author: LOONEY, J.

text:
    CITY OF FARMERSVILLE v. TEXAS-LOUISIANA POWER CO. et al.
    No. 11342.
    Court of Civil Appeals of Texas. Dallas.
    Oct. 29, 1932.
    Rehearing Denied Dec. 10, 1932.

      Touchstone, Wight, Gormley & Price and J. W. Gormley, all of Dallas, for appellant.
    W. R. Abernathy and W. P. Abernathy, both of McKinney, and Bennett L. Smith, of Pt. Worth, for appellees.
   LOONEY, J.

This controversy reached ns first on appeal from an order of the trial court dissolving a temporary injunction [see City of Farmersville v. Texas-Louisiana Power Co. (Tex. Civ. App.) 33 S.W.(2d) page 272]; we refer to and adopt the statement of the case there given. As there shown, on May 5, 1930, appellant adopted two ordinances (Nos. 122 and 123); the purpose being to regulate utilities and fix rates to be charged consumers. These ordinances were enacted under authority of article 1119, Revised Statutes, as it then existed ; later, however, the Porty-Second Legislature amended the article by an Act approved May 26, 1931, effective ninety days after adjournment (see Session Acts, c. 226 p. 380 [Vernon’s Ann. Civ. St. art. 1119]) in these respects: Authorizing cities and towns of over 500 population, instead of over 2,000 as formerly provided, to regulate and prescribe rates to be charged by public utilities; providing that no rates should be fixed that would yield more than 10 per cent, per an-num, in lieu of the former provision, of not less than 10 per cent, per annum, on the actual cost of the physical properties, equipment, and betterments.

After the amending statute became effective, appellant, on September 1,1931, adopted Ordinances Nos. 126 and 127 in all material respects the same as .Ordinances Nos. 122 and 123, in which rates for its own observance were prescribed, as well as for the observance of appellee, being the same, in effect, formerly voluntarily charged by ap-pellee. Appellee, refusing to abide by the schedule prescribed by the ordinance, promulgated, and insists upon maintaining, a schedule of rates much lower, all of which is revealed by the findings of the court hereinafter set out.

The case was tried without a jury on appellant’s fifth amended petition, which differs from its original petition as set out in the report on former appeal, in several material respects. We notice the following: In the amendment, appellant specially pleaded the ordinances enacted under amended article 1119; and, as a last recourse, if denied the legal remedy sought, that it be accorded in-junctive relief in the premises under general principles of equity.

As the case is, in some respects, a pioneer, we are giving a lengthy and somewhat tedious statement.

Appellee urged, and the-court sustained, a special exception to the allegations of the amended petition setting up and relying upon the rate and regulatory ordinances adopted in September, 1931, by authority of amended article 1119, on the theory that said amendment was unconstitutional because of a eap-tional defect; other issues framed by the pleadings are revealed by the conclusions of the trial judge, the material portions of which we adopt as our own, except however, the conclusions that are obviously speculative.'

The court found that on August 9,1899, the city of Farmersville, by ordinance, granted a franchise authorizing the Farmersville Milling Company and its successors, etc., to maintain and operate within said city an electric light plant for a period of fifty years, granting, in this connection, the use of the streets, alleys, and other public highways of the city for such purposes; that thereafter the Farm-ersville Mill & Light Company acquired all rights of the Farmersville Milling Company, under said grant, and in the year 1926 the Kentucky-Central Company acquired from the Farmersville Mill & Light Company its rights under said franchise and properties, except its power plant, and ■ thereunder the Kentucky-Central. Company furnished electricity to said city and its citizens until defendant (appellee) in 1927, acquired said assets, including the distributing system, franchise rights, and privileges of -the Kentucky-Central Company, and has since furnished to the city of Farmersville and its inhabitants electricity, as provided under the franchise; that from some date in 1927 to some date in 192S, appellee furnished electric power under a schedule of rates that allowed no discount for prompt payment, and provided a minimum rate of $1.50 per month; that a slight change was made in 1928 merely affecting commercial customers; the rates then charged by the power company were as follows: Monthly residence rates: 15 cents per kw. for the first 20 kw.; 10 cents per kw. for all energy consumed in excess of 20 kw. Monthly business rates: 15 cents per kw. for first 20 kw.; 12½ cents per kw. for second 20 kw.; 10 cents per kw. for third 20 kw.; 7½ cents per kw. for next 200 kw.; 4 cents per kw. .for all energy consumed in excess of 260 kw. — with a minimum rate of $1.50" per month. These rates remained in force until March 1, 1930, about three weeks after the city plant began operation, at which time appellee promulgated an entirely new schedule materially lowering rates to consumers, and is still maintaining said lowered rates. During the year 1929, the city of Farm-ersville, through its governing body, availed itself of the rights accorded cities and towns in this state to purchase and install its own electric light plant; electric machinery was purchased on time payments under the provisions of the statute authorizing such purchase, and,' in respect to the purchase, installation, and operation of its electric light plant, the city conformed to the provisions of the statutes. (The court here sets out the contract entered into for the purchase and installation of the city’s plant, which we do not deem .material in this connection.) The plant established by the city began operation in February, 1930, at which time the city adopted the schedule of rates then being charged by the power company, appellee, except the city gave 10 per. cent, discount for prompt payments, and reduced the minimum rate from $1.50 to $1.25 per month. (The court in paragraph 7 made findings with reference to special contracts with certain • business houses, providing for the installation of lights under awnings in front of business places, not deemed material in this connection.) The findings include these further facts that, at and prior to the time of the completion and operation of the city’s plant, the city had secured promises from 225 patrons of the power company to quit it and become customers of the city when its plant began operation. The power company had 450 customers at the time the municipal plant began operation In the early part of February, 1930; about three weeks later 280 of its customers discontinued and became customers of the municipal plant. At this point the court makes a specific finding to the effect that, if the power company had not reduced its rates, the municipal authorities would have secured all of the 450 customers in another three weeks’ time except about 10 per cent. When the customers of the power company were reduced to 170, appellee, on March 1, 1930, adopted and promulgated its new schedule of rates; that is, they charged only 5 cents for the first 20 kw. and 3 cents for all over that amount, and it has maintained this schedule of rates since said time, with the result that loss of customers ceased.

In paragraph 9, the following deductions are stated: “I find that the power company reduced its rates as above on March 1, 1930, in good faith solely for the purpose .of preventing a loss and confiscation of the property and investments in the city and did not make and maintain such reduced' rates for the purpose of putting the city plant out of business nor for the purpose of securing a monopoly in the lighting business.” We cannot assent to the above as being a reasonable deduction from the facts; on the contrary, think that in this, as well as in all such instances, the presumption should be indulged that appellee intended the natural and immediate results of the voluntary action taken, and, as applied to the instant case, we deduce the fact that it was the intent and purpose of appellee in reducing its rates to put the city plant out of business, with the view of. ultimately securing a monopoly of the lighting business at Farmersville.

The court further found that, after the power company reduced its rates to-the 5 cents and 3 cents, the governing body of the city, on April 24,1930, enacted a general regulatory utilities ordinance, and on May 5,1930, enacted an ordinance prescribing certain rates to be ehai'ged consumers, being the same then being charged by the municipal plant. The court also found that, on and for some time prior 'to the passage of said ordinances, the city of Farmersville had! a population of only 1,878, and since has not had a population of 2,000 or over; that at the time of the consideration and passage of these ordinances (Nos. 122, 123), the mayor and city council were in possession of information which, if pursued, would have apprised them of the fact that Farmersville did not have a population of 2,000; that said officials made no investigation, no evidence was introduced, and no finding was made, except as shown on the face of the ordinance. We think the evidence justified the conclusion that, at the time of the passage of Ordinance No. 123 (May 5, 1930), fixing the rates to be charged by eleetrie utilities in the city of Farmers-ville, members of the governing body knew that the actual count (1930 United States census) showed that the city of Farmersville had a population of only 1,878. The findings in paragraph 11 we do not regard material.

In paragraph 12 the court found that the city, acting under amended article 1119, ascertained that Farmersville had a population of over 500 inhabitants, and in June (8 and 9), 1931, adopted Ordinances Nos. 124 and 125, same as Nos. 122 and 123, regulating utilities and prescribing rates, etc.; however, as these were adopted before the amendment became effective, the governing body, on September 1, 1931, adopted Ordinance No. 126, a regulatory ordinance similar to the former regulatory ordinances, and on September 11> 1931, adopted Ordinance No. 127, fixing the rates to be charged by utilities furnishing electricity to the city, the same as were prescribed in Ordinance No. 123 adopted May 5, 1930, being the same rates adopted and put into effect by the city when it began operation in February, 1930.

In paragraph 13 the court said: “I further find that the governing body of the City of Farmersville, in adopting and enacting each and all of said ordinances, setting, fixing and regulating the rates to be charged by the power company, as well as the municipal plant, did not consider whether the rate or compensation set would yield more or less than ten per cent net on the actual cost of the physical properties, equipments or better-ments, of either the city plant or the defendant company’s system, but merely adopted the rates in effect and charged by the power company, with the exception of reducing the minimum to $1.25 and giving a ten per cent discount for prompt payment.” This finding we regard immaterial, as no direct attack was made by appellee on the rates as being insufficient to yield 10 per cent, on the actual cost, etc.; its insistence being that it had the right to charge rates much lower than those prescribed by the city, therefore an objection that the rates prescribed by the ordinance were too low would place appellee in such an incongruous position as to render such criticism unworthy of consideration. In paragraph 14 the court said: “Prom the evidence I find that if the defendant, the power company, was required to charge the same rates as the municipal plant and as set by the ordinances, that practically all of the customers of the power company would change over to the city plant and become its customers, and that the power company would not have sufficient customers or income to pay the operating expenses of their system in the city without taking into account any reserve for depreciation, and that it would result in a confiscation and loss of their properties and investments in said city.” It is obvious that these conclusions are purely speculative, and of course may properly be answered by speculation; however, we do not assent to the doctrine implied that it is the purpose of the law to guarantee economic results, but simply to guarantee to each and all utilities equality of opportunity to compete for local patronage.

The record further discloses that, since the institution of this suit on, to wit, January 1, 1932, in cause No. 694, .in equity, pending in the District Court of the United States for the Northern District of Texas, Fort Worth Division, in the case of Stafford-Low-den Company v. Texas Louisiana Power Co., Appellee, receivers were appointed and qualified, with full power to possess, control, and continue the business of appellee, and that all persons were enjoined from instituting or prosecuting or continuing the prosecution of any action at law or proceeding in equity in any court, etc., except by permission of said court; however, it appears that on January 18, 1932, presiding Judge Wilson sustained the motion of appellant herein praying permission to continue the prosecution of the instant suit. The language of the order reads, in part, as follows: “It is considered by the court that said motion should be granted, conditioned, however, that the attorneys for the City of Farmersville should from time to time file certified copies of the orders, decrees or judgments in said state court in this said court, to the end that this court may keep itself advised of the proceedings in the premises, and it is so ordered, adjudged and decreed.”

Based upon its findings, the court concluded, as a matter of law, that appellant was not entitled to the injunctive or any other relief prayed for, and that it take nothing by the suit and pay all costs incurred, and, judgment being entered accordingly, the city of Farmersville appealed.

The case has been ably and thoroughly briefed and argued by both sides, and, while giving due consideration to all questions raised, we pretermit discussion of questions that we do not deem necessary to a proper disposition of the case.

Appellant insists that the trial court erred in holding unconstitutional and void the amendments of article 1119, adopted by the Forty-Second Legislature May, 1931 (see Session Acts, pp. 380, 381), because of a captional defect. The statute was sought to be amended in two respects; that is, the population of the cities and towns authorized to act under said statute was changed from 2,000 to 500, and the concluding paragraph, reading, “the governing body shall not prescribe any rate or compensation which will yield less .than ten per cent per annum net on the actual cost of the physical properties, equipments and betterments,” was changed so as to read that such governing body shall not prescribe any rate or compensation “which will yield more than 10 per cent, per annum net on the actual costs of the physical properties, equipments and betterments.”

The caption of the act (Act 1931, c. 226) reads: “An Act to amend Article 1119 of the Revised Civil Statutes of 1925, so as to change the population of towns coming within its scope from two thousand (2,000) to five hundred (500); and declaring an emergency.”

Thus it appears that one of the objects sought was not expressed in the title; that is to say, the change wrought in the last paragraph, wherein a minimum rate of 10 per cent, on actual cost, etc., was changed by the amendment to a maximum rate of 10 per cent, reckoned on the same basis.

Section 35, art. 3, of the Constitution, provides that: “No bill * * * shall contain more than one subject, which shall be expressed in its title. But if any subject shall be embraced in an act, which shall not be expressed in the title, such act shall be void only as to so much thereof as shall not be so 'expressed.”

We assume, for the discussion, that the object expressed in the body of the act, but not expressed in the caption, would, if adopted, constitute a material change in the existing law.

Appellant insists that, as the bill was amended in this respect on the floor of the House, its journal disclosing that, after the amendment was adopted, the House ordered the caption to be amended so as to conform thereto; that the failure to harmonize the caption with the amendment was due to the neglect or oversight of the engrossing officials of the House; therefore the bill should not be held unconstitutional and void in any particular because of such oversight or neglect.

Tlie doctrine is well recognized that, in order to determine the meaning of obscure or doubtful phraseology employed in an act, courts may consider a number of things, among others, the history of the times, the circumstances attending the adoption of the amendment, executive messages to the legislative body, debates, committee reports, and legislative proceedings (25 R. C. L. pp. 1033-1039, §§ 268-271), but this doctrine should not, in our opinion, be extended to the length invoked by appellant. The captional requirement being constitutional, and therefore mandatory, we can only look to the completed act in order to determine its validity in this respect. King v. Terrell (Tex. Civ. App.) 218 S. W. 42 (writ refused). Also see Pangborn v. Young, 32 N. J. Law, 29; Field v. Clark, 143 U. S. 649,12 S. Ct. 495, 36 L. Ed. 294. The title of the act under consideration stated a purpose to amend article 1119 only in one respect; that is, so as to authorize cities and towns of over 500 population to exercise the regulatory and rate-making power theretofore granted cities and towns of over 2,000 population ; this purpose having been specified in the title, an amendment attempted in another respect cannot, under the authorities, be sustained as a valid enactment. Arnold v. Leonard, 114 Tex. 535, 273 S. W. 799, 803; Chaneey v. Dayton, etc., R. Co. (Tex. Civ. App.) 280 S. W. 843; Hamilton v. St. Louis, etc., R. Co., 115 Tex. 455, 283 S. W. 475; Gulf Production Co. v. Garrett, 119 Tex. 72, 24 S.W.(2d) 389.

The contention is also made that the objectionable amendment, being subordinate and an incident to the paramount purpose as disclosed in the title, should be held unobjectionable, under the doctrine quoted from Dillon, announced in Johnson v. Martin, 75 Tex. 33, 12 S. W. 321, 324, discussed in Doeppenschmidt v. International & G. N. R. Co., 109 Tex. 532, 101 S. W. 1080, and Missouri, K. & T. R. Co. v. State of Texas, 102 Tex. 153, 113 S. W. 916, as follows: “This provision [of the Constitution) has been frequently construed to require .only the general or ultimate object to be stated in the title, and not the details by which the object is to be attained. Any provision calculated to carry the declared object into effect is unobjectionable, although not specially indicated in the title.” We cannot accept this view. The rate matter dealt with was not, in our opinion, an incident to, or a detail of, the expressed purpose “to change the population of towns coming within its scope from two thousand (2,000) to five hundred (500)”; these constituted two distinct objects, one expressed in the title, the other not.

Appellant contends further that, if the second sentence of the amending statute, dealing with the rate subject, is held objectionable for the reason stated, it would follow that the original rate provision of the statute, before the amendment was atttempt-ed, survives nevertheless; therefore that the first sentence of the amended article, dealing with the subject of population, and the second sentence of the original article, dealing with the rate subject, now constitute the law in point.

Our attention is called to the decision of the Supreme Court, in Ward, etc., Co. v. Carpenter, 109 Tex. 103, 200 S. W. 521, in support of this contention. This case involved an act • (Acts 1913, c. 72) amending article 7235, R. S. 1911, a stock law, that applied to a number of counties, including Matagorda. The amendment proposed, as expressed in the title, was to include certain other counties, naming them, and the article in this respect was amended. However, Matagorda county was neither mentioned in the title of the amending statute nor in the body of the completed bill. In this situation, the contention was made that, having been dropped from the statute, Matagorda county could not avail itself of the privileges of the stock law. The Supreme Court denied this contention, holding that the title of the amending act expressed only one purpose, that is, to extend the application of the statute to certain counties other than those named in the original act, and that the 'exclusion of Matagorda county from the list of counties to which the amendatory act applied was beyond the purpose to which the amendatory act was expressly limited by its title, and to that extent was unconstitutional and void. The following cases are to the same effect: Chapman v. Morrison (Tex. Civ. App.) 278 S. W. 236; Hofheinz v. Wilson (Tex. Civ. App.) 281 S. W. 273; Rodgers v. Tobias (Tex. Civ. App.) 225 S. W. 804.

We find no material distinction between the question presented in the Ward-Carpenter Case and the question presented in the ease at bar; therefore hold that the amendment to article 1119 was ineffective to change the existing provision in second paragraph with reference to rates, but that it was effective to change the original statute in the other respect; therefore hold that the amendment bringing cities of over 500 population within the scope of the article and the unchanged rate provision of paragraph 2 of the article as it read before the amendment was attempted constitute the valid statutory provisions in point.

However, if in error in this, we think the amended act should be sustained on. another theory which we will'now discuss. If it be true that the attempted amendment to article 1119, relating to rates, was improperly adopted because of the captional defect, would that nullify the entire act? We think not; at most, the amendment would fail only as to the purpose not expressed in the title. This proposition, we bejieve, may be sustained under the terms of the Constitution reading, “but if any subject shall be embraced in an act, which shall not be expressed in the title, such act shall be void only as to. so much thereof as shall not be so expressed.” The purpose expressed in the title relating to the change in population of cities to be brought within the scope of the statute is an objeqt entirely separate and distinct from the other object attempted, is complete within itself, clearly evidencing a legislative intent, and may stand without any reference to the unauthorized portion of the amendment. This idea is seemingly sustained by the Supreme Court in Western Union Tel. Co. v. State, 62 Tex. 630. The court said: “It does not necessarily follow, because a statute is void in part that it is void in toto; for some of its provisions, not liable to any constitutional objection, may be separate and distinct from the parts which are void, and so complete within themselves, and so clearly evidencing the legislative intention in reference to the subjects to which they relate that they may stand without reference to the parts which are void.” To the same effect, see Arnold v. Leonard, 114 Tex. 535, 273 S. W. 799 ; Young v. Chilton (Tex. Civ. App.) 41 S.W.(2d) 505.

The doctrine announced in 36 Cyc. par. 10, p. 1165, quoted, with approval, by the Commission of Appeals in American Surety Co. v. Axtell Co., 120 Tex. 166, 36 S.W.(2d) 715, 719, and approved by the Supreme Court, is that “An amended act is ordinarily to be construed as if the original statute had been repealed, and a new and independent act in the amended form had been adopted in its stead; or, as frequently stated by the courts, so far as regards any action after the adoption of the amendment, as if the statute had been originally enacted in its amended form.” Under this doctrine, if the amending act is construed as repealing the original statute, it follows that the amending act, minus the second paragraph dealing with the subject of rates, is the statutory law in point.

However, in determining the question under consideration, we do not deem it of any consequence whether the original rate provision of article 1119 is still the law or was impliedly repealed by the amending act, because appellee is in no position to contend that the rates prescribed by appellant are confiscatory or insufficient to yield 10 per cent, per annum net on the actual cost of physical properties, etc.; in fact its position (in our opinion erroneously sustained by the trial court) is revealed in the court’s fourteenth conclusion of fact, as follows: “(14) From the evidence I find that if the defendant, the power company, was required to charge the same, rates as the municipal plant and as set by the ordinances, that practically all of the customers of the power company would change over to the city plant and become its customers, and that the power company would not have sufficient customers or income to pay the operating expenses of their system in the city without taking into account any reserve for depreciation, and that it would result in a confiscation and loss of their properties and investments in said city.”

The loss of patrons by appellee (visualized by the trial court), if compelled to charge the same rates prescribed by the municipal plant for its own observance, which, until overturned in an appropriate proceeding, are presumed reasonable, and such as appellant was compelled to impose in order to discharge its duty under article 1113, R. S., is obviously based upon speculation; but even if, as assumed by the court, patrons should change from appellee to appellant as the result of competition based alone upon the quality of service rendered, which would be the case, as the record neither discloses nor is it contended that there existed any inequality in opportunity to secure business; loss of patronage, under these circumstances, would be simply an incident to legitimate competition, an economic loss, and in no sense a confiscation of appellee’s property as that term is understood. Can it be reasonably insisted that appellee will suffer a confiscation of property if compelled to charge rates materially higher than those being voluntarily collected by it? Its position, in effect, is that, in order to prevent confiscation, under the ministry of higher rates, it was selling its service for materially less compensation. It is perfectly obvious that, if appellee is compelled to charge the rates prescribed by the ordinance, it will suffer loss only in so far as it fails to successfully compete with the municipal plant in the quality of service rendered under precisely equal conditions and opportunities.

The law guarantees equal opportunities for competition, but does not and cannot guarantee economic results. This doctrine was announced by the United States Supreme Court in Ætna Insurance Co. v. Hyde, 275 U. S. 440, 48 S. Ct. 174, 177, 72 L. Ed. 357, as follows: “It has never been and cannot reasonably be held that state-made rates violate the Fourteenth Amendment merely because the aggregate collections are not sufficient to yield a reasonable profit or just compensation to all companies that happen to be engaged in the affected business.” The same idea was expressed by Judge Hutcheson in Galveston Electric Co. v. City of Galveston (D. C.) 272 F. 147, 162. He wrote: “Counsel on page 47 of their brief say: ‘It must be borne in mind in this connection, that the Galveston Electric Company is a public service corporation, and that the Constitution guarantees it a fair return upon the value of its property.’ This statement is wholly erroneous, and must have been made without thought. The Constitution makes no guarantee to the complainant, except to protect it against legislation which would deprive the company of the right to charge rates adequate to produce a fair rate of return. If counsel’s major premise that the Constitution guarantees a fixed net for return were correct, its conclusion is right, but that this proposition is unsound is manifest. Certainly the Constitution does no more than to say to the complainant that the Legislature cannot force it to operate at such rates as will deprive it of a return similar to that enjoyed generally by enterprises in that community.” If an economic disaster should overtake a public utility as the result of legitimate competition, the loss must be borne as a business casualty. In Hamilton Gaslight, etc., v. City of Hamilton, 146 U. S. 258, 13 S. Ct. ,90, 93, 30 L. Ed. 903, Justice Harlan used the following language in point: “It may be that the erection and maintenance of gas works by the city at the public expense, and in competition with the plaintiff, will ultimately impair, if not destroy, the value of the plaintiff’s works for the purposes for which they were established. But such considerations cannot control the determination of the legal rights of the parties.”

However, the decisive questions presented are these: Was the governing body of Farmersville authorized to enact the ordinance prescribing the rates to be charged consumers by both utilities operating in Farmersville, the privately owned as well as the publicly owned plant, and compel obedience thereto?

Amended article 1119 being a valid enactment, it follows, in our opinion, that appellant, being within its scope, was not only authorized to pass the rate ordinance, but, as held in City of Uvalde v. Uvalde Electric & Ice Co. (Tex. Com. App.) 250 S. W. 140, and in Community Natural Gas Co. v. Natural Gas & Fuel Co. (Tex. Civ. App.) 34 S.W.(2d) 900, 902, 903, it became its duty so to do, and, having performed the duty, it is entitled to a decree compelling obedience by appellee, its agents and servants. The record discloses that in the year 1929 the city of Farmersville established its own electric lighting system, as shown in paragraph 6 of the court’s findings, as follows: “During the year 1929 the City of Farmersville, through its governing body, availed itself of the rights accorded cities and towns in this state to purchase and install its own electric light plant. The electric machinery was purchased on time payments under the provisions of the statute of the state, authorizing such purchase and in respect to the purchase, installation and operation of its electric light plant, the city conformed to the provisions of the statutes authorizing and controlling municipal corporations engaged in such business. * * ”

In this situation, the governing body was not only required to prescribe reasonable rates to bo charged consumers by the utilities for lighting services, but it was manda-torily directed by statute to charge and collect for such service (its service) “a sufficient rate to pay for all operating, maintenance, depreciation, replacement, betterment and interest charges, and for interest and sinking fund sufficient to pay any bonds issued to purchase, construct or improve any such systems or of any outstanding indebtedness against same. * * ” See article 1113, R. S. 1925. This statute compels the governing body to levy and collect, as a minimum, rates that would yield enough revenue to pay the items above mentioned, or such as were necessary, and the presumption will be indulged that, in the proper exercise of discretion, the governing-.body faithfully performed this duty, and that the rates prescribed in the ordinance for its own observance, as weill as for the observance-of appellee, represented the irreducible minimum below which appellant could not go without violating a plain statutory duty; equality of opportunity for business had to be maintained; and, as appellant was compelled by statute to charge a minimum rate sufficient to accomplish the purposes named, and maintain equal competition conditions, it was compelled to prescribe the same minimum rates for observance by itself as well as by appellee. This being true, will appellee bei •permitted to disregard the schedule by charging and collecting rates materially lower than those fixed by the ordinance? We do not think so, because it is obvious that, if ap-pellee is permitted to disregard the ordinance in this respect, the municipal plant will have a short life, the municipality will thereby lose a means of measuring reasonable rates, and the right to prescribe a minimum rate, its only means of preserving its plant and maintaining competition in the quality of service, will become “a useless potentiality.” The city, having the unquestioned statutory right, regardless of the franchise under which ap-pellee operated, to establish and operate its own lighting system, was entitled to enjoy the same opportunity to compete with appellee on basis of quality of service, just as would any privately owned utility under same circumstances. In Fairbanks, Morse & Co. v. Texas Power & Light Co., 32 F.(2d) 693, 695, the Circuit Court of Appeals (Fifth Circuit) through Foster, Judge, had occasion to say: “Under the laws of Texas cities and towns are given authority to build and operate light and water systems. Article 1111, Complete Tex. St. 1928. This is a right that cannot be contracted away. Article 1, § 17, Texas Const.; City of Brenham v. Brenham Water Co., 67 Tex. 542, 4 S. W. 143. It follows that, regardless of its contract with plaintiff, the city of Commerce had the right to erect its own electric light plant at any time the proper officers should see fit to do so. * * * ” The right of a city to enter the field of competition was commented upon by Judge McKenna in City of Joplin v. Southwest Missouri Light Co., 191 U. S. 150, 24 S. Ct. 43, 44, 48 L. Ed. 127, thus: “The city, it is further urged, could be indifferent to profits, and could tax its competitor to compensate losses. But this is speculation and it may be opposed toy speculation, and there are, besides, countervailing considerations. The limitation contended for is upon a governmental agency, and restraints upon that must not be readily implied. The appellee concedes, as we have seen, that it has no exclusive right, and yet contends for a limitation upon the city which might give it (the appellee) a practical monopoly. Others may not seek to compete with it, and if the City cannot, the city is left with a useless potentiality, while the appel-lee exercises and enjoys a practically exclusive right. There are presumptions, we repeat, against the granting of exclusive rights, and against limitations upon the powers of government.”

It is a matter of common knowledge that large organizations are rapidly absorbing' the smaller utilities now furnishing citizens of municipalities and communities throughout the country many of the necessities of everyday life; these utilities are capable, if properly controlled, of rendering a valuable service, but, if left unregulated or permitted to destroy competitors by cút-throat competition, the public may ¡become a prey to unrestrained greed and. rapacity. As appellee pursued the most effective course possible to destroy and clear the field of competition, it cannot be reasonably said that it reduced rates and undersold appellant in good faith without an intention to put the city plant out of business and of securing a monopoly ; these are the natural and inevitable consequences of the cut-throat competition inaugurated by it. The presumption is indulged that a person intends to accomplish the natural consequences of his acts. 22 O. J. (§ 74) 2, p. 143. Even in criminal matters “the intention to commit an offense is presumed whenever the means used is such as would ordinarily result in the commission of the forbidden act." Penal Code, art. 45, also article 1223.

The most effective instrumentalities being suggested by advanced thinkers for the protection of the public against such impositions are municipally owned and operated utility plants, and the minimum rate schedule to insure competition in quality of service. Both methods of protection were resorted to by the city of Farmersville, and it is importuning the courts to “stay up its hands.”

In a recent public address, a distinguished statesman, discussing the subject, said: “There are two methods of restoring reasonable rates for electricity and telephones in this State (New York;) * ⅜ ⅜ One of these methods is to allow and restore competition either by encouraging new companies to enter the field, or by setting up at least a yardstick, more municipally operated companies, especially in the electrical field.” A president of one of our largest railroad systems, expressing himself candidly as to the value of the minimum rate as a means of maintaining healthy competition, recently said: “I cannot share your view that the problem of unregulated competition can be met by withdrawing the power of the Interstate Commerce Commission to fix minimum railroad rates and then allowing the railroads to go in and fight the trucks, busses, barges and ships to the death, as they would be obliged to do. That would not be mere competition. It would be ruthless, barbarous, industrial warfare. I have no doubt whatever that it would end in the general bankruptcy of the country’s entire distribution machinery. * * * I would think it a distinct step backward to withdraw the principle of minimum rates in application to the railroads. Instead, I think one of the things chiefly needed is to apply the same principle, through regulative authority, to highway and waterway transportation.” What is true in the realm of transportation is equally true in the realm occupied toy the utilities. Unrestricted or cut-throat competition is intended to, and will, if pursued to the bitter end, inevitably result in the creation of monopoly. Justice Brandéis, speaking before a House Committee in January, 1913, uttered these words: “Unrestricted competition, with, its abuses and excesses, leads to monopoly, because these abuses and excesses prevent competition from functioning properly as a regulator of business. 'Competition proper is beneficent, because it acts as an incentive to the securing of better quality or lower cost. It operates also as a repressive of greed, keeping within bounds the natural inclination to exact the largest profit obtainable. Unfair and oppressive competition defeats those purposes. It prevents the natural development which should attend rivalry, and which gives success to those who contribute most to the community by their development of their own business and the exercise of moderation in the exaction of profits. It substitutes devious and corrupt methods for honest rivalry, and seeks to win, not by superior methods, but by force. Its purpose is not to excel, but to destroy. The Clayton Act (38 Stat. U. S. 730) and the Federal Trade Commission Act (15 USOA §§ 41-51) are designed to aid in preventing monopoly by preventing unfair and destructive competition, and the worst form of illegitimate competition has been found to be price-cutting. All the investigations in Congress and elsewhere have confirmed this conclusion. Monopoly is a natural outcome of cut-throat competition. With the exception of the railroad rebate, cut-throat competition was the most powerful of all weapons which the Standard Oil Company employed. It was the most powerful of all weapons employed by the Tobacco Trust. The Standard Oil Trust would cut the price in the districts where a competitor established himself, and thus destroy him, meanwhile reimbursing itself for the cut in the region by charging higher prices elsewhere. * ⅜ ⅜ ”

The precise situation with which we are dealing was before the Supreme Court of Iowa in the case of Incorporated Town, of Mapleton v. Iowa Public Service Co., 209 Iowa, 400, 223 N. W. 476, 479, 68 A. L. R. 993, the same anomalous situation presented here was present there; that is, the spectacle of a municipality contending for the enforcement of rates higher than those contended for by the privately owned public utility. There it was contended as contended here, that the purpose of the lower rates charged by the utility was to induce additional customers and to prevent being driven from the field of competition by the municipal plant. The fair inference held by the court in that case, as we think is inevitable here, was that the rate cutting indulged in by the private utility would result ultimately in driving the municipal utility from the field of competition. The court said: “If this can be lawfully • done, then á municipally owned plant must always be at the mercy of the owner of a privately owned plant, when such owner chooses to inaugurate a rate%war and to take a loss therefrom. The exercise or existence of such a power is antagonistic to the whole scheme of public service by utility companies, and is inconsistent with the principle of rate regulation.” The same idea was expressed by the Supreme Court of California in Economic Gas Co. v. City of Los Angeles, 168 Cal. 448, 143 P. 717, 718, Ann. Cas. 1916A, 931. The . court said: “Respondent insists, however, that the city’s power is merely to declare a maximum rate, and that the corporation may do anything it desires in the way of a reduction of price to a general class of consumers. We cannot agree with this contention. One of the purposes of regulation is to exclude favoritism to an individual or a class. If the legislative body of a city might only fix a maximum rate, it might be possible for a corporation to reduce its charges, in some form or another, to a point which would drive a competitor out of business and, after accomplishing that result, to resume the maximum charge permitted by law. It is contended that the city’s police power extends only to the protection of the consumer. But ‘regulation’ involves more than that. It includes the power to prevent ruinous competition among the producers as well as unjust charges to the* consumers. Familiar examples of the right of a regulating body to fix rates which may not be exceeded nor rebated are furnished by the controversies which have arisen between the Interstate Commerce Commission and certain transportation companies. The Supreme Court of the United States has held that the tariff rates for shipments may not be evaded by any pretext or device.” The same court, in Pinney, etc.-, Co. v. Los Angeles Gas, etc., Co., 168 Cal. 12, 141 P. 620, 621, L. R. A. 1915C, 2S2, Ann. Cas. 1915D, 471, disposing of a similar question, said: “Appellant asserts, however, that the only reasonable use of the police power in the matter of rate-fixing is to establish the maximum charge which the public utility may make, leaving it open to the public utility by agreement to fix a less charge for an individual consumer. The untenableness of this position, however, must become apparent when a moment’s consideration is given to the fact that one of the primary and most important objects to be attained by rate regulation is the prevention of discrimination. It must be quite clear that to hold that the rate-fixing power goes no farther than to name an amount beyond which a charge may not be made leaves the utmost room for abuse by way of favoritism and discrimination within that limit. It is, in practical effect, a denial of the existence of the rate-fixing power itself.” To the same effect, holding that the power to fix a rate implies the power to make it both the maximum and minimum, see Community Natural Gas Co. v. Natural Gas & Fuel Co. (Tex. Civ. App.) 34 S.W.(2d) 900, 902; City of Tipton v. Tipton, etc., Co., 176 Iowa, 224, 157 N. W. 844, 845; concurring opinion of Judge Sawtell in Great Northern Utilities Co. v. Public Service Commission (D. C.) 52 F.(2d) 802, 805, 808.

We are of opinion therefore, and hold, that it is the plain legal duty of appellee to obey, in all things, the rate ordinance in question, and to charge and collect from its patrons in the city of Farmersville no lower rates than those fixed by said governing body, and to this end appellant is entitled to the writ of mandamus commanding appellee, its officers, agents, and servants to perform this legal duