation of double the amount of interest contracted, etc. There was no provision either in the state or federal law that rights thereby provided should be exclusive.

However, on August 14, 1973, there were provisions in applicable federal law which provided that there were instances where transactions of which there might be complaint were “exempted transactions”; specifically in that the rules whereby penalties were provided would have no application to certain kinds of transactions. 15 U.S.C.A. § 1603, “Exempted transactions,” provided that federal law of Subchapter 1, “Consumer Credit Cost Disclosure,” of Chapter 41, “Disclosures — Generally,” should not have application to “credit transactions involving extensions of credit for business or commercial purposes.”

Of the foregoing the Bank seeks advantage. Its contention in a cross-point is that as a matter of law the evidence in the case compelled the holding that Cantrell’s purchase of the motor home was for use by Caballero for business or commercial purposes, i. e., for the purpose of furthering a business or commercial activity for gain.

The Bank’s authorities for the foregoing contention are: Sapenter v. Dreyco, Inc., D.C.La.1971, 326 F.Supp. 871, aff’d at 450 F.2d 941 (5th Cir., 1971, with certiorari denied at 406 U.S. 920, 92 S.Ct. 1775, 32 L.Ed.2d 120); Brill v. The Newport National Bank, CCH Consumer Credit Guide, Transfer Binder, par. 99,057 (U.S.D.C., So. Dist. of N.Y., Feb. 20, 1973); Puckett v. Georgia Homes, Inc., 369 F.Supp. 614 (U.S.D.C., Dist. of So. Carolina, 1974).

Necessarily does the Bank make the contention for though it prevailed upon the court to submit a special issue to the jury on its contention, the jury refused — by its negative answer thereto — to find Cantrell’s purchase of the motor home to have been for business or commercial purposes.

There was nothing in the evidence which even raised the issue of any intended use of the motor home for anything other than living purposes by the Caballeros. That the motor home happened to have wheels so that it was movable would not qualify it as acquired by them for business or commercial purposes. There was nothing more shown by the evidence. Cantrell did not even participate in the purchase with expectation of personal gain; he simply lent his credit with the hope and expectation that the Caballeros would finish paying for the vehicle. The authorities upon which the Bank places reliance are without application to the case and it may not claim any benefit of exclusion by the aforementioned § 1603 of U.S.C.A. Title 15.

Giving limited effect to the jury’s finding by Special Issue No. 2 (that the Bank failed to deliver a copy of the promissory note and security agreement) the trial court awarded Cantrell the maximum amount of $1,000.00 specified by federal law. The trial court did not award any part of the penalty provided by Texas law in effect on August 14, 1973. Cantrell was not awarded that which was provided by Art. 5069-8.01, then in effect. (The material time was prior to that upon which the Texas legislature enacted statutes intended to bring state law into conformity with federal law.) In this the trial court erred. We hold that the amount provided, calculable with mathematical exactitude, was also the entitlement of Cantrell.

Cantrell insists that this court could cure the error of the trial court without remand. Furthermore, on the authority of the holding in McDonald v. Savoy, 501 S.W.2d 400, 408 (Tex.Civ.App.-San Antonio 1973, no writ history) he insists that the penalty provided by U.S.C.A. § 1640, aforementioned, and the penalty by V.A.T.S. Art. 5069-8.01 are both to be applied. The San Antonio court did in fact so hold.

While we doubt that provision for imposition of penalties by both the federal and state laws were intended by either the Congress or Texas legislature, yet the rules of construction compel that we hold in accord with the San Antonio court in McDonald v. Savoy, supra. 53 Tex.Jur.2d, p. 280, “Statutes,” § 186, “Statutes in pari materia.”

Apart from the right to recover attorney’s fees there would be no doubt but that Cantrell is entitled to $1,000.00 by the federal law, and furthermore entitled by Texas law (by mathematical computation to arrive at double the amount of interest contracted) an additional $5,887.20. This means that Cantrell has established his entitlement to a total amount of $6,887.20, without consideration of any amount as attorney’s fees to which he would be entitled.

As heretofore noticed, the trial court, upon the basis of the jury finding in answer to Special Issue No. 2 and the award of $1,000.00 damages (here found to have been erroneous because the penalty provided by Texas law at the material time was not also granted) awarded additional recovery in the amount of $1,000.00 as attorney’s fee. While the trial court might have awarded only $1,000.00 as attorney's fee even if there had been additional amount granted as damages (or penalties) the presumption may not be made by this court, in view of our reversal, that it would not have awarded more. Hence there must be remand of the case upon the question of attorney’s fees. This element of Cantrell’s entitlement under the applicable statutes must be fixed with knowledge and consideration of the total amount to which Cantrell was otherwise entitled to judgment. To do this would be the exclusive province of the trial court.

Cantrell contends that he was entitled to more as attorney’s fees, even if as applied to his complaint of non-delivery of a copy of the note and security agreement the only other damages to which he is entitled is the $1,000.00 granted by the judgment. In one respect this is because he contends that by the jury’s answers to Special Issues Nos. 3 to 5, inclusive, he is entitled to further damages, plus attorney’s fees; but early in the opinion we have held that he was not entitled to such further damages because the court did not err in disregarding the answers. Not being entitled to the damages Cantrell would not be entitled to any attorney’s fee for establishing an entitlement.

Cantrell’s evidence on the amount of reasonable attorney’s fees was never separated as applied to what would be a reasonable attorney’s fee because of the Bank’s failure to deliver a copy of the promissory note and security agreement from the amount which would be a reasonable attorney’s fee as applied to the other separable and additional damages sought. On the latter he is not entitled to damages or attorney’s fees; on the former he is entitled, by our holding, to more damages than was granted by the trial court and we are able to compute them in this case and render judgment which the trial court should have rendered. We cannot do likewise as applied to a proper award of attorney’s fee.

We hold that the violations on the part of a lender which give rise to different counts of liability for damages are, and should be, treated as distinct causes of action for each of which imposition of the penal provisions are provided. The trial court could properly consider the counts on which Cantrell prevailed (and was entitled to damages) as a separate cause of action from that upon which Cantrell failed to prevail. As in the case of costs, the attorney’s fees could be apportioned by the court in its entry of judgment even if Cantrell, as a plaintiff, had successfully established both his causes of action, so that the attorney’s fee awarded as applied to each cause of action could be determined. 20 C.J.S. Costs § 17, p. 288, et seq. “(Apportionment of Costs)-Separate Counts or Causes of Action”; St Louis S.W. Ry. Co. v. Oliver, 37 S.W. 642 (Tex.Civ.App., 1896, no writ history).

Without thought given to the separability of Cantrell’s causes of action his attorney obtained the stipulation of the Bank’s attorney that, if and in the event there was propriety of Cantrell’s recovery, the total of one hundred sixty-nine and one-half (169¾⅞) hours time would have been expended by his attorney (through the appeal), and that a reasonable hourly charge of the attorney therefor would be at the rate of $40.00 per hour. This would purport to be an attempt to stipulate the sum of $6,780.00 as reasonable attorney’s fees. It could only have been an attempt to do so as applied to the successful establishment of Cantrell’s right to recover under both his causes of action.

Anyway the trial court fixed by the judgment an allowance to Cantrell of $1,000.00 as attorney’s fees he was entitled to recover over against the Bank. The court was at liberty to disregard the stipulation because Cantrell prevailed in only one cause of action. Furthermore, our opinion is that even if Cantrell had prevailed in both it would be correct for the court to consider other appropriate matters in the ultimate decision. That ultimate decision would be what Cantrell should pay his attorney (to be adjudged over against the Bank as a penalty). The attorneys for the litigants in a case such as this are not, nor should they be, empowered by stipulation to hamper the court in the discharge of its duty to administer justice under the law in respect to the proper award of attorney’s fees. Were the law otherwise there would be opportunity for its misuse.

On the foregoing see 1 Attorney’s Fees, Speiser, the following: Chapter 12, “Allowance of Fees as Costs,” p. 540, § 12:55, “Where attorney’s fee regarded as penalty”; Chapter 13, “Allowance of Fees as Damages,” p. 674, § 13:44, “Criteria for determining amount of allowance”; p. 676, § 13:45, “Procedure for determination of allowance.”

