author: GUITTARD, Chief Justice. AKIN, Justice,

text:
    Charles S. CHRISTOPHER, Appellant, v. GENERAL COMPUTER SYSTEMS, INC., Appellee.
    No. 19238.
    Court of Civil Appeals of Texas, Dallas.
    Aug. 31, 1977.
    Rehearing Denied Nov. 15, 1977.

      R. L. McSpedden, Collie, McSpedden & Roberts, Dallas, for appellant.
    Dean Carlton, Dallas, for appellee.
   GUITTARD, Chief Justice.

This suit was brought by General Computer Systems, Inc., a supplier of computer equipment, against Surety Industries, Inc. and Charles Christopher, Surety’s president and sole stockholder, for misappropriation of funds alleged to have been collected by Surety as agent for General and diverted by Christopher for his personal use. After a verdict favorable to General, the claim against Surety was severed, and judgment was rendered against Christopher on the verdict for $117,190.97 actual damages and $150,000 exemplary damages. On this appeal Christopher’s principal contentions are that the pleadings and evidence are insufficient to support the findings of damages, that the exemplary-damage issue was improper, and that the court erred in admitting evidence of appellant’s conviction of a crime which, he asserts, did not involve moral turpitude. We affirm.

The evidence shows that General from time to time sold equipment to Surety, which leased it to various customers, and that General provided maintenance service for the lessees. The parties did business under a “Master Sales Agreement,” which provided as follows:

SURETY agrees that it will collect, as agent for GENERAL monthly maintenance payments, without fee whatsoever to SURETY. SURETY will pay such maintenance payments to GENERAL within five (5) days after receipt, without any deduction whatsoever.

General alleged that under the above provision of the contract, Surety had collected maintenance payments from lessees which it had failed to pay over to General, that these funds were trust funds which Surety had commingled with its own funds, that Christopher and the other officers of Surety had caused the funds to be dissipated and had appropriated them to their own personal and business purposes, and that more than $500,000 of such funds had been lent or given to defendant Christopher.

In response to special issues, the jury found (1) that the amount of maintenance funds collected by Surety and not paid to General was $117,190.97, (2) that such collections were made by Surety as agent for General, (3) (not pertinent), (4) that maintenance funds so collected were commingled with Surety’s general funds, (5) that such commingled funds or a part thereof were diverted by Christopher, and (6) that Christopher diverted more than $125,000 of such commingled funds. Other findings, including those concerning exemplary damages, will be noticed later in this opinion.

1. Funds Collected as Agent

We consider first appellant Christopher’s attack on the answer to special issue number one as without sufficient support in the evidence. By this answer the jury found that Surety collected $117,190.97 of maintenance funds which it failed to pay over to General. After review of the evidence, we conclude that there is sufficient evidence to support this finding.

The basic problem of proof was that neither General nor Surety had adequate records of the maintenance fees collected by Surety. The evidence shows that lessees of the equipment made monthly payments to Surety covering both the rentals owing to Surety and the maintenance fees collected by Surety for General. When Surety received these payments, it deposited them with its general operating funds and failed to keep a careful record of how much of each of such payments was from maintenance as distinguished from rental. Christopher testified that the maintenance fees went into several accounts and that Surety had no policy or established method of accounting for them. He admitted that it was difficult to allocate these collections between funds owed to Surety and funds owed to General. Surety’s accountant Willke testified concerning a summary he had made from Surety’s records of maintenance fees collected, but his testimony based on these summaries cannot be taken as conclusive in view of other testimony concerning the inadequacy of Surety’s records. Christopher testified that Surety sometimes had difficulty determining which funds belonged to it and which to General. General’s accountant, Harry Greenberger, had been permitted to make an extensive investigation of Surety’s books, and he testified concerning the summaries he had made, which did not agree with Willke’s summaries. Greenberger also testified that he was unable to verify all the book entries from original documents or entries made at the time of the transactions and that in some respects the records he examined were inconsistent. He also testified that Surety’s records, particularly its general ledger for 1974, were not kept in accordance with normal bookkeeping practices.

In this situation, General’s principal reliance is on circumstantial proof. Green-berger testified concerning the amount of maintenance fees billed by General to Surety, representing amounts payable by lessees to Surety as General’s agent. In order to establish what part of these billings had been collected, he undertook to determine from Surety’s records which of the monthly rentals had not been received. Apparently, Surety did keep a record of rentals past due. Greenberger then inferred that if the rental was not collected in a particular case, the corresponding maintenance fee for that month was not collected, and that if the rental was collected, the maintenance fee was collected. He then totaled the uncollected maintenance fees so determined and subtracted that amount from the total billings for maintenance fees to obtain a figure for the maintenance fees actually collected. On that basis, after taking into account certain credits to which Surety was entitled according to a stipulation of the parties, and, allowing for other adjustments not in controversy, Greenberger arrived at a net amount owing to General of $117,190.97, the amount found by the jury in answer to issue number one. This figure is less than the amount owed to General as evidenced by Greenberger’s summaries of Surety’s records.

Appellant attacks this computation by challenging Greenberger’s inference that Surety’s record of the rentals not collected was proof of the maintenance fees collected. By itself, of course, it did not constitute such proof. There was other proof, however, which we find circumstantially sufficient to support Greenberger’s inference. The maintenance fees, like the rentals, were paid monthly by the lessees to Surety. Christopher admitted that the maintenance fees and rentals were billed to the lessees on the same invoices and were collected together. There is no evidence of an instance when one was received without the other. Since Surety had the duty as General’s agent to collect and pay over the maintenance fees, it is in no position to assert that when a payment was insufficient to cover both, that payment should be credited to the rental rather than to the maintenance fee. Christopher, as Surety’s chief executive officer, is in no better position.

Moreover, Surety, as General’s agent, had a duty to keep and maintain the maintenance funds as a separate and identifiable account for the benefit of General. Searle-Taylor Machinery Co. v. Brown Oil Tools, Inc., 512 S.W.2d 335, 338 (Tex.Civ.App.-Houston [1st Dist.] 1974, writ ref’d n. r. e.). According to Christopher’s own testimony, Surety did not comply with that duty. Neither Surety nor Christopher offered any evidence tending to show that rentals were received from lessees who did not at the same time pay also the corresponding maintenance fee. Under these circumstances we conclude that the evidence provides a rational basis for accepting Greenberger’s computation, at least as prima facie proof of the amount of maintenance funds collected by Surety and not paid over to General. A contrary holding would permit Surety and Christopher to take advantage of the inadequacy of Surety’s own records to avoid accountability for funds collected and held as General’s agent and diverted by Christopher to his own personal use.

Appellant attacks Greenberger’s figures on the additional ground that they include amounts collected before March 1975 when, according to a letter from General’s lawyer, all accounts were settled and Surety gave a note for the agreed amount due, which was subsequently paid. We are unable to determine from this letter and the testimony relating to it whether it had anything to do with maintenance funds collected by Surety. The amount of $383,473.03 stated as the “outstanding balance” is apparently based on other transactions between General and Surety. At least, Greenberger and the jury might properly have so regarded it, so far as the present record shows. Consequently, we cannot say that this letter established conclusively the inaccuracy of Greenberger’s figure of $117,190.97.

2. Diversion of Commingled Funds

We next consider appellant’s attack on the jury’s finding in answer to issue number five that appellant diverted the commingled funds or a part thereof. In support of this attack, appellant argues that the effect of the suit is to hold him as a shareholder liable for the corporate debts because he received money from the corporation. He insists that this cannot be done unless the corporation has become insolvent and has ceased doing business, or unless the stockholders have “denuded” the corporation of its assets, and that these facts are neither alleged nor proved.

We cannot accept this analysis because the maintenance funds were not simply a debt that Surety owed to General. Under the express provision of the “Master Sales Agreement” above quoted and also under the jury’s finding in answer to issue number two that the maintenance funds were collected by Surety as agent for General, these funds belonged to General, not to Surety. The evidence shows that Surety commingled General’s funds with its own and that appellant Christopher knew he was withdrawing funds from the commingled account. To the extent that Christopher diverted such funds to his own use, he was diverting General’s funds as well as Surety’s funds, and he is liable directly to General for his own acts rather than for the acts of Surety. Searle-Taylor Mach. Co. v. Brown Oil Tools, Inc., 512 S.W.2d 335, 338-39 (Tex.Civ.App.-Houston [1st Dist.] 1974, writ ref’d n. r. e.). By withdrawing for his personal use funds that he knew to be commingled, he became personally responsible for the commingling to the extent of the funds withdrawn. As sole stockholder and chief executive officer, Christopher had control of the evidence concerning disposition of the funds. He admitted that he had complete knowledge and control of Surety’s affairs. Thus he was responsible for the commingling, and, consequently, we hold that he had the burden of proving how much of the funds he received belonged to Surety rather than to General. See Dessommes v. Dessommes, 505 S.W.2d 673, 680 (Tex.Civ.App.-Dallas 1973, writ ref’d n. r. e.), and cf. Logan v. Logan, 138 Tex. 40, 156 S.W.2d 507, 510-11 (1941) (dictum). Since he made no such proof, he is liable to General for the full amount of General’s funds so commingled up to the amount of the commingled funds diverted by him, which, as the jury found, exceeded the amount of General’s funds commingled. Under the circumstances, his liability need not be predicated on proof that Surety was insolvent and ceased to do business or that its assets had been “denuded.”

Accordingly, we have examined the record to determine whether there is evidence that Christopher did, in fact, divert to his own use more than $125,000 of commingled funds, as the jury found in answer to issue number five. We find the evidence sufficient to support the jury’s answer to this issue. Christopher himself testified that the maintenance funds collected were deposited with Surety’s general operating funds and that either he or other enterprises controlled by him benefited from more than $500,000 withdrawn from such funds. Moreover, the evidence shows that an account was maintained on Surety’s books showing more than $540,000 of withdrawals by its officers and employees from its general funds. Of these withdrawals, Christopher admitted that more than ninety percent were attributable to him. He also admitted that he had reported $50,000 of these withdrawals on his personal income tax return for 1973 and $120,000 on his return for 1974. This testimony is ample to support the jury’s finding that Christopher diverted to his own use more than $125,000 of the commingled funds.

Appellant also contends that General did not plead any basis for his personal liability for the debts of Surety. The petition alleged that Surety received the maintenance funds as General’s agent, that Christopher and other officers of Surety caused the funds to be commingled with other funds of Surety, and that Christopher and the others “had appropriated said funds to their own personal and business uses, to-wit: in excess of $500,000 has been lent or given to Christopher or to activities charged to him.” We hold that this pleading supports submission of issue number five and recovery of the amount found by the jury, since its does allege a wrongful diversion by Christopher of funds belonging to General.

Appellant’s assertion of a conflict in the jury’s findings is likewise without foundation. He argues that since the jury found in answer to issue number one that the maintenance funds collected and not paid over to General amounted to $117,-190.97 and also found in answer to issue number five that the amount of the commingled funds diverted by Christopher was more than $125,000, there is a conflict in these findings because the commingled funds are the same as maintenance funds. The obvious answer to this contention is that after the maintenance funds were commingled with Surety’s other funds, the commingled funds amounted to more than the maintenance funds alone. Consequently, there is no conflict between these findings. The judgment rendered against Christopher for actual damages in the amount of $117,190.97 is consistent with both of these findings.

3. Conspiracy

Appellant’s next attack on the verdict is upon the answer to issue number seven in which the jury found “that Charles S. Christopher and Surety Industries, Inc., conspired to withhold maintenance funds from General Computer Systems, Inc.” This issue was apparently submitted in connection with General’s claim for exemplary damages, since it is followed by an issue inquiring whether such conspiracy was “willful and deliberate,” and another inquiring whether exemplary damages should be awarded. Appellant’s objection to the issue is that there are no pleadings to support it, that there is no evidence to support the jury’s finding, and that the evidence is insufficient to support the finding.

Appellant’s contention concerning lack of pleading is that General did not plead that Christopher conspired with the corporate defendant, Surety Industries, Inc., but only that he conspired with its officers, George Dillman and Dan Gordon, to dissipate and misappropriate the maintenance funds collected for General. We cannot consider this argument because it was not preserved by a proper objection in the trial court. The objections to the charge are shown in the statement of facts, as rule 272 of the Texas Rules of Civil Procedure now permits. These objections are contrary to the following prohibitions in rule 274 of the Texas Rules of Civil Procedure:

Where the objection made by the complaining party, . . . is in the opinion of the appellate court obscured or concealed by voluminous unfounded objections, . . . such objection . shall be untenable. No objection to one part of the charge may be adopted and applied to any other part of the charge by reference only.

The objection to issue number seven violates this rule in two respects. In the first place, defendant’s only objection to this issue is nothing more than a reference to other objections. The entire objection is as follows: “The same three, the first three objections to Special Issue No. 7.” The three objections referred to are apparently those made with respect to the first special issue, including the objection that that issue is not supported by the pleadings. In the second place, the objection is obscured by voluminous unfounded objections. The same three objections are repeated by reference with respect to the first twelve special issues — all issues, apparently, except those submitted at defendant’s request. Consequently, we hold that this objection is not preserved for review. Monsanto Co. v. Milam, 494 S.W.2d 534, 537 (Tex.1973).

We must consider, however, appellant’s contentions that the answer to issue number seven is without support in the evidence and that the evidence is insufficient to support this finding, since these objections may properly be made after verdict. Tex.R.Civ.P. 279; Strauss v. LaMark, 366 S.W.2d 555, 558 (Tex.1963). Appellant argues that there is no mention of a “conspiracy” in the statement of facts other than the testimony of appellee’s witness Greenberger, who admitted that he did not of his own knowledge know that Christopher had “conspired” with Dillman or Gordon tó do anything. Appellant seems to take the view that in the absence of evidence that Christopher made an express agreement with Dillman or Gordon, or some other identifiable individual, to divert the maintenance funds collected for General, there is no evidence of a conspiracy.

We do not accept this view. The charge defines “conspiracy” as “a combination of two or more persons by concerted action to accomplish some unlawful purpose or to accomplish some lawful purpose by unlawful means.” It defines “person” as including a corporation as well as a natural person. No objection was made to either of these definitions. Issue number seven does not inquire whether appellant conspired with Dillman or with Gordon, but rather inquires whether he conspired with Surety Industries, Inc. Since the jury was instructed that the term “person” as used in the definition of conspiracy included a corporation, and since appellant was the president and chief executive officer of Surety, as well as its sole stockholder, the question is whether there is evidence to show that the acts of the appellant in his individual capacity “combined” with the acts of the corporation, acting through appellant as its chief officer, to withhold the maintenance funds from General. After reviewing the record, we conclude that there is ample evidence to support this finding. Christopher admitted that he had complete knowledge and control of Surety’s affairs. As an officer of Surety he was responsible for Surety’s commingling of General’s funds with its own, and he was also responsible for the diversion of these funds to his own use as an individual. In his individual capacity he accepted the commingled funds, knowing their source, and used them for his own purposes. We hold that this evidence is sufficient to show that there was a combination between him as an individual and the corporation for which he acted, to withhold the maintenance funds from General. It follows that the evidence is sufficient to support the answer to issue number seven under the definition of “conspiracy” and “person” in the court’s charge.

On the present record, a predicate for exemplary damages might have been established on the theory of willful conversion, without any finding of conspiracy, but the issues as submitted impose on General a greater burden. The issues as submitted and answered by the jury establish that Christopher diverted General’s funds to his own use, that this diversion was the result of a combination between his acts as an individual and his acts on behalf of Surety, and that these acts were willful and deliberate. Thus the jury has found actual damages as a result of a willful and deliberate wrong on the part of Christopher and has assessed his punishment for that wrong at $150,000. We find ample evidence to support these findings. Conceivably, in some other type of case, error might be committed in defining “conspiracy” so as to permit a jury to consider the acts of an individual on his own behalf in combination with his acts as an officer of a corporation, and in some other case, a “meeting of the minds” between two natural persons might be required. But since the definition was submitted here without objection on that ground, and since the jury has found, in effect, that Christopher’s actions on his own behalf in combination with his acts as an officer of Surety, were willful and deliberate and resulted in damage to General, we hold that all elements of an award for exemplary damages have been established.

Appellant complains also that no judgment could be based on the finding of conspiracy in answer to issue number seven because “there can be no actionable conspiracy in resisting the payment of a lawful obligation.” In support of this contention, he cites Bartelt v. Lehmann, 207 S.W.2d 131, 133 (Tex.Civ.App.-Austin 1947, writ ref’d), which was a suit on a note against a business trust, in which individual liability of the trustees was asserted on the ground that they had conspired to prevent payment of their own unpaid subscriptions for shares of the trust. The court held that the allegation of conspiracy was insufficient to assert individual liability because it was “not an unlawful purpose to resist the payment of an obligation, regardless of its legality.” This case is inapposite because here the conspiracy alleged is not simply to resist payment of a debt by Surety to General, but rather to divert to Christopher’s personal use funds belonging to General and held by Surety as agent. Such a wrongful diversion of General’s funds was clearly unlawful, and thus the pleading and the evidence above detailed are sufficient to establish Christopher’s personal liability.

4. Exemplary Damages

The next group of points advanced by appellant concerns the jury’s finding in answer to issue number ten that exemplary damages should be awarded against him. We cannot consider his complaints that this issue is a general charge and a comment on the weight of the evidence because no objection on these grounds was made before the charge was submitted to the jury. His principal argument is that there was neither pleading nor proof of fraud, malice, or oppression which, he says, is essential to recovery of exemplary damages, citing Ogle v. Craig, 464 S.W.2d 95 (Tex.1971).

Although the petition does not use the term “malice,” it does allege that defendants “by their willful, capricious, and torturous [sic] conduct, specifically the willful misappropriation of trust funds and the conspiracy to damage GCS, as aforesaid, are liable to plaintiff for punitive damages.” The record discloses no special exception to this allegation. In the absence of such an exception we hold that the allegation of “willful misappropriation . . . and the conspiracy to damage GCS” was sufficient to support submission of the issue of exemplary damages. Tennessee Gas Transmission Co. v. Moorhead, 405 S.W.2d 81, 85 (Tex.Civ.App.-Beaumont 1966, writ ref’d n. r. e.).

We conclude also that the evidence supported the finding of exemplary damages, although none of the witnesses used the word “malice,” and none testified to any expressions of ill will against General on the part of Christopher or any specific intent to cause injury to General other than to take money which, at least in part, belonged to General. Willful misappropriation of property without justification is a recognized ground of exemplary damages, even in the absence of an express finding of malice. Courtesy Pontiac, Inc. v. Ragsdale, 532 S.W.2d 118 (Tex.Civ.App.-Tyler 1975, writ ref’d n. r. e.). The finding of exemplary damages in answer to issue number ten must be taken together with the finding in answer to issue number eight that the conspiracy between Christopher and Surety to withhold the maintenance funds from General was “willful and deliberate.” Since appellant makes no attack on this finding, it must be taken as established. D. T. Carroll Corp. v. Carroll, 256 S.W.2d 429, 432 (Tex.Civ.App.-San Antonio 1953, writ ref’d n. r. e.); Western Gulf Pet. Corp. v. Frazier Jelke & Co., 163 S.W.2d 860 (Tex.Civ.App.-Galveston 1942, writ ref’d w. o. m.). This finding is not merely that Christopher’s action was “wrongful,” such as the finding regarded in Ogle as insufficient to support exemplary damages. It is rather a finding of a willful tort of the type generally held sufficient to support an award of exemplary damages. International Bankers Life Ins. Co. v. Holloway, 368 S.W.2d 567, 583 (Tex.1963) (conspiracy by corporate officers to obtain profits from dealings in corporation’s stock to damage of other stockholders); Earthman’s, Inc. v. Earthman, 526 S.W.2d 192, 208 (Tex.Civ.App.-Houston [1st Dist.] 1975, no writ) (conversion of corporate stock).

If we should construe appellant’s attack on issue number ten as raising the question of sufficiency of the evidence to support the answer to issue number eight, we still could not sustain appellant’s contention because our review of the record convinces us that there is ample evidence to support the finding that the action of Surety and of Christopher in withholding maintenance funds and diverting such funds to Christopher’s own use was, indeed, “willful and deliberate.”

Appellant complains also that the aviard of $150,000 as exemplary damages was excessive. We cannot agree. Several factors supporting this award are shown in this record. Besides expenses of litigation, the deliberate withholding of this sum of money is shown by the record to have caused General severe financial distress. The consequent damage, though perhaps too remote to be considered as actual damages, could properly be considered by the jury on the issue of exemplary damages. Earthman’s, Inc. v. Earthman, 526 S.W.2d 192, 208 (Tex.Civ.App.-Houston [1st Dist.] 1975, no writ); Pan American Pet. Corp. v. Hardy, 370 S.W.2d 904, 908 (Tex.Civ.App.-Waco 1963, writ ref’d n. r. e.). Moreover, the amount of $150,000, as found, is not disproportionate to the finding of actual damages in the amount of $117,190.97. This ratio between actual and exemplary damages is an important factor in determining whether an award of exemplary damages is excessive. Southwestern Inv. Co. v. Neeley, 452 S.W.2d 705, 707-08 (Tex.1970). Consequently, we cannot hold the finding of exemplary damages to be excessive.

5. Evidence of Conviction

Appellant also complains of the admission of his conviction for violation of the federal eavesdropping statute on the ground that such conviction was not final and did not involve moral turpitude. Appellant insists that the prejudicial effect of this evidence is established by the substantial adverse verdict. We conclude that appellant has no standing to complain of this evidence, since he did not make a timely objection in the trial court. He did raise the matter before trial by a motion in li-mine, which the court overruled, but such a motion and ruling is not sufficient to preserve the error for appeal. Hartford Accident and Indemnity Co. v. McCardell, 369 S.W.2d 331 (Tex.1963). When that ruling was made, counsel was faced with a tactical dilemma. He could either raise his objection again when the evidence was offered before the jury, knowing that the judge had already decided to overrule it, or he could attempt to soften the effect of the evidence by placing the matter before the jury himself on voir dire of the jury panel. He chose the latter course, and only after evidence of the conviction had been admitted before the jury did he make a formal objection on the grounds now urged. Although we sympathize with counsel’s problem, we must hold that under McCardell he has no standing to ask for a reversal on this ground.

6. Denial of Continuance

Finally, we note appellant’s complaint that the court abused its discretion in overruling his motion for continuance on the ground that trial was set only two months after the case was filed, preparations for trial were not complete, and counsel for one of the defendants was unable to participate in selection of the jury because his wife had recently given birth. Appellant has shown no harm from the court’s action in proceeding with the trial, and the motion does not show that the attorney temporarily absent from the trial was counsel for the present appellant rather than the other defendant. Consequently, we hold that postponement of the trial was a matter within the discretion of the trial judge.

In oral argument counsel disclosed that the early trial setting was made by the court and agreed to by the parties in an effort to avoid a hearing on an application for temporary injunction, which probably would have been necessary if trial on the merits had been set in normal course. We commend the court and counsel for this procedure, since it did apparently avoid such a hearing and since it resulted in a final judgment in less time than would have been required by a hearing on the application for temporary injunction and disposition of an appeal from the interlocutory order granting or denying injunctive relief.

Affirmed.

AKIN, Justice,

dissenting.

I cannot agree with the majority’s holding that the jury’s answer to special issue number seven, the conspiracy issue, is supported by the evidence. One of the requirements of a civil conspiracy is “a combination by two or more persons to accomplish an unlawful purpose or to accomplish a lawful purpose by unlawful means.” Schlumberger Well Surveying Corp. v. Nortex Oil and Gas Corp., 435 S.W.2d 854, 856 (Tex.1968). As the majority concedes, the finding that two persons participated in the conspiracy can only be supported if we treat Christopher in his individual capacity as one person and Surety acting solely through its officer Christopher as the second person. There is no evidence that any other officer or agent of Surety participated in or had knowledge of the alleged conspiracy. “[0]ne of the essential elements required to establish a civil conspiracy is a ‘meeting of the minds on the object or course of action.’ ” Id. at 857. Although a corporation may be a “person” for the purpose of conspiracy law, it does not have a “mind” separate and distinct from the minds of its officers and agents. Clearly, there cannot be a meeting of the minds where there be but one mind. Thus, the courts have refused to find a conspiracy where only one natural person was acting in the scheme or plan which was the basis of the alleged conspiracy, even though he was an officer or agent of two corporations and both corporations were utilized in the scheme or plan. Lockwood Grader Corp. v. Bockhaus, 129 Colo. 339, 270 P.2d 193, 196-97 (1954); Windsor Theatre Co. v. Walbrook Amusement Co., 94 F.Supp. 388, 396 (D.Md.1950), aff’d 189 F.2d 797 (4th Cir. 1951); Knutson v. Daily Review, Inc., 383 F.Supp. 1346, 1359 (N.D.Cal.1974), modified, 548 F.2d 795 (9th Cir. 1976) (the Ninth Circuit did not pass on this question, but did note the stated rule in footnote 4 at 802). This does not mean that a natural person cannot enter a conspiracy in multiple capacities; it merely means that two natural persons are required to constitute a conspiracy.

Since the exemplary damages can be predicated only on the jury’s finding of a conspiracy and since there is no evidence of a conspiracy here as a matter of law, I would reverse and render the judgment of the trial court with respect to exemplary damages.

ON MOTION FOR REHEARING

Appellant attacks our holding that the evidence supports the jury’s findings of a conspiracy between him and Surety Industries, Inc., on the ground that we have “undertaken to establish the rule in Texas that a corporation can conspire with its chief executive officer when the one and only actor in the whole transaction was the chief executive officer himself.”

This argument indicates a misunderstanding of our ruling. We have not undertaken to establish any such rule. Our decision is limited to the peculiar circumstances of this case and the language of the issues and accompanying definitions, as submitted to the jury without objection. We agree with the decisions cited by appellant to the effect that a corporation cannot conspire with itself, no matter how many of its agents may participate in the corporate action. Worley v. Columbia Gas of Kentucky, 491 F.2d 256, 261 (6th Cir. 1974); Dorsey v. Chesapeake & Ohio Ry., 476 F.2d 243, 245 (4th Cir. 1973); Pearson v. Youngstown Sheet and Tube Co., 332 F.2d 439, 442 (7th Cir. 1964); Nelson Radio & Supply Co. v. Motorola, 200 F.2d 911, 914 (5th Cir. 1952), cert. denied, 345 U.S. 925, 73 S.Ct. 783, 97 L.Ed. 1356 (1953); Webb v. Culberson, Heller & Norton, Inc., 357 F.Supp. 923, 924 (N.D.Miss.1973); Johnny Maddox Motor Co. v. Ford Motor Co., 202 F.2d 103, 105 (W.D.Tex.1960). We accept also the rulings of certain federal trial courts construing the Sherman Anti-Trust Act as requiring that a conspiracy in restraint of trade be shown by a concert of action between more than one individual person. Knutson v. Daily Review, Inc., 383 F.Supp. 1346, 1359 (N.D.Cal.1974), modified, 548 F.2d 795 (9th Cir. 1977); Windsor Theatre Co. v. Walbrook Amusement Co., 94 F.Supp. 388, 396 (D.Md.1950), affm’d, 189 F.2d 797 (4th Cir. 1951).

Likewise, he have no quarrel with those decisions holding on their particular facts that the claim of common-law conspiracy did not provide an independent ground of primary liability against a corporation and its chief officer in the absence of any participation in the wrongdoing by another corporate agent. Ariate Compania Naviera v. Commonwealth Tankship Owners, Ltd., 310 F.Supp. 416, 421 (S.D.N.Y.1970); Bereswill v. Yablon, 6 N.Y.2d 301, 305, 189 N.Y.S.2d 661, 664, 160 N.E.2d 531, 533 (1959); Lockwood Grader Corp. v. Bockhaus, 129 Colo. 339, 270 P.2d 193, 196-97 (1954). Even if these cases are taken to stand for the rule that conspiracy is not a ground of recovery against an individual acting in more than one capacity, that rule, as applied here, would mean only that the definition of conspiracy in the charge was too broad in that it permitted the jury to consider Christopher’s acts as an individual in combination with his acts as a corporate officer in determining the existence of a conspiracy. If such an objection had been made, the court might have given an appropriate limiting instruction or it might have submitted the exemplary damages issues on some other theory raised by the evidence. Since no such objection was made, our question is whether the evidence supports the findings on the seventh issue under the broad definitions as submitted. For the reasons given, we hold that it does.

Moreover, since Christopher’s wrongful conduct and his liability for actual damages were established by other findings, and since the only significance of the conspiracy findings in the context of this appeal is to characterize his wrongful conduct as “willful and deliberate” for the purpose of recovering exemplary damages, we hold that the jury’s findings, based on the evidence of such a combination, supports the recovery of exemplary damages, however inadequate the evidence may have been to establish a common-law conspiracy for any other purpose.

Motion for rehearing overruled.

AKIN, J., dissents.


source: Caselaw Access Project

author: DIES, Chief Justice.

license: Public Domain

text:
    The CITY OF BEAUMONT, Appellant, v. Kirkland JONES, dba Anthony Cemetery, Appellee.
    No. 8042.
    Court of Civil Appeals of Texas, Beaumont.
    Oct. 27, 1977.
    Rehearing Denied Nov. 17, 1977.
    George Phair, Beaumont, for appellant.
    Lindsey Walker, Beaumont, for appellee.
   DIES, Chief Justice.

Anthony Cemetery was established in about 1867, and it is now in the corporate limits of Beaumont, a Home Rule City. In July 1975 Kirkland Jones purchased Lots 7 and 8 of the Morris Addition to the City of Beaumont which is adjacent to the cemetery. The deed was to Jones individually, but he testified he took it as trustee for the cemetery. He is the grandson of the original founder and the leader of the family group now operating the cemetery.

Lots 7 and 8 when purchased by Jones were zoned R-3 by the City of Beaumont. In addition to single family dwellings permitted by an R-l Zone, “Neighborhood establishments of the general character and type as the following are permitted”: (Emphasis Supplied) Then follow a long list of permitted uses. A cemetery is^ not listed.

The cemetery contends it has the right to use the two lots in question as a part of the cemetery. The City sought an injunction to prevent this.

In a nonjury trial, the court held with the cemetery from which the City of Beaumont perfects this appeal.

The City’s first point contends, “The trial court erred in holding that the City of Beaumont does not have authority to regulate the expansion or operation of cemeteries through its zoning ordinance.”

Art. 912a-24 of Tex.Rev.Civ.Stat. Ann. (1963) provides in part:

“It shall be unlawful for any person, company, corporation, or association to establish or use for burial purposes any graveyard or cemetery . . . located . within, or within less than four (4) miles from, the incorporated line of any city of not less than one hundred thousand (100,000) nor more than two hundred thousand (200,000) inhabitants . provided that where cemeteries have heretofore been used and maintained within the limits hereinabove set forth, and additional lands are required for cemetery purposes, land adjacent to said cemetery may be acquired by the cemetery association ... to be used as an addition to such cemetery, and the use of said additional land for such purposes shall be exempt from the provisions of this Section . . . .” (emphasis supplied)

Does this statute prohibit the City of Beaumont from regulating the use of land by zoning adjacent to the originally dedicated cemetery? We think not. The City of Beaumont is a Home Rule City, deriving its legislative power from Tex.Const. art. XI, § 5, and Tex.Rev.Civ.Stat.Ann. art. 1175 § 34 (1963). In Forwood v. City of Taylor, 147 Tex. 161, 214 S.W.2d 282, 286 (1948), the Court said:

“It was the purpose of the Home Rule Amendment, Art. XI, Sec. 5, and the enabling statutes, supra, to bestow upon . cities . . . full power of self-government, that is, full authority to do anything the legislature could theretofore have authorized them to do.”

This is an authority to promulgate zoning ordinances regulating the use of property for certain purposes in aid of the general welfare, safety, and public health and morale of the community. City of Bellaire v. Lamkin, 159 Tex. 141, 317 S.W.2d 43 (1958). This authority is subject to the limitation that no ordinance can be legally enacted by a city which conflicts or is inconsistent with a state statute. Royer v. Ritter, 531 S.W.2d 448 (Tex.Civ.App.-Beaumont 1975, writ ref’d n. r. e.).

The State’s entry into a field of legislation does not automatically preempt that field from city regulation. City of Weslaco v. Melton, 158 Tex. 61, 308 S.W.2d 18 (1957). A general law and a city ordinance will not be held repugnant to each other if any reasonable construction upholding both can be reached. City of Houston v. Reyes, 527 S.W.2d 489, 494 (Tex.Civ.App.-Houston [1st Dist.] 1975, writ ref’d n. r. e.). In City of Beaumont v. Fall, 116 Tex. 314, 291 S.W. 202, 206 (1927), the rule is thus stated:

“Of course, a general law and a city ordinance will not be held repugnant to each other if any other reasonable construction leaving both in effect can be reached. In other words, both will be enforced if that be possible under any reasonable construction . . ..”

In Louder v. Texas Liquor Control Board, 214 S.W.2d 336 (Tex.Civ.App.-Beaumont 1948, writ ref’d n. r. e.), the City of Port Arthur in May 1948 annexed two adjacent areas in which appellants were lawfully engaged in the sale of liquors. In effect was a zoning ordinance setting forth the areas within Port Arthur where liquors could be sold. It did not include the annexed area. The court held the city ordinance was valid in the annexed area.

In Long v. City of Fort Worth, 333 S.W.2d 644 (Tex.Civ.App.-Fort Worth 1960, no writ), the City sought to enjoin the defendant from operating a beauty shop in her home in violation of its zoning ordinance. Tex.Penal Code Ann. art. 734b (since repealed) made it unlawful for a person to operate a beauty shop unless it was a bona fide establishment with a permanent and definite location, but further qualified the prohibition that “provided, a person may have a shop in his or her home where the requirements, provisions and sanitary rules of this act are complied with.”

Defendant claimed this inconsistency negated the ordinance prohibition.

The court held that the ordinance intended to prohibit persons who might desire to operate beauty shops in their homes from so doing in the event such homes were zoned so as to prohibit such use, and thus did not conflict with the intent of the statute, which was merely to allow home beauty shops under the penal article unless prohibited by some other statute or ordinance.

The Cemetery urges that we are bound by our previous holding in Royer v. Ritter, 531 S.W.2d 448 (Tex.Civ.App.-Beaumont 1975, writ ref’d n. r. e.). There a city ordinance prohibited package stores within the city limits from engaging in business on four days when, under the Texas Liquor Control Act, they would be authorized to operate; and on other days the ordinance required that the package stores close at 8 P.M. when the State Act permits them to remain open until 9 P.M.

There we were confronted with an ordinance clearly inconsistent with State law. Justice Keith (in the concurring opinion at 450) succinctly stated the error when saying, “Beaumont’s attempt to make unlawful that which is lawful under the Act is therefore inconsistent with and contrary to a general law of the State and invalid.”

We construe Tex.Rev.Civ.Stat.Ann. art. 912a-24 (1963) to provide that cemeteries used and maintained in city limits before the effective date of the act may acquire additional lands for cemetery purposes, where a city ordinance does not prohibit such a use of such acquired land. This point is sustained.

City’s next and last point is “the trial court erred in holding that the zoning ordinance of the City of Beaumont permits the establishment and operation of cemeteries in all classified zones.”

Tex.Rev.Civ.Stat.Ann. art. 912a-24 (1963), in part, provides:

“ . . . and further provided that the establishment or use of a columbarium by any organized religious society or sect as a part of or attached to the principal church building owned by such religious society or sect, and within the limits here-inabove set forth, shall not be unlawful, and shall be exempt from the provisions of this Section.”

The court found:

“The zoning ordinances of the City of Beaumont permit the establishment and operation of cemeteries in all classified zones as under the definition of Zone R-l a church, which is authorized to operate a columbarium, is the only related use specified.”

The argument Cemetery makes here is that since churches are permissible uses in any zone in the city, and since Tex.Rev.Civ.Stat.Ann. art. 912a-24 (1963) excludes columbariums which are attached to churches from the prohibition provisions against cemeteries, and since a columbari-um is a form of cemetery, then any cemetery can lawfully exist anywhere in the City of Beaumont.

We do not follow this reasoning. There is no church on any of this property. A “columbarium” and a “cemetery” have different definitions. See Tex.Rev.Civ.Stat. Ann. art. 912a-1 (1963). Because an established church anywhere in the City of Beaumont could lawfully maintain a “columbari-um” does not mean that a “columbarium” (which is not defined as a “cemetery”) can exist without the church. City’s last point is sustained.

The trial court having abused its discretion in denying the City’s application for the injunction, we reverse the judgment and remand the cause to the trial court with instructions to grant the relief sought by the City to prevent the use of the lots for cemetery purposes.

The judgment of the trial court is REVERSED, and the cause is REMANDED with instructions.

      . “Cemetery” is ... a place dedicated to and used and intended to be used for the permanent interment of the human dead. It may be either a burial park for earth interments; a mausoleum for vault or crypt interments, a crematory, or crematory and columbarium for cinerary interments, or a combination of one or more thereof.
      “Columbarium” is defined by the same article as: . . .a structure or room or other space in a building or structure of most durable and lasting fireproof construction or a plot of earth, containing niches, used, or intended to be used, to contain cremated human remains.”


author: AKIN, Justice.

text:
    John E. HEALY et ux., Appellants, v. WICK BUILDING SYSTEMS, INC., Appellee.
    No. 19251.
    Court of Civil Appeals of Texas, Dallas.
    Nov. 15, 1977.
    Rehearing Denied Jan. 12, 1978.

      Royal H. Brin, Jr., Strasburger & Price, Dallas, for appellants.
    Mark C. Hill, Cantey, Hanger, Gooch, Munn & Collins, Fort Worth, for appellee.
   AKIN, Justice.

This is an appeal from an order denying a motion to set aside a default judgment in a garnishment action. Wick Building Systems, Inc. filed an application for writ of garnishment against Mr. & Mrs. John E. Healy after obtaining a $95,486.00 judgment against Healy Mortgage Company. In that suit, Wick also sought judgment against these garnishees individually but was not successful in that respect. Then Wick filed this garnishment which the garnishees failed to answer. After the default judgment was entered against the garnishees on October 21, 1976, they filed, on October 26, a motion to set aside the default or, alternatively, a motion for new trial. The questions presented on this appeal are: (1) whether garnishees’ failure to answer was a result of conscious indifference and (2) whether the garnishee’s motion set up a “meritorious defense”. The latter question turns on whether appellants’ failure to deny “that any other persons within his knowledge are indebted to the defendant” (debtor) as required by Tex.R.Civ.P. 666 for discharge, precludes, as a matter of law, a meritorious defense to the garnishment action being set up. We hold that it does not. We also hold that garnishees’ failure to answer was not the result of conscious indifference. Accordingly, the trial court abused its discretion in refusing to set aside the default.

Lack of Conscious Indifference

On March 4,1975, Wick applied for a writ of garnishment against the Healys. This writ was served on them on March 8, 1975, after which the Healys turned the matter over to their attorney who had represented them successfully in the original suit when Wick had sought judgment directly against them. The motion to set aside the default, supported by affidavits, shows that the attorney promptly prepared an answer and mailed it to the Healys on March 10. Apparently, Wick’s attorney knew that the Healys were represented in the garnishment because of a letter dated March 9 to the Healys’ attorney requesting depositions. On May 19, Wick’s attorneys gave written notice of intent to take oral depositions. This notice was specifically addressed to the Healys and their named attorney. Pursuant to this notice, the Healys’ depositions were taken and their attorney was present and participated. On August 11, the Hea-lys’ attorney sent the depositions to the court’s clerk and sent a copy of the letter of transmittal to Wick’s attorneys. This deposition was received and filed on August 12. The case was set for trial on October 21, but neither the garnishees nor their attorney received notice of the setting. Consequently, a default was entered against them on that date for $95,486.00. Upon receipt of notice of default, the Healys’ attorney immediately filed the motion to set aside the default and offered to compensate Wick for any expenses entailed in taking the default and to go to trial forthwith. The trial court denied the motion, and the garnishees appealed, asserting that the court abused its discretion in denying the motion. Wick argues, on the other hand, that over two hundred days expired between service and the default and that both the Healys and their attorney were aware that no answer had been filed. In this respect, Wick points to the following testimony in Healys’ deposition:

Q. All right. This is not the same lawsuit which was tried on December, 1975. This is a different lawsuit in which Writs of Garnishment were served upon you and your wife. And you received from the Court a Writ of Garnishment?
* * * * * *
A. I received one, yes sir.
Q. And you discussed this with your attorney?
A. Yes, sir.
Q. Have you filed any answer in response to that Writ of Garnishment with the Court, advising the Court as to what property you do or do not have that belonged to Healy Mortgage Company?
A. I don’t believe we have.
HEALY’S COUNSEL: I don’t know.
Q. Well, as far as I am aware, there has been no answer filed, but I’m asking, you do not know of any answer that’s been filed?
A. No, sir.
[Emphasis added by appellee]

Appellee interprets the garnishee’s response to mean that the garnishee affirmatively knew that no answer had been filed. However, we read this testimony as meaning that the garnishee did not know personally what specific documents his attorney may have filed. Indeed, laymen are not expected or required to be familiar with the technical intricacies of a lawsuit. In any event, it appears to us that the employment of an attorney to represent them in this action, and his appearance at the depositions negates any conscious indifference as set forth in Craddock v. Sunshine Bus Lines, 134 Tex. 388, 133 S.W.2d 124, 126 (1939), as follows:

A default judgment should be set aside and a new trial ordered in any case in which the failure of the defendant to answer before judgment was not intentional, or the result of conscious indifference on his part, but was due to a mistake or an accident; provided the motion for a new trial sets up a meritorious defense and is filed at a time when the granting thereof will occasion no delay or otherwise work an injury to the plaintiff. [Emphasis added]

We hold that under this rule the record establishes as a matter of law that garnishees’ failure to file an answer was neither intentional nor the result of conscious indifference. Whether negligence exists on the part of the defendant or his attorney is immaterial. Ivy v. Carrel, 407 S.W.2d 212, 213 (Tex.1966); O’Hara v. Hexter, 550 S.W.2d 379, 382 (Tex.Civ.App.—Dallas 1977, writ refused n. r. e.).

Meritorious Defense

We now turn to whether the appellants have met the second part of the test required by Craddock, that is, whether they have set up a meritorious defense in their motion for new trial. In this respect, garnishees alleged in the sworn motion that neither of them is or has been indebted to the debtor and that they had no effects or funds in their hands belonging to the debt- or. They also alleged they had never been indebted to either the debtor or the plaintiff. Wick argues that the garnishees have failed to set up a meritorious defense, as a matter of law, because they failed to deny “that any other persons within his knowledge are indebted to the defendant,” as required by Tex.R.Civ.P. 666 for discharge. Our question is whether, as a matter of law, this omission is fatal to their alleged meritorious defense. We hold that it is not insofar as the rule in Craddock is concerned.

Tex.R.Civ.P. 666 sets forth the elements necessary for discharge of the garnishee. It provides:

If it appears from the answer of the garnishee that he is not indebted to the defendant, . . . and that he has not in his possession any effects of the defendant . . . and if he has either denied that any other persons within his knowledge are indebted to the defendant or have in their possession effects belonging to the defendant, or else has named such persons, should the answer of the garnishee not be controverted as hereinafter provided, the court shall enter judgment discharging the garnishee.

Thus, as we read this rule, it requires for discharge three items:

(1) a denial that the garnishee is indebted to the defendant;

(2) a denial that the garnishee has effects of the defendant; and

(3) a denial of knowledge of third persons who may be indebted to the defendant or have effects of the defendant, or the names of such persons.

Rule 667 sets forth when a default may be taken. That rule states:

If the garnishee fails to file an answer to the writ of garnishment at or before the time directed in the writ, it shall be lawful for the court, . . . on or after appearance day, to render judgment by default, as in other civil cases, against such garnishee for the full amount of such judgment against the defendant together with all interest and costs that may have accrued in the main case and also in the garnishment proceedings. The answer of the garnishee may be filed as in any other civil case at any time before such default judgment is rendered. [Emphasis added.]

As we read this rule, it provides that a default may be taken, as in other civil cases, only if no answer is filed. Cf. Tex.R.Civ.P. 239. It does not state that if the garnishee fails to answer any question contained in the writ that a default may be entered against the garnishee. Thus, it appears to us that an answer, even though insufficient for discharge, may be sufficient to prevent a default. This rule simply makes a garnishee subject to a default judgment, as in any other case, where no answer is filed.

Rule 668 reads:

Should it appear from the answer of the garnishee or should it be otherwise made to appear and be found by the court that the garnishee is indebted to the defendant in any amount, . . . the court shall render judgment for the plaintiff against the garnishee for the amount found to be due [Emphasis added]

This rule authorizes judgment only where the garnishee is indebted to the defendant and then only to the extent of such indebtedness. Vick v. Merchants Fast Motor Lines, Inc., 151 S.W.2d 293, 294 (Tex.Civ.App.-Eastland 1941, no writ). The rule contemplates that judgment will be predicated on the garnishee’s answer admitting the indebtedness or, if garnishee’s answer is traversed under rule 673, upon evidence of indebtedness at trial.

Rule 674 provides that if the garnishee’s answer is controverted the issue shall be tried as in other cases, and under rule 678 the garnishee is discharged if it is determined, after trial, that he was not indebted to the defendant and did not have effects belonging to the plaintiff.

Rule 669 provides for a sale of effects in the hands of the garnishee that may belong to the defendant in order to satisfy the plaintiff’s judgment against the defendant. Rule 670 sets forth the remedy for plaintiff in the event that the garnishee refuses to deliver the effects of the defendant to the sheriff or constable.

Since rule 667, pertaining to when a default judgment may be rendered, specifically states that a default may be entered when the garnishee fails to answer, “as in any other civil case,” it follows that an answer, even though insufficient for discharge, may be sufficient to prevent a default. It likewise follows that the rule in Craddock v. Sunshine Bus Lines also applies to defaults rendered in garnishment actions.

Thus, as we read these rules, the question of whether the garnishee has set up a meritorious defense pertains solely to the question of whether the garnishee is indebted to the judgment debtor or whether the garnishee has in his possession property belonging to the judgment debtor. The question of whether the garnishee has knowledge of other persons who are indebted to the judgment debtor in no way goes to the question of whether the garnishor is entitled to judgment against the garnishee under rule 667 or rule 668; rather, it serves primarily a discovery function. See Holloway Seed Co. v. City National Bank of Dallas, 92 Tex. 187, 47 S.W. 95, 97 (1898). The question presented here is not whether the Healys as garnishees are entitled to discharge under rule 666, but rather whether they have set up a meritorious defense to the writ of garnishment under rules 667 and rule 668. Since the Healys’ motion for new trial placed in issue the merits of the garnishor’s right of recovery, we hold that the failure to respond to the discovery aspect of rule 666 did not justify the trial court’s refusal to set aside the default. To hold to the contrary would not only deny the garnishees their day in court but would also invoke the harsh penalty of a default judgment for a failure to make discovery without allowing any opportunity to remedy that failure. See Snyder National Bank v. Pinkston, 219 S.W.2d 606 (Tex.Civ.App.-Dallas 1949, no writ). That result would be particularly harsh here in view of the garnishee’s successful defense of the original action out of which this writ issued.

Our holding is supported by the supreme court decision in Jemison v. Scarborough, 56 Tex. 358 (1882). In Jemison, the court was confronted with a case similar to ours in that the garnishees’ answer was defective. The trial court, however, refused to grant a default, but instead discharged the garnishee, and the garnishor appealed. The supreme court, in reversing and remanding for trial, stated at page 360:

This is not a case where the garnishee is in default for the want of an answer; but here the answer is defective, and, standing alone, would not authorize a judgment to be rendered discharging him; but until excepted to, it is such an answer as ought to preclude the rendition of a judgment by default against him. In such a case the plaintiff ought to except to the answer; for then, if the same is insufficient, the garnishee would have the right to amend, so as to fully place his case before the court. [Emphasis added]

The court went on to observe that the liability of a garnishee “is dependent upon his being indebted to, or having effects of, the defendant in the original suit.” Id. at 361. That court also noted that garnishment has never received, nor should it receive, a liberal construction in favor of the garnishor.

Our holding finds further support in Capps v. Citizen’s National Bank of Longview, 134 S.W.2d 808, 809 (Tex.Civ.App.-Texarkana 1911, no writ), a case in which the court of civil appeals was confronted with a situation factually similar to ours. In that case, the garnishee answered that it was not indebted to the defendant and that it had no effects belonging to the defendant; it failed, however, to deny knowledge of any other person who may have been indebted to the defendant. When this defect was pointed out to the trial court, the court struck the answer but permitted the garnishee to amend to cure the defect and refused to grant plaintiff a default. Plaintiff in that case appealed, asserting that he was entitled to a default, as a matter of law, because of garnishee’s defective first answer and that the trial court erred, therefore, in permitting the garnishee to amend and in refusing plaintiff a default judgment. The Court of Civil Appeals rejected this contention and affirmed, quoting with approval from Jemison v. Scarborough, supra.

We have found no case in which an appellate court has affirmed a default judgment where the garnishee had answered on the merits but had failed to answer as to other persons that may have been indebted to the defendant. Nevertheless, appellee Wick cites us to American Express Co. v. Monfort Food Dist. Co., 545 S.W.2d 49, 52-53 (Tex.Civ.App.-Houston [14th Dist.] 1976, no writ) for the proposition that a failure of the garnishee to answer all questions necessary for discharge is no answer at all and justifies a default against the garnishee. Although American Express is distinguishable from this case in that the garnishee’s answer failed to respond as to what effects it had belonging to the debtor, it sets forth the proposition above stated as “a harsh but well-settled rule.” Id. at 52. In support of this “harsh but well-settled rule,” the 14th Court of Civil Appeals quotes from Gray v. Armour & Co., 129 Tex. 512, 104 S.W.2d 486, 487 (1937) the following:

Prior decisions, however, must be construed as clearly establishing the rule that if the answer filed does not contain responses to all inquiries required to be answered in order to furnish the basis for discharge, as provided by article 4086, then the answer may be regarded as insufficient, even in absence of exceptions or a controverting affidavit, and judgment by default may be entered against the garnishee.

As we read Gray, that court specifically refused to follow this so-called rule and held in a situation similar to ours that where a garnishee’s answer is sufficient for discharge, a default judgment is improper even though the garnishee failed to respond to all of the questions in the writ. The Gray court did not hold that a garnishee must plead all elements necessary for discharge in order to prevent a default. Indeed, the Gray court stated:

There are expressions in previous cases to the effect that if the garnishee fails to make answer to any one or more of the statutory questions the court is authorized to proceed as though no answer had been made, and render judgment accordingly. Freeman v. Miller, 51 Tex. 443; Norton v. B. &. A. Drilling Company (Tex.Com.App.) 34 S.W.2d 1095; Kentucky Oil Corporation v. David (Tex.Com.App.) 285 S.W. 290; Lamb-McAshan Company v. Ellis (Tex.Com.App.) 270 S.W. 547.
We have concluded that the language referred to must be interpreted in the light of the particular facts in those cases. Upon examination of the facts in each of the cases where this language has been used we think it will be found that the question which the garnishee failed to answer was a question which by virtue of article 4086 should have been answered as a condition precedent to the discharge of the garnishee. It will also be found that in most instances, if not all, exceptions were filed to the answer raising the question of insufficiency. 104 S.W.2d at 487.

The rationale of Gray was to alleviate the harsh result of the consequences for failing to answer all questions in the writ and to prevent injustice being done where all of the technicalities of the statutes pertaining to writs of garnishment had not been strictly adhered to by the garnishee. In this respect, it was a harbinger of the rule set forth two years later by the supreme court in Craddock v. Sunshine Bus Lines, supra. For example, the Gray court stated:

If a garnishee files answer which complies with article 4086, it seems to us but a fair and just rule to require the plaintiff to call to the attention of the court by proper exceptions or objections the fact of any insufficiency in the answer, thus affording the garnishee an opportunity to supply a complete answer, and also affording the court an opportunity to prevent injustice and to do justice by all parties. [Emphasis added]

The Gray court did, however, distinguish prior decisions on the ground that “exceptions were filed to the answer [of the garnishee] raising the question of insufficiency” and the garnishee had failed to amend. That court further observed that its conclusion was in harmony with decisions upholding the right of a garnishee to amend his answer when confronted with exceptions touching the answer’s sufficiency and, in some cases, to have a default set aside.

In American Express Co., the Houston court had some doubt concerning the viability of the “rule” as stated in Gray, but because it had been cited for so long by other courts of civil appeals, that court chose to follow what it termed the “harsh rule” in Gray, which we have previously noted was not the holding in Gray, but was specifically rejected by that court. We find, however, that the various courts of civil appeals’ cases citing Gray have not analyzed or cited to this harsh statement in Gray in conjunction with the rule applicable to default judgments enunciated in Crad-dock. Consequently, we do not regard these decisions as authoritative with respect to the question before us and, in our view, we believe that the supreme court would reach the same conclusion as we have here, particularly in light of the rationale set forth in prior supreme court cases, which we discuss, infra and supra.

We note also that none of the cases cited to support American Express’s conclusion that Gray stood for the “rule” that if the answer does not contain responses to all questions necessary to obtain a discharge a default may be entered against the garnishee, actually do so. For example, in J. C. Hadsell v. Allstate Insurance Co., 516 S.W.2d 211 (Tex.Civ.App.-Texarkana 1974, writ dism’d), the court observed that the garnishee’s answer substantially complied with rule 666 although the garnishee failed to respond to the discovery aspect of the writ, citing Gray, and held that the garnishee was entitled to an attorney’s fee where the garnishor non-suited. Likewise, the other cases cited in support of the proposition by American Express are either in-apposite or cite Gray for other statements. These cases are Investors Diversified Service Inc. v. Bruner, 366 S.W.2d 810, 815 (Tex.Civ.App.-Houston 1963 writ ref’d n. r. e.); First National Bank v. Banco Longoria, 356 S.W.2d 192 (Tex.Civ.App.-San Antonio 1962, writ ref’d n. r. e.); Texlite Inc. v. Liberty State Bank, 150 S.W.2d 822 (Tex.Civ.App.-Waco 1941, no writ); Snyder National Bank v. Pinkston, 219 S.W.2d 606 (Tex.Civ.App.-Dallas 1949, no writ); and Vick v. Merchants Fast Motor Lines, Inc., 151 S.W.2d 293, 294 (Tex.Civ.App.-Eastland 1941, no writ).

Contrary to American Express, the rationale of earlier cases focused upon preventing an injustice to either the garnishee or the garnishor. Our holding is supported by this rationale in earlier cases such as Freeman v. Miller, 51 Tex. 443 (1879). In that case, the court was confronted with a default judgment rendered against garnishees where they denied that they were indebted to the garnishor but failed to respond to the second and third statutory questions which were whether garnishee had in his possession any effect of the defendants and whether he had knowledge of any effects of the defendant that were in the hands of other persons and, if so, what persons. In affirming the default judgment, the court held that where the garnishee, without any excuse, fails to make any answer to one or more of the statutory questions, the court is authorized to render a default judgment. However, the court stated: “[I]f from accident, mistake or other cause, injustice has been done the garnishee, he himself must take the initiative, and by motion made in due time, or other proper proceedings, seek to set aside the judgment.” [Emphasis added].

Heeding this rule, Freeman filed an action in the nature of a bill of review to set aside the default judgment. By affidavit attached to his petition, Freeman answered the statutory questions in the negative and alleged a good excuse for his failure to do so in the first case. The trial court, nevertheless, denied his bill and he appealed again. In Freeman v. Miller, 53 Tex. 372, 377-78 (1880), the supreme court, in reversing, enunciated this rule:

The true rule in such cases is, that to entitle a party to relief in equity he must show, first, that his failure to make full answer was not attributable to his own omission, neglect or default; second, that he has a good defense to the entire cause of action, or to such part of it as he proposes by his petition to litigate. It is not enough to show that he was not guilty of neglect in permitting the judgment to go by default, but he must also clearly show that it is inequitable and unjust to permit it to be enforced. [Emphasis added]

Thus, the supreme court in both Freeman cases placed great emphasis upon refusing to permit to stand a default judgment against the garnishee where it was unjust and inequitable. Indeed, it appears that all earlier decisions have been reluctant to sanction a default and have generally construed the garnishment statutes so as not to perpetrate an injustice on the garnishee and to give the garnishee his day in court. In this respect, the rationale of these earlier cases is similar to that enunciated in Craddock v. Sunshine Bus Lines, supra, with respect to default judgments generally.

In Lamb-McAshan Co. v. Ellis, 270 S.W. 547 (Tex.Com.App.1925, opinion adopted), the garnishee filed no answer and a default judgment was rendered against it. In its motion to set aside the default, garnishee alleged that it was in no manner indebted to any one of the judgment defendants, but failed to deny that it did not have in its possession any effect belonging to any of the judgment defendants or to deny the number of shares they had in the garnishee company. The question presented was whether the garnishee had alleged a meritorious defense. The writ of garnishment served upon it required it to answer the following questions: (1) What, if anything, it was indebted to the judgment defendants, (2) what effects, if any, belonging to them it had in its possession, and (3) what number of shares, if any, the judgment defendants had in the garnishee company. The court held that the garnishee had failed to establish a meritorious defense in that it had failed to deny that it was indebted to any one of the judgment defendants or that the judgment defendants had no shares in the garnishee company. This case is distinguishable from ours in that these questions go to the merits of the garnishment action rather than to discovery. Consequently, we do not regard Lamb-McAshan as controlling. The Lamb-McAshan court did quote, however, with approval from the second Freeman v. Miller case, to the effect that in order for the garnishee to maintain an action to set aside the judgment, “it must allege the same facts as would have been necessary to defeat judgment in the first instance.” Id. at 550. Similarly, here, the Healys have alleged facts sufficient to prevent a judgment being taken against them under rules 667 and 668, although they may not have set up sufficient facts to justify a discharge under rule 666.

We conclude that where a garnishee answers with respect to the merits of the writ, but fails to answer as to his knowledge of other persons who may be indebted to the debtor, no judgment by default may be taken against him, and that if he fails to answer, but shows by affidavit on his motion for a new trial that he was not indebted to the defendant and had no effects of the defendant in his possession, he has “set up” a meritorious defense, even though he fails to show whether he knows of other persons who may be indebted to the defendant. Consequently, we reverse the order of the district court overruling the Healys’ motion to set aside the default, as well as the default judgment, and remand for trial on the merits.

ON MOTION FOR REHEARING

Wick contends that we erred in reversing several crucial findings of fact made by the trial court because no attack was made on these findings by an assignment of error on appeal.' In this respect, Wick argues that these findings were supported by substantial evidence. These “fact findings” go to both the question of conscious indifference, as well as the question of meritorious defense.

With respect to a meritorious defense, it is well settled that the trial court must, as a matter of law, determine from the motion for new trial and movant’s affidavit whether such a defense has been “set up.” Ivy v. Carrell, 407 S.W.2d 212, 214 (Tex.1966). Consequently, any finding of fact by the trial court as to whether a meritorious defense has been set up is unauthorized and is of no effect.

A court is, however, justified in determining disputed questions of fact with respect to the “conscious indifference” standard. However, we know of no authority for a trial court to resolve disputed fact issues without hearing evidence. Even though facts contained in the Healys’ affidavits were disputed by Wick’s affidavit as to whether the Healys showed a lack of conscious indifference to the suit, no evi-dentiary hearing on these disputed issues was requested nor had. Indeed, the court’s order specifically recites: “the court having considered the motions, the depositions and affidavits on file herein, briefs and arguments of counsel, finds the following facts.” Thus, it is obvious that the court did not hold an evidentiary hearing. We hold, therefore, under these circumstances, that a court cannot make findings of fact solely from the record on file without hearing evidence and findings so made are without effect. We also hold that in such a situation, the court is bound to accept as true the affidavits of the movant unless his opponent requests an evidentiary hearing. See Dallas Heating Co. v. Pardee, 561 S.W.2d 16 (Tex.Civ.App.-Dallas 1977); Cowling v. Colligan, 307 S.W.2d 841, 843 (Tex.Civ.App.-Austin 1957), reformed 158 Tex. 458, 312 S.W.2d 943 (1958).

Motion overruled.

      . All questions were by Wick’s counsel unless otherwise noted.

      . All references are to Texas Rules of Civil Procedure.

      . We note that at the time of the Gray decision article 4086 of the Tex.Rev.Civ.Stat. of 1925 (predecessor of Tex.R.Civ.P.666) required the garnishee to answer whether he was indebted to the judgment debtor and whether he had effects belonging to the judgment debtor as a predicate for discharge. The discovery aspect of rule 666 was then contained in article 4081.

      . Paschal’s Digest, art. 157-167 (1876).