Even if Cantrell had prevailed on both causes of action, the stipulation was not one to which there must be rigid adherence and the trial court would not have been bound thereby. It is obvious that to hold otherwise would, by construction, be to hold that it was proper to inflict injustice — initially upon Cantrell, and by and through him upon the Bank from which he was entitled to receive indemnity — and this would be true even had we not held that it was proper for the trial court to treat the separate counts of liability as separate causes of action. 83 C.J.S. Stipulations, § 13, p. 31, “Conclusiveness in General.”

Though in this case it is not Cantrell, the client, who is sued for attorney’s fees, it would be correct to treat the situation as though it were, for in application of the law it would be a distinction without a difference. Contractual provisions for payment of necessarily incurred attorney’s fees are enforceable only to the extent that the amount stipulated is reasonable within the limitations imposed by any applicable statute and the court may accordingly inquire into the reasonableness of the specified amount and reduce it where, under the circumstances, it is deemed excessive in contract cases, as between attorney and client. 2 Attorney’s Fees, Speiser, Chapter 15, “Allowance of Fees in Accordance with Contractual Stipulations,” p. 360, § 15:44, “Court’s power to alter amount stipulated”; 25 C.J.S. Damages § 91(a), p. 981, “Litigation Expenses and Attorney’s Fees.” The rule is appropriate as well, even more occasion presented, where there must be imposition of a penalty against a defendant in the form of an attorney’s fee reasonably due by a plaintiff to his own attorney. Reasonableness of attorney’s fee in either case should be that which a client should pay his own attorney for services; the theory at law involving the question of what the client should pay, with ancillary provision that he be entitled to recover over on a liability premise from a third party.

We affirm the judgment of the trial court that Cantrell take nothing as applied to his action under the Texas Business and Commerce Code. We sever from the case as filed and tried the cause of action in which the trial court’s judgment is affirmed.

We reverse the judgment of the trial court as applied to the cause of action predicated upon the trial court’s failure to award Cantrell the statutory damages provided by Texas law in Art. 5069-14.19 in effect at time of the parties’ transaction on August 14, 1973. Judgment is here rendered that Cantrell recover of and from the Bank the total of the statutory damages by federal and state law in the amount of $6,887.20, plus legal interest from September 17, 1976, date of the trial court’s judgment.

The case and cause of action upon which judgment below granted Cantrell judgment for $1,000.00 attorney's fees is severed and remanded to the trial court for the purpose of determining the amount which would constitute a reasonable attorney’s fee under the facts and circumstances of Cantrell’s cause of action because of the Bank’s failure to deliver to him a copy of the note and security agreement (pursuant to the transaction of August 14, 1973).

Costs of appeal are taxed against the Bank.


source: Caselaw Access Project

author: DODSON, Justice. DODSON, Justice.

license: Public Domain

text:
    R. C. FREEMAN, Appellant, v. SHANNON CONSTRUCTION, INC., Appellee.
    No. 8818.
    Court of Civil Appeals of Texas, Amarillo.
    Dec. 5, 1977.
    On Motion for Rehearing Jan. 3, 1978.
    Appellant’s Second Motion for Rehearing Denied Jan. 30, 1978.

      Wayne Bagley, Amarillo, for appellant.
    Gibson, Ochsner, Adkins, Harlan & Han-kins, James H. Doores, Amarillo, for appel-lee.
   DODSON, Justice.

In this case R. C. Freeman is the appellant herein and the defendant and cross-plaintiff in the court below. Shannon Construction, Inc. is the appellee herein and the plaintiff and cross-defendant in the court below. The parties will be referred to as Freeman and Shannon.

Shannon was the general construction contractor on the Bell Tower Apartment project located in Amarillo, Texas. Shannon, as general contractor, entered into two contractual agreements with Freeman as subcontractor for certain cement work on the project. The first agreement in the original amount of $184,034 was dated November 20, 1972 and the second agreement in the original amount of $9,750 was dated October 22, 1973. Each of the agreements provided for extras, when approved according to the terms thereof.

Freeman partially completed the work specified in the two agreements and certain approved extras thereunder. The agreement provided for periodic payments by Shannon to Freeman as the work progressed under the contracts. However, before all of the work was fully completed under the two agreements, a controversy arose between Freeman and Shannon concerning the amount of money due and owing to Freeman for the partially completed work on the project.

Shannon and Freeman were unable to resolve the controversy to the satisfaction of Freeman, so he abandoned further work on the project. Shannon completed the work under the two agreements. Then Shannon brought this action to recover the amount of $36,610.22 expended in completing the work under the two agreements. Freeman answered Shannon’s action by a general denial and then brought his cross-action alleging an unpaid balance of $9,685.50 due him for work completed under the two agreements with Shannon.

The case was tried before a jury on eight special issues submitted by the court. On the verdict of the jury and other specific findings by the court, judgment was entered against Freeman in the amount of $21,704.30 with interest at the rate of nine percent per annum from the date of judgment until paid. From this judgment Freeman appeals to this court. We affirm.

Freeman brings seven points of error to this Court as follows:

Point of Error No. One: The Court erred in granting Plaintiff’s [Shannon] Motion in Limine.
Point of Error No. Two: The Court erred in overruling Appellant’s [Freeman] objection to Special Issue Number One for the reason that as a matter of law, upon showing of a breach by the Appellee of the contract, the law does not place a responsibility on R. C. FREEMAN to continue his work.
Point of Error No. Three: The Court erred in overruling Defendant’s [Freeman] Objection on Special Issue No. Four, because the Court’s Charge nowhere restricts the evidence to “charges” that are reasonable and necessary in Amarillo, Texas.
Point of Error No. Four: The Court erred in overruling Appellant’s [Freeman] Objection to Special Issue Number Eight for the reason that as a matter of law, a breach has been shown by Appellee of Contract 1364 and Contract 1903, and there was thereafter no legal obligation on the Appellant to proceed. There was not pled, nor has the evidence shown consideration for a new agreement.
Point of Error No. Five: The Court erred in overruling Ground One of Appellant’s [Freeman] Motion for Judgment. The Appellant was clearly within his legal rights in stopping work on the contract; and as a matter of law, the Court should have rendered judgment for Appellant notwithstanding the verdict.
Point of Error No. Six: The Court erred in admitting testimony of Michael D. Wieder on his direct examination, over the timely objection of Appellant [Freeman] that Appellee [Shannon] had spent $41,000.00 in connection with the construction of Bell Towers Apartments without laying the predicate that would show in any respect that such expenses were reasonable or necessary.
Point of Error No. Seven: The Court erred in overruling Appellant’s [Freeman] Ground Number two of Appellant’s Motion for Judgment, for the reason that there was no evidence to support the jury’s answer to the second part of Special Issue Number Five.

In response to the special issues submitted to it by the court, the jury found as follows:

(1) That Freeman abandoned his work under the contracts in question prior to the completion of the same;

(2) That, after receiving written notice from Shannon to proceed with his work, Freeman did not return to such work within ten days and complete such work in accordance with the contracts;

(3) That Shannon terminated its contracts with Freeman and employed others to complete such abandoned work;

(4) That Shannon paid $41,000 in order to complete the work of Freeman under the contracts in question;

(5)(a) That the $41,000 amount paid to complete the contracts of Freeman was not reasonable “under the circumstances then and there existing;” (b) however, $25,000 was the reasonable and necessary amount required to complete the contracts of Freeman;

(6) That Shannon had paid Freeman $189,488.30 under the contracts in question;

(7) That no amount of money was due and owing to Freeman by Shannon on the 16th day of February, 1974, under the contracts in question; and

(8) That on or about February 15, 1974, Freeman agreed to complete the contracts in question and thereby waived any breach of such contracts prior to that time by Shannon.

Freeman’s second point of error maintains that special issue number two, inquiring as to whether he had abandoned and refused to complete his work, should not have been submitted to the jury.

His fourth point asserts that special issue number eight, asking the jury whether he had waived any breach of the contract by Shannon, should not have been submitted to the jury.

He also complains of the overruling of his Motion for Judgment Notwithstanding the Verdict in his fifth point of error.

In each of these points Freeman relies on the alleged breach of the contract by Shannon to excuse his own non-performance. His contention rests on his claim that Shannon failed to pay $9,685.50 owed to Freeman under the contract. Such non-payment, he insists, is an absolute excuse for his own non-performance.

Freeman’s objections to the charge and to the jury’s response to issues one and eight are rendered of no consequence by the jury’s answer to special issue number seven, which controls the question of whether Shannon breached the contract by not paying Freeman. There the jury found that Shannon owed nothing to Freeman on the date he complains that Shannon breached by not paying an amount due under the contract. Therefore, his non-performance was not excused.

Freeman neither objected to the method of submission of issue number seven, nor challenged the jury’s answer to such issue in this court.

Absent a jury finding of a breach by Shannon, Freeman cannot complain that his non-performance was excused.

The jury found in special issue number one that Freeman abandoned his work under the contracts in question prior to completion. In McKnight v. Renfro, 371 S.W.2d 740, 745 (Tex.Civ.App.-Dallas 1963, writ ref’d n. r. e.) the court states that the applicable measure of damages is as follows:

When the owner, upon failure of the contractor to perform takes over the job and completes the work himself, he may recover from the contractor the excess of the reasonable and necessary cost of completion over and above the unpaid portion of the contract price. Hillyard v. Crabtree, 11 Tex. 264; Gonzales College v. McHugh, 21 Tex. 256; American Surety Co. of N. Y. v. Lyons, 44 Tex.Civ.App. 150, 97 S.W. 1080; Franks v. Harkness, Tex.Civ.App., 117 S.W. 913; Da Moth & Rose v. Hillsboro Ind. School District, Tex.Civ.App., 186. S.W. 437; American Surety Co. v. Gonzales Water Power Co., Tex.Civ.App., 211 S.W. 251; Standard Accident Ins. Co. of Detroit, Mich. v. Laird, Tex.Civ.App., 81 S.W.2d 271; Ruberoid Co. v. Scott, Tex.Civ.App., 249 S.W.2d 256; 10 Tex.Jur.2d 69.

This same measure of damages applies to the claim of a contractor against a subcontractor for abandonment of the work on subcontracts. See C. McCormick, Handbook of the Law of Damages § 169 (1935). Freeman’s points of error two, four and five are overruled.

Freeman complains in point of error number seven that the trial court erred in overruling his second ground for judgment notwithstanding the verdict for the reason that there was no evidence to support the jury’s determination that $25,000 was the reasonable and necessary amount required to complete the contracts of Freeman with Shannon.

Freeman contends in his brief “ . that the reasonable and necessary cost of completing the job in Amarillo, Texas, at the time in question was the amount of $7,386.00 (without credit for materials furnished and work thereon done) . . ..” and his testimony at the trial was substantially to the same effect.

Cecil Gehringer was Shannon’s superintendent on the job in question. Gehringer testified that when Freeman left the job the so-called building C was not complete. He said, “Inside the building the four laundry rooms were not completed; there was stairs and landings that wasn’t completed.” And likewise, he testified that “four laundry rooms were not complete” in building B. Also, he testified “there were seven landings and 172 steps, in both buildings, B and C, that had not been poured.” Mr. Gehringer testified as to unfinished area by Freeman on Exhibit # 45 which was before the jury. He testified that the tennis court, the pool area, the pool room, the sidewalks and curbs as shown on the exhibit “had not been poured.” Gehringer’s testimony concerning the unfinished portions of the work under the contracts covers some eleven pages of the statement of facts.

Gehringer testified from a log made on the job at the time, that he called Freeman on many occasions from February 18, 1974 to April 2, 1974, that Freeman told him on several occasions he would return to the job; however, he never did return and complete the work.

Gehringer further testified that he tried to hire cement contractors in Amarillo and Lubbock to complete the work; however, none were available to take the job and complete it. In this connection, Freeman testified that he did not think Shannon could get anyone else to finish the job.

Michael Wieder, the secretary and treasurer of Shannon, testified that Shannon paid out $41,015 to complete the work under the contracts with Freeman. Wieder testified that the amounts paid out were as follows:

(1) $828 air fare for two persons from Cleveland, Ohio to finish the work;

(2) $9,928 for the time for these two men in Amarillo;

(3) $14,137 to Mr. Hinoyos and his crew “for work that would have been required of Mr. Freeman;”

(4) $9,964 to Crowe-Gulde, Inc. for concrete to complete the job under contract to Freeman;

(5) $4,000 for lumber to make forms, for rental of forms and for wire mesh to imbed the concrete;

(6) $885 for Shannon’s labors attributable-to Freeman’s contracts.

The $14,137 amount paid to Mr. Hinoyos and his crew and the $9,964 amount paid to Crowe-Gulde, Inc. were evidence to support the finding of the jury to special issue number five.

The jury was privileged to believe all or none of the testimony of any one witness or to accept it in part while rejecting it in another part. Esteve Cotton Company v. Hancock, 539 S.W.2d 145, 158 (Tex.Civ.App.-Amarillo 1976, writ ref’d n. r. e.). Also, the jury was entitled to draw reasonable inferences from the facts it found were proved. After reviewing all the evidence in the record, we cannot say, with due regard to the province of the jury, that, as a matter of law, there was no evidence of probative force to support the answer to special issue number five. Therefore, Freeman’s point of error number seven is overruled.

In point of error number three, Freeman complains that the court erred in overruling his objection to special .issue number four because the court’s charge to the jury nowhere restricts the evidence to “charges” which are reasonable and necessary in Amarillo, Texas. And in point of error number six he complains that the court should have excluded the testimony of Michael Wieder to the effect that Shannon had spent $41,000 to complete the work under the two contracts in question, without Shannon laying a predicate that such expenses were reasonable and necessary.

Freeman, in his brief, in essence, contends that the contracts between himself and Shannon called for the sale of goods, and therefore the transaction is governed by the Tex.Bus. & Comm.Code. More particularly, he says § 2.713 is applicable to this case. We do not agree. The contracts called for the furnishing of services including both labor and material; however, the essence of the transaction was for services rather than the sale and passage of title to goods. See: Goelz v. Wadley Research Institute & Blood Bank, 350 S.W.2d 573 (Tex.Civ.App.-Dallas 1961, writ ref’d n. r. e.); J & R Electric Division of J. O. Mory Stores, Inc. v. Skoog Construction Company, 38 Ill.App.3d 747, 348 N.E.2d 474 (1976).

The testimony of Michael Wieder, an officer of Shannon, was admissible on the issue of “reasonable and necessary” cost to complete the work of Freeman by Shannon. The jury determined that the $41,000 figure was unreasonable in the first part of special issue number five, but further found that $25,000 was the reasonable and necessary amount in the second part of the same issue. This finding to the second part of special issue number five was a controlling issue under McKnight v. Renfro, supra, and the authorities therein cited.

Freeman’s points of error three and six are overruled.

Freeman in his first point of error complains that the court erred in granting Shannon’s Motion in Limine. The motion requested the court to instruct Freeman and his attorney “not to mention or imply in any way before the júry, prior to such evidence having been submitted to the Court, that [Shannon] has failed to pay other creditors’ bills . .” and other matters.

The court sustained the motion; however, Freeman neither offered any such testimony outside the presence of the jury nor perfected a bill of exception by showing any such testimony. Under such circumstances, Freeman has failed to show that the ruling of the court was erroneous. J. Weingarten, Inc. v. Brockman, 134 Tex. 451, 135 S.W.2d 698 (1940); American National Insurance Company v. Tri-Cities Construction, Inc., 551 S.W.2d 106, 110 (Tex.Civ.App.-Houston [1st Dist.] 1977, no writ); and Bell v. Bradshaw, 342 S.W.2d 185 (Tex.Civ.App.-Dallas 1960, no writ).

Freeman’s seven points of error are overruled.

Freeman neither objected in the trial court nor assigned error in this court for the failure to determine the amount of approved extras on the job which should have been added to the sum of the two original contract amounts in determining the amount of the judgment against him. In the absence of such objection and assignment of error, we are unable to reach the matter.

Shannon brings one' cross point wherein it complains that the court erred in failing to grant its motion to disregard the answers to special issue number five and failing to enter judgment for Shannon based on the answer to special issue number four because the amount paid by Shannon to complete Freeman’s contracts was the proper measure of damages. We do not agree. Again, the proper measure of damages applicable to this case is set forth in McKnight v. Renfro, supra, and the authorities therein cited.

Shannon contends in support of its position that the measure of damages is the so-called stipulated or liquidated damage or indemnity provision which is contained in the contracts as follows:

If Subcontractor abandons his work hereunder, Contractor may give written notice to Subcontractor to proceed; and, if Subcontractor does not return to such work within ten (10) days after such notice, this Contract shall be, at Contractor’s option, terminated and Contractor shall have the right to employ a different Subcontractor to complete such abandoned work and shall furthermore deduct from the amount otherwise payable to Subcontractor the amount which Contractor pays to the substituted Subcontractor for completion of such work. If Contractor pays to such substituted Subcontractor a sum which when added to payments previously made to the original Subcontractor amounts to more than the total amount to be paid by Contractor to Subcontractor under the terms hereof, Subcontractor shall be obligated to pay to Contractor and shall pay to Contractor forthwith the excess of such amount over the original contract amount, as liquidated damages, and not as a penalty.

Our Supreme Court in Stewart v. Basey, 150 Tex. 666, 245 S.W.2d 484, 486 (1952) held that:

An agreement, made in advance of breach fixing the damages therefor, is not enforceable as a contract and does not affect the damages recoverable for the breach, unless
(a) the amount so fixed is a reasonable forecast of just compensation for the harm that is caused by the breach, and
(b) the harm that is caused by the breach is one that is incapable or very difficult of accurate estimation.

The provision before us fails to meet either element of the test. The “amount which Contractor pays to the substituted Subcontractor for completion of such work” fails to limit the amount to “reasonable and necessary” charges therefor on the facts and circumstances existing at the time of the breach. Also, the provision fails because such damages are capable of accurate determination without difficulty under the applicable law of this state.

Shannon’s cross point one is overruled.

Accordingly, the judgment of the trial court is affirmed.

ON MOTION FOR REHEARING

DODSON, Justice.

After reviewing Appellant’s Motion for Rehearing and accompanying brief, we have determined that our original opinion correctly states the applicable law in this case. However, the basic contention in the motion for rehearing merits further discussion of the application of Chapter 2 (Sales) of the Texas Uniform Commercial Code to the building contract.

The chapter’s provisions are limited to transactions involving the sale of goods. Tex.Bus. & Comm.Code Ann. § 2.102 (1968). Most building contracts, on the other hand, involve the sale of both goods and services. In such hybrid transactions the question becomes whether the dominant factor or “essence” of the transaction is the sale of goods or services. As explained in Bonebrake v. Cox, 499 F.2d 951, 960 (8th Cir. 1974):

The test for inclusion or exclusion is not whether [goods and services] are mixed, but, . . . whether their predominant factor, their thrust, their purpose . is the rendition of service, with goods incidentally involved ... or is a transaction of sale, with labor incidentally involved .

Shannon was the general construction contractor on the Bell Tower Apartment project located in Amarillo, Texas. Shannon, as general contractor, entered into two contractual agreements with Freeman as subcontractor for certain cement work on the project. The first contract, dated 20 November- 1972, described the work and services to be performed by Freeman as follows:

In accordance with the architectural and structural drawings and specifications prepared by T. R. Daniel, furnish all labor, material and equipment in order to perform the following concrete and related work.
1) Slabs, curbs, and gutters related to site work as modified by the removal of flat gutters between asphalt paving. Flat curbs to be upended to provide wheel stops.
2) Building foundations as modified with architect’s approval.
3) Expansion and construction joints.
4) Concrete reinforcement including mesh for slabs.
5) Cast in place concrete for:
a) slabs on grade
b) bond beams
c) slabs over metal centering
d) balconies (exterior) formed and with adequate shoring or support
6) Curing and/or protection.
7) Embedded items.
The aforementioned work to be performed for the sum of One Hundred Eighty Four Thousand and Thirty-four Dollars ($184,034).

And the second contract dated 22 October 1973 described the work and services to be performed by Freeman as follows:

In accordance with architectural and structural drawings dated 10-14-73 by Keeva J. Kekst, Assoc., Inc. but not limited to. Furnish all labor and material to complete the following:
a) a complete concrete tennis court area approx. 120' X 102' X 4" with wire mesh and base expansion joints and saw cuts as directed.
b) sidewalks and exterior concrete patio and pool area cut into 5' squares, curbs at planted.
c) all interior concrete slabs in the ree. bldg, corridors and pool bldg.
d) curing and/or protection.
All as directed by the job superintendent. The aforementioned work to be performed for the total sum of $9,750.00.

Appellant Freeman attempts to show that the essence of his contract with Shannon Construction was the sale of over 4,815 cubic yards of cement. The bulk sale and delivery of cement is not mentioned in the contracts or supported by the record in this case. Freeman’s contracts called for labor, material and equipment to perform the concrete and related work to construct and finish the concrete structures for Shannon, the general contractor. Clearly, the “predominant factor” or the “essence” of the transaction between Freeman and Shannon was the furnishing of services and performance of work required for erecting the structures in the apartment complex. Accordingly, Chapter 2 of the Texas Uniform Commercial Code does not apply.

As noted in two cases cited by appellant Freeman, the sale of bulk cement is readily distinguishable from the overriding service of forming cement into completed structures. In S. M. Wilson & Co. v. Reeves Red-E-Mix Concrete, Inc., 39 Ill.App.3d 353, 350 N.E.2d 321 (1976), the court presumed the transaction was governed by the Code when a subcontractor agreed to sell and deliver a specified quantitymf cement. The court noted, however, that the general contractor removed the concrete from the trucks, transported it to where it would be used, poured, cured, and finished. Likewise, in Wilson v. Daniel International Corporation, 260 N.C. 548, 197 S.E.2d 686 (1973), a workman’s compensation case, the Supreme Court of South Carolina distinguished between a sale of cement that was merely delivered and poured into the general contractor’s forms and a situation in which the subcontractor went further to execute part of the construction work of the general contractor.

After considering all matters set out in Appellant’s Motion for Rehearing, we adhere to our former disposition of the case. Appellant’s Motion for Rehearing is overruled.

      . These items were further explained by addendums dated 22 January 1973 and 31 January 1973, being Exhibits P-2 and P-3 respectively, which are the original exhibits in the case.

      . Uniform Commercial Code, Ill.Rev.Stat.1975.


author: HUGHES, Justice.

text:
    MITCHELL ENERGY CORPORATION et al., Appellants, v. William A. BLAKLEY, Appellee.
    No. 17856.
    Court of Civil Appeals of Texas, Fort Worth.
    Dec. 8, 1977.
    Rehearing Denied Jan. 12, 1978.
    Smith & Fulton, Vinson, Elkins, Searls, Connally & Smith, Houston, Cantey, Hanger, Gooch, Munn & Collins and Stephen A. Madsen and R. Daniel Settle, Fort Worth, for appellants.
    Law, Snakard, Brown & Gambill and Robert M. Randolph, Fort Worth, for appel-lee.
   OPINION

HUGHES, Justice.

Lessee, GM&A Gas Products Plant, Inc., and its assignor, Mitchell Energy Corp., appeal from a summary judgment holding for lessor, William A. Blakley, declaring an oil and gas lease terminated for failure to make timely payment of shut-in gas royalty and ordering them to account for all gas and condensate oil produced and sold by them since the date lessor purchased the land covered by the lease. They also appeal from that portion of the judgment, based on a jury verdict, awarding Blakley $144,-704.85, which amount, less certain offsets, represents (a) the jury’s award of fair market value of gas and condensate oil produced and (b) punitive damages for appellants’ failure to account for additional gas and condensate oil produced from the well. Lessor alleged the lease had terminated because shut-in royalty payments were erroneously commenced one day late. Alternatively, he alleged a previous lessee’s sale of gas from the well to the driller for use in drilling another well under the lease was a sale which came within the actual royalty clause and was not within the free-use provision of the lease which grants the lessee free use of gas for all operations under the lease. Lessor sought an accounting and later amended his pleadings to allege that appellants, in their accounting, intentionally understated the amounts of gas and condensate oil produced by the well.

We reverse the trial court’s judgment, render judgment in part that the lease did not terminate for failure of timely shut-in gas royalty payments, and remand the balance of the case to the trial court for consolidation with the severed cause number 141-87202-76.

The trial court’s summary judgment was rendered against Mitchell Energy Corporation, successor in interest of Mitchell & Mitchell Properties, Inc., (hereafter collectively called Mitchell); GM&A Gas Products Plant, Inc.; and two other defendants, Humble Oil & Refining Company and Phillips Petroleum Company, Humble and Phillips have not appealed.

The initial background of this case precedes the involvement of Wm. A. Blakley and Mitchell and GM&A.

EXECUTION OF OIL AND GAS LEASE AND OPERATIONS UNDER THE LEASE

Walter C. Pool, Jr., and The Fort Worth National Bank, independent executors and trustees under the wills of W. C. and Alma L. Pool, as lessor, executed an oil and gas lease covering 2,341.66 acres in Tarrant and Denton Counties, Texas, to Humble as lessee, for a primary term of ten years. The lease was dated March 11, 1955, and effective April 1, 1955.

Humble paid annual delay rentals to maintain the lease without drilling operations until the end of the primary term. Humble agreed to assign the lease to Phillips, and Phillips began operations for drilling the Pool “B” well on the west 320 acres of the Pool lease. Phillips contracted with Jack Grace Drilling Company to drill the “B” well. When the “B” well was completed, it was shut in for lack of a pipeline connection. On June 2, 1965, Humble assigned the lease to Phillips as to the west 320 acres. In August, 1965, Phillips recorded a declaration, pooling the west 320 acres of the Pool lease with 320 acres out of other leases held by Phillips and creating a 640-acre gas unit.

In January, 1966, Phillips employed Grace to drill the Pool “D” well on other acreage covered by the lease. Phillips then sold gas produced from the “B” well to Grace for use in drilling the “D” well from February 3,1966, to March 4,1966. The record shows that the gross value (less tax) of the gas used for drilling was $592.88.

Humble made the first few shut-in gas royalty payments of $195.14 per month on the “B” well to The Fort Worth National Bank, using March 21, 1965, as the completion date and due date. When Phillips began making the shut-in payments, it continued to use the 21st as the due date.

PURCHASE OF POOL LAND BY BLAKLEY

On November 21,1966, Blakley purchased the Pool Land. On March 21, 1967, the Bank returned the shut-in payment to Phillips for the period March 21 through April 21, 1967. By letter dated that same day (March 21, 1967) Blakley wrote Phillips:

“My legal advice is that you no longer have any interest in the oil and gas minerals by virtue of the original lease on this land. Under the most extenuating construction favorable to you no circumstances could cover any more than the 320 acres involved in the 640 acre Pool B # 1.
“You will therefore be advised that it is my position that you do not have any interest in the oil and gas minerals on this property and any tender made or attempted to be made by you will not serve to . acquire such interest.”

ASSIGNMENTS OF PORTIONS OF OIL AND GAS LEASE TO APPELLANTS, MITCHELL AND GM&A

On December 2, 1968, and retroactively effective from November 1, 1968, Phillips assigned to Mitchell those portions of the leases constituting the 640-acre gas unit, including the west 320 acres of the Pool lease. A pipeline was completed to the “B” well. Production began in September, 1969. The “B” well was tied into a gathering line owned by Southwestern Gas Pipeline, Inc., which bought gas from the “B” well under a contract with GM&A and collected gas from four other Mitchell wells in the area. On January 30, 1970, Mitchell assigned its interest to GM&A and made the assignment retroactively effective as of the date of the first production from the well on the gas unit.

FILING OF ORIGINAL ACTION BY BLAKLEY

On October 3, 1969, Blakley filed this action against Mitchell & Mitchell Properties, Inc., Phillips, Humble, and Southwestern Gas Pipeline, Inc., seeking to cancel the lease on the ground of bad-faith pooling. Later GM&A Gas Products Plant, Inc. was also named a defendant. Ten individuals who were the alleged lessors of the leases purportedly pooled by Phillips with the Blakley acreage were also named as defendants. The trial court sustained pleas of privilege by the ten individuals and Southwestern.

On June 25,1973, Blakley filed his fourth amended original petition, alleging the lease had terminated on the additional grounds that there had been a failure of timely payment of shut-in gas royalty because (a) “HUMBLE erroneously commenced making the shut-in gas royalty payments for a period described as commencing on March 21,1965, rather than on March 20, 1965” and consequently no “royalty was ever paid or tendered ... for the period March 20, 1965 to March 21, 1965”; and (b) the sale of gas to Grace for use in drilling the “D” well changed the shut-in royalty due date to the fourth of the month, as of March 4, 1966.

On February 17,1975, the trial court rendered an interlocutory summary judgment, granting Blakley’s motion for summary judgment and reciting that it found the defendants’ motion for summary judgment moot. Therein the court declared that the lease “expired and terminated under its terms prior to September 1, 1969, for failure to make timely payments of shut-in gas royalty; . . ; .” and declared that the lease assignment and declaration of pooling had also terminated.

The court’s final judgment, rendered April 27, 1976, made the interlocutory summary judgment final. The final judgment carried forward the conditional waiver contained in the interlocutory summary judgment, reciting that Blakley had “waived his right to trial of the bad faith pooling issues, conditioned upon finality of this summary judgment terminating the lease for failure to make timely shut-in gas royalty payments; . . . .”

Upon agreement of the parties, the trial court severed the bad-faith pooling issues, and defendants, Humble and Phillips, were eliminated from the remainder of the trial below.

Mitchell and GM&A filed a joint accounting, to which Blakley objected on the ground that the accounting fraudulently understated the amounts of gas and condensate oil produced and converted by them. The trial court ordered a separate trial on those issues, which were tried before a jury.

The trial court’s final judgment incorporated the terms of the interlocutory summary judgment, and, based on the jury’s answers to special issues, rendered judgment for Blakley against appellants, jointly and severally, for the following amounts, less certain offsets:

(1) The sum of $1,600.38 as the fair market value of gas not accounted for by defendants; and
(2) The sum of $116,500.00 as exemplary damages for understating the volume of gas intentionally for the purpose of reducing the payments owed to plaintiff; and
(3) The sum of $1,470.59 as the fair market value of condensate oil not accounted for by defendants; and
(4) The sum of $15,000.00 as exemplary damages for understating the volume of condensate oil intentionally for the purpose of reducing the payments owed to plaintiff; and
(5) The sum of $39,327.36 as the fair market value of gas and condensate oil accounted for by defendants, less the sums of $2,843.71 paid in taxes and refunds and $7,941.19 paid as expenses of operating the well, for a net figure of $28,542.46; and
(6) Legal interest at six per cent per an-num on the net amounts recovered by plaintiff under item (5) next preceding, from the time each month that gas and condensate oil were produced and converted by said defendants until date of this judgment. (At date of judgment these amounts totalled $6,982.42); and
(7) Interest at nine per cent per annum on the total sum of items (1) through (6), from date of judgment until paid.

The court also awarded appellants the following amounts as set off:

$9,750.00 as the fair market value of the recoverable casing, $11,981.00 for the tubing, and $3,660.00 for leasehold equipment.

Blakley received a joint and several judgment in the net total sum of $144,704.85, with interest at nine per cent per annum.

Appellants, by point of error no. 1 contend that the trial court erred in rendering summary judgment that the lease expired for failure of timely payments of shut-in gas royalty. Point of error no. 2 avers that the trial court’s action was error because the Grace Drilling sale did not change the due date for such payments to the fourth day of each month.

Blakley alleged that the sale, from February 3,1966 through March 4,1966, of gas from the “B” well to Grace Drilling for use in drilling the “D” well, suspended the payment of shut-in royalties during that period. Appellants argue that this transaction was within the free-use provision of the lease. Blakley contends it was a “sale” which required the payment of actual royalties. When the well was again shut in on March 4,1966, Blakley says a new due date for payment of shut-in gas royalties was established — the fourth of each month.

The pertinent terms of the lease are as follows:

Subject to the other provisions herein contained, this lease shall be for a term of ten years from this date, called “primary term” and as long thereafter as oil, gas or other mineral is produced from said land or land with which said land is pooled hereunder. 2.
3. The royalties to be paid by lessee are: (a) on oil, one-eighth of that produced and saved from said land . (b) on gas, including casing head gas or other gaseous substance, produced from said land and sold or used off the premises or for the extraction of gasoline or other product therefrom, the market value at the well of one-eighth of the gas so sold or used, provided that on gas sold at the wells the royalty shall be one-eighth of the amount realized from such sale; while there is a gas well on this lease or on acreage pooled therewith, but gas is not being sold or used, Lessee may pay as royalty, on or before ninety (90) days after the date on which said well is shut in and thereafter at monthly intervals a sum equal to one-twelfth (V12) of the amount of the annual rental payable in lieu of drilling operations during the primary term on the number of acres subject to this lease at the time such payment is made, and if such payment is made or tendered, this lease shall not terminate and it will be considered that gas is being produced from this lease in paying quantities; and (c) . Lessee shall have free use of oil, gas, coal and water from said land, except water from Lessor’s wells, for all operations hereunder, and the royalty on oil, gas and coal shall be computed after deducting any so used.

The issue before us is whether the sale of gas by Phillips to the drilling contractor for operations under the lease comes within the free-use and shut-in gas royalty clauses instead of the actual royalty provision for gas “sold or used off the premises.” We expressly do not address the issue whether intermittent off-premises sales re-suit in changes in the shut-in royalty due date.

Appellants argue that the construction urged by Blakley ignores the second part of the free-use clause which states that the royalty is to be computed after deducting the amount of gas used.

Blakley cites as indirect support for his position Munger v. Waggoner, 260 S.W. 696 (Tex.Civ.App.-Amarillo 1924, writ ref’d). In Munger the court held that under a similar free-use provision lessee could exchange crude oil produced on the premises for an equal amount of fuel oil. The court noted that this exchange was beneficial to the lessor because the substituted fuel was a more efficient source of energy and its use reduced the amount of free crude oil used under the free-use provision of the lease. Blakley points out that the court in Munger also expressly stated that it was not confronted with a situation in which the oil was traded for “derricks or horses, or mules, boilers, and engines . . . .” Blakley categorizes these items as suitable for use in drilling operations and construes this language as support for his contention that the rule in Munger must be limited strictly to the facts of that case. Blakley argues that a sale or trade for items other than a more efficient, and hence more economical fuel would be prohibited by a proper application of Munger,

We disagree with Blakley’s interpretation of the language in Munger. Although Blakley argues it is significant that “derricks or horses . . .” are suitable for use in drilling operations, we think the crucial distinction suggested by Munger is that neither the gas nor the “derricks or horses” received in exchange would have been used exclusively for the drilling operations under the lease. In the case at bar the gas was not used in connection with other operations. It is undisputed that the gas was used by Grace solely in drilling operations under the lease.

By its terms, the lease continued after the primary term only if there was actual production (or constructive production in the form of shut-in royalty payments.) To bolster his argument that the actual royalty clause rather than the shut-in royalty clause applies, Blakley attempts to argue that the Grace Drilling sale constituted actual production under the terms of the lease.

We agree with Blakley that the lease continued in effect only so long as there was production in paying quantities (that is, sufficient to pay the lessee a profit, even if small, over operating and marketing expenses, although it might never repay the cost of drilling the well.) Garcia v. King, 139 Tex. 578, 164 S.W.2d 509 (1942). And where it is shown that a small profit has been realized from the well’s operation, the well is producing in paying quantities. Morgan v. Fox, 536 S.W.2d 644, 650 (Tex.Civ.App.-Corpus Christi 1976, writ ref’d n. r. e.).

Blakley argues that it is shown that the lessee made such a profit. In support, Blakley states only that the terms of the drilling contract required the purchaser to bear all costs of running the line from the Pool “B” well to the Pool “D” well and that the purchaser paid Phillips for the gas. Blakley argues that it is “empirical” that where there is a sale of gas, there is a market for that gas.

As we construe the lease, however, this argument is irrelevant. The royalty provision does not impose a royalty on gas sold for use on the premises for operations under the lease. In our view the second clause of the free-use provision expressly precludes the payment of royalty on any gas used in the drilling operations — even on gas sold by the lessee to the driller for that purpose.

Appellants cite Tidewater Associated Oil Co. v. Clemens, 123 S.W.2d 780 (Tex.Civ.App.-Texarkana 1938, no writ) as support for their position that the lessee was not required to pay royalty on the gas sold to Grace. In Tidewater the lease permitted lessee free use of gas for operations under the lease. The wells on the lease were producing only oil and wet (casinghead) gas. There was no well producing dry gas (gas only). The lessee sold the wet gas to a casinghead gas plant which extracted the gasoline and returned the residue gas to the lessee for use in his operations. The lessor argues that he was entitled to receive, in kind, ⅛ of the residue gas because the residue gas returned was part of the consideration the lessee received from the sale. The court held that the lessor’s contentions did not take into account the lessee’s right to free use of gas for his operations and that the sales contract with the plant merely protected lessee’s right to free use of the gas after the gasoline had been extracted from it.

Blakley attempts to distinguish Tidewater because the free-use clause in that case lacked the second provision found here (“and the royalty on oil, gas and coal shall be computed after deducting any so used.”)

Blakley also argues that the second clause of the free-use provision merely provides the method for calculating the royalty when gas is used by the lessee and that it does not permit free use of gas sold to others for operations under the lease.

We see no reason to interpret the second clause as a bar to lessee’s free use in this case. We do not find the secondary authorities cited by Blakley persuasive. The language quoted concerning the effect of intermittent production on the shut-in royalty anniversary date does not refer either to sales for use in operations under the lease or to the free-use provision. See Comments, 24 Tex.L.Rev. 478,482 (1942); Walker, Developments in the Law of Oil and Gas in Texas During the War Years — A Resume, 25 Tex.L.Rev. 1, 22 (1946), and 3 H. Williams & C. Meyers, Oil & Gas Law § 633.5 at 469-70 (1975). We construe the second clause of the free-use provision as permitting the sale of gas by lessee to driller in this case.

Appellants’ third point is that the trial court erred in rendering summary judgment that the lease expired for failure of timely payments of shut-in gas royalty because the payments were timely commenced and continued.

Blakley’s fourth amended original petition alleged that “HUMBLE erroneously commenced making the shut-in gas royalty payments for a period described as commencing on March 21, 1965, rather than on March 20,1965,” and consequently “no . royalty was ever paid or tendered . for the period March 20, 1965 to March 21, 1965.”

But in response to Phillips’ requests for admissions Blakley had previously admitted the following:

“10. Humble . . . after the shuting-in [sic] of the Pool ‘B-l’ Well, immediately after its completion, timely commenced payment of shut-in gas royalties to the persons authorized to receive the same in accordance with the terms of the Oil, Gas and Mineral Lease of March 11, 1955.
“11. All shut-in gas royalty payments made by Humble . . . and Phillips . prior to the acquisition of the property made the basis of this lawsuit by Wm. A. Blakley, were timely made to the persons authorized to receive the same under the terms of the Oil, Gas and Mineral Lease dated March 11, 1955.” Blakley further admitted:
“9. But for the fact that the Pool ‘B-l’ Well was placed in production, . it would be correct to state that prior to the acquisition by Wm. A. Blakley of the property made the basis of this lawsuit, each shut-in royalty payment which Phillips . . . undertook to make was timely made to the persons authorized to receive the same . . . . However, said well was placed in production on February 3, 1966, and was thereafter shut in again on March 4,1966. . When the well was shut in again on March 4, 1966, shut-in royalty payments were due and owing monthly, and a new monthly anniversary date came into being. For the period prior to acquisition by Wm. A. Blakley of the property made the basis of this lawsuit, and only during the period of such acquisition . shut-in royalty payments were made by Phillips . . .far enough in advance of each of the old monthly anniversary dates that, when such payments are made applicable to the new monthly anniversary date arising after the well was shut in on March 4,1966, such payments by Phillips . . . prior to November 21, 1966, nevertheless were timely made.”

By our holding on point of error no. 2 we have rejected Blakley’s contention that the sale to Grace Drilling changed the shut-in royalty due date to the fourth of the month.

Thus the only question before us under point of error no. 3 is whether payments after November 21, 1966 (the date Blakley purchased the land), and up to March 21,1967 (the date Blakley repudiated the lease) were timely made or tendered with respect to the due date of the 21st. We need not look beyond March 21, 1967, since tenders of shut-in gas well royalty are unnecessary after repudiation of the lease. Archer County v. Webb, 161 Tex. 210, 338 S.W.2d 435 (1960).

Using the 21st as the monthly due date, there is no question as to the timeliness of the payments or tenders. The lease requires that payments be “mailed or delivered . . . on or before the date of payment.” In his brief Blakley admits that monthly shut-in royalty payments were delivered prior to the 21st of each month for the period from November 21, 1966, through April 21, 1967.

We sustain appellants’ third point and hold that the shut-in gas payments were timely commenced and continued. Having sustained appellants’ first three points, it is unnecessary for us to consider points of error nos. 4 through 8. In connection with the position (which we have rejected) that the Grace sale changed the shut-in royalty due date, these points raise the questions of ratification, acknowledgment, novation and repudiation by Blakley. Nor need we consider point of error no. 9 which contains an assertion that the trial court erred in its rendering summary judgment because there were genuine issues of fact material to those questions.

CONCLUSION

We reverse that portion of the trial court’s judgment declaring that the lease expired prior to September 1,1969, for failure to make timely payments of shut-in royalty and render judgment that the lease is valid as against the allegations that it terminated because of failure to make timely shut-in gas royalty payments.

Appellants have asked, in an alternative prayer for relief, that we also declare the issue of the alleged bad-faith pooling moot. However, the trial of those allegations below was waived, conditioned upon the finality of the summary judgment, and those issues were severed. The severance of the bad-faith pooling issues, and our holding on the summary judgment issues, require that the remainder of the case concerning Blak-ley’s objections to the accounting and the alleged understatement of production be remanded for trial and consolidated with the bad-faith pooling action against all defendants. Accordingly, we expressly refrain from consideration of appellants’ points of error nos. 10 through 23 relating to the jury trial held on the issues raised by Blakley’s objections to appellants’ accounting.

We reverse the trial court’s judgment and render judgment in part that the lease did not terminate for failure of timely shut-in gas payments.

We remand the balance of the case to the trial court and order that it be consolidated with severed cause number 141-37202-76.


author: CORNELIUS, Chief Justice.

text:
    Jim MORGAN, Appellant, v. Grady SINGLEY, Appellee.
    No. 8504.
    Court of Civil Appeals of Texas, Texarkana.
    Dec. 13, 1977.
    Rehearing Denied Jan. 31, 1978.

      Thomas R. Grett, Longview, for appellant.

      Guy N. Harrison, Longview, for appellee.
   CORNELIUS, Chief Justice.

Grady Singley, who was the plumbing, heating and air conditioning subcontractor for the general contractor M. Clint Brown Company, entered into subcontracts with Jim Morgan by the terms of which Morgan • was to perform the plumbing portion of Singley’s contracts on the Citizens Resource Center and the Student Center at LeTour-neau College in Longview. The contracts required Singley to pay Morgan $31,000.00 for the Resource Center and $48,845.00 for the Student Center. They also required Morgan to perform his work in accordance with certain plans and specifications, and obligated Singley to pay Morgan monthly progress payments based on the work completed to that time. The work began and Morgan was paid his monthly progress payments through June of 1974. The last payment was made to Morgan on June 26, 1974, for work and materials for the month of May. Morgan received no payment after June 26th but he continued his work until September 1, 1974. At that time Morgan was told that payments for his work in July and August had been made by the general contractor to Singley but that Singley had not passed them on. Upon that discovery, Morgan promptly removed his workmen from the job sites and performed no more services under his contracts. In response, Singley used some of his own workmen and also employed another plumbing contractor, on a cost-plus basis, to complete the work. He then sued Morgan to recover the expenditures in excess of the contract prices. Morgan counterclaimed seeking payment for work done but not paid for and for the value of certain materials allegedly left at the job sites.

The testimony relating to the reasons for Singley’s withholding of Morgan’s progress payments was conflicting. Both Singley and the general contractor’s superintendent agreed that payment was made to Singley for Morgan’s work as it progressed but that the superintendent instructed Singley to withhold Morgan’s share until certain defects and deficiencies in Morgan’s work had been remedied. Singley contended the defects were never remedied. Morgan denied these assertions. He testified that Singley told him that the general contractor made no payments in July and August. Morgan also contended that any defects in his work had been remedied prior to his leaving the job sites. No witness was able to recall the exact dates when defects or deficiencies in the work were discovered or when Morgan was asked to remedy them. Morgan testified that much of the non-complying work was approved by an inspector who was later overruled by another inspector. All of the inspectors who testified denied ever approving any of the defective work.

Trial was to a jury which found, in effect, that Morgan abandoned his work without justification; Morgan failed to perform his work according to the plans and specifications; Morgan’s abandonment proximately caused Singley to expend $38,087.82 to complete the work; and that Morgan had substantially completed the work on the Resource Center, for which he was due an additional $2,691.93 by way of offset against Singley’s recovery. Certain other jury findings were disregarded, of which action neither party has complained. Based upon the jury findings and undisputed evidence showing that Singley had paid $90,-903.09 for the two jobs which Morgan had contracted to perform for a total of $82,-795.00, the court awarded Singley a recovery of $8,108.09 less the $2,691.93 offset for Morgan’s unpaid work on the Resource Center, for a net of $5,416.16.

Four points of error have been assigned. The first two contend that the jury finding that Morgan breached the contracts by abandoning the work without justification, and the trial judge’s implied finding (Tex.R.Civ.P. 279) that Singley’s withholding of the progress payments did not amount to a breach, are both against the great weight and preponderance of the evidence. It is argued that, as it was undisputed that Singley failed to pay the July and August payments, that fact alone establishes that Singley breached the contract and that Morgan’s subsequent abandonment of the work was justified and could not have constituted a breach, citing Taylor-Fichter Steel Const. Co. v. Curtis, 144 S.W.2d 285 (Tex.Civ.App.Beaumont 1940, writ dism’d judgmt cor.), and Kidd-Scruggs v. Tyler Hotel Co., 270 S.W. 566 (Tex.Civ.App.Texarkana 1925, writ ref’d). It is, of course, the general rule that the unjustified refusal or failure to pay the agreed installments would constitute a breach of the contract. But it is now recognized to be the rule that reciprocal promises in a contract are presumed, in the absence of an intention to the contrary, to be mutually dependent rather than independent, and that the breach of one will excuse performance of the other. See K & G Construction Company v. Harris, 223 Md. 305, 164 A.2d 451 (1960). In speaking of the refusal of an owner or general contractor to pay a contractor or subcontractor because his work has been defective, Professor Corbin states:

“If the refusal to pay an installment is justified on the owner’s part (Singley in our case), the contractor (Morgan in our case) is not justified in abandoning work by reason of that refusal. His abandonment of the work itself will be a wrongful repudiation that goes to the essence, even if the defects in performance did not.” (Parenthesis supplied.) 3A A. Corbin, Contracts, Sec. 708, at 333 (1972).

Thus, if Morgan’s performance had not been in compliance with the plans and specifications as agreed, Singley’s refusal to pay the progress payments would have been justified and Morgan’s abandonment of the work, rather than Singley’s refusal to pay, would have constituted the breach of the contracts. As to whether Morgan’s performance was in compliance with the contracts or was defective at the time Singley discontinued payment, the evidence was highly contradictory with considerable evidence pro and con. From a review of the entire record we cannot say that either the jury’s finding or the trial judge’s implied finding concerning the party responsible for the breach of the contracts is against the great weight and preponderance of the evidence.

Morgan urges that the general contractor’s payment to Singley for Morgan’s work constituted an acceptance of the work and Singley had a duty to pass the payment on to .Morgan. There was testimony, however, that the payments to Singley were with the reservation that they should not be passed on to Morgan until the work defects were remedied. In those circumstances, the payment to Singley would only constitute a conditional acceptance of Morgan’s performance, and would not preclude a finding that Singley was justified in withholding payments until the defects were remedied.

Point No. 3 asserts that the jury’s answer to Special Issue No. 6 is ambiguous and that the court was in error in basing a judgment thereon. Issue No. 6 inquired what amount of money Singley “was required to expend to complete the work JIM MORGAN had contracted to perform?” The jury answered: “$38,087.82.” Morgan contends that the issue is defective because it is not clear whether the answer of the jury represents the amount expended above that paid to Morgan or the amount expended above the contract price.

We have concluded that the issue is not ambiguous and there is ample evidence in the record to support the jury’s answer of $38,087.82. We think it clear that, when the issue inquired what amount of money Singley was required to expend to complete the work, it was referring to the amount of money required to finish the work remaining after Morgan abandoned the job. That amount was easily calculated, if the jury believed Singley’s evidence. He testified that he paid another contractor $25,023.44 to complete the work; he was required to purchase an additional $7,096.88 worth of materials; and he had to use an additional 542.5 hours of his crew’s labor, at a net cost to him of $11.00 per hour, which amounted to $5,967.50. The total of these three figures is $38,087.82, which was the jury’s answer to Special Issue No. 6.

The fourth point contends that the jury’s answer to Special Issue No. 13 is against the great weight and preponder-anee of the evidence. That issue, in conjunction with previous ones, inquired of the jury what amount was owing Morgan (on a quantum meruit basis) for the work he had done on the Resource Center. The jury answered $2,691.93. Morgan asserts that the answer is not supported by the evidence because the jury deducted 10% retainage from the total contract price for the Resource Center before it calculated the value of the percentage of the work completed by Morgan. The assertion is based upon Sing-ley’s speculation in his motion for judgment to the effect that:

“That to arrive at the answer to Issue 13, regarding the Resource Center, the jury took the contract amount of $31,000.00 and reduced it 10% retainage, leaving a contract amount of $27,900.00. They further multiplied that by 98%, finding that the job was 98% complete, leaving a figure of $27,342.00 and taking into account the evidence showed (sic) that SINGLEY had already paid $24,651.07, leaving the sum of $2,691.93, therefore, evidencing that the jury felt that Plaintiff had underpaid Defendant on the Resource Center contract.”

We agree that the 10% retainage should not have been deducted by the jury from the contract price when determining the amount due Morgan for his substantial performance of the work on the Resource Center. Retainage is designed to protect laborers and materialmen by delaying the disbursement of a portion of the contract price until those parties have had an opportunity to perfect or enforce their claims against the fund so created. It should not be used to reduce the contract price in a suit between a contractor and a subcontractor pertaining to their respective rights under the whole contract. But we have no way of determining whether or not the jury considered the retainage in arriving at their answer. There is nothing in the record, other than Singley’s speculation in his motion for judgment, to indicate they did so. We do know, however, that for the unpaid value of the work on the Resource Center the jury allowed a figure of only $2,691.93, which when considered with the $24,651.07 the undisputed evidence shows had already been paid to Morgan on that contract, represents only approximately 88% of the contract price of $31,000.00. That conflicts with the uncontroverted evidence which established that the Resource Center was at least 98% complete when Morgan left the job. Singley conceded that fact, while Morgan contended that the job was 100% complete. As the jury’s answer to Issue No. 13 is, in effect, less than that testified to by any witness, the answer is without support in the evidence and results in the judgment for Singley being excessive. See Houston Belt & Terminal Ry. Co. v. Lynch, 221 S.W. 959 (Tex.Com.App.1920, judgmt adopted); Rector v. DeArana, 385 S.W.2d 503 (Tex.Civ.App.El Paso 1964), rev’d and rem’d to Civ.App., 398 S.W.2d 911 (Tex.1966); Vassar v. State, 382 S.W.2d 321 (Tex.Civ.App. Beaumont 1964, no writ); State v. Spears, 374 S.W.2d 250 (Tex.Civ.App.Beaumont 1963, no writ).

It is the duty of this Court to determine the amount that the judgment is excessive. Texas Pipe Line Co. v. Hunt, 149 Tex. 33, 228 S.W.2d 151 (1950); Rector v. DeArana, supra. The jury could have found a figure representing a 98% completion of the Resource Center, but not a lesser figure. They could, of course, have found a figure representing 100% completion, because Morgan testified that the work was 100% completed. But as pointed out by the opinion of the Court of Civil Appeals in Houston Belt & Terminal Ry. Co. v. Lynch, 185 S.W. 362 (Tex.Civ.App.Galveston 1916), aff’d, 221 S.W. 959 (Tex.Com.App.1920, judgmt adopted), which involved an analogous situation, it is evident that as the jury found the amount to be less than 98%, the lowest figure testified to by any witness, in the nature of things they would in no event, though they had been confined within the range of the testimony, have found a figure greater than 98%. Based upon the finding that Morgan was entitled to an offset of only $2,691.93, Singley recovered judgment for $5,416.16. As the jury could have found under the evidence no less than a figure representing a 98% completion of the Resource Center (resulting in an offset of $5,728.93), we are authorized to hold that the verdict is excessive by $3,037.00, and to require a remittitur of that amount, according to the holding of the Commission of Appeals in Houston Belt & Terminal Ry. Co. v. Lynch, 221 S.W. 959, supra. In that case the court said:

“It is true that the assignment of error sustained by the Court of Civil Appeals was that the answer to the second question was contrary to the evidence, and there was no assignment complaining of an excessive verdict or judgment as such. But it is likewise true that the substance of the assignment so sustained was the excessiveness of the judgment. .
“Prior to the passage of the remittitur statute, the rule was established in this state that, where the law afforded no criterion by which to determine damages, the damages being uncertain in their nature, and the amount thereof left to the sense of right and justice of the jury, the appellate courts could declare the verdict and judgment excessive, and thereupon reverse and remand the cause for a new trial. This was the limit of their authority. They could not substitute their own finding as to damages, and thereby effect a reform in the judgment. The remitti-tur statute was enacted to enlarge the power of these courts, with a view to a final adjudication on appeal where the only error was excessive judgment; .
“. . .In the present case, the complaint being that the value of the property after construction and operation was less than justified by the evidence, it was necessary for the Court of Civil Appeals to first determine what value would be justified under the evidence, if it had been found by the jury. The court concluded that the jury could have found from the evidence such value to be $1,500. Having assessed it at $1,450, the result was an excess in the judgment in the sum of $50, plus interest. . . . That which alone gave the Court of Civil Appeals the right in any manner to interfere with the judgment of the trial court was its excessiveness. Through this alone defendant was injured. Of this injury it complained by indirection, assigning error to the finding rather than to its necessary effect — excessive judgment. Looking to substance rather than form, the action of the court in this case was no more a substitution of its own finding for that of the jury than in the case of excessive judgment under a general verdict. The court granted defendant the relief, and the only relief, to which it was entitled, and it is in no position to complain of the action of the court in the premises.”

See also Texas Pipe Line Co. v. Hunt, supra; Rector v. DeArana, supra; Vassar v. State, supra; Central Power and Light Company v. Graddy, 318 S.W.2d 943 (Tex.Civ.App.Houston 1958, no writ); State v. Spears, supra, for other cases applying similar reasoning.

For the reasons stated, the judgment will be reversed and remanded unless Singley shall within ten (10) days from December 13, 1977, file with the Clerk of this Court a remittitur in the amount of $3,037.00, in which event the judgment will be reformed as indicated and affirmed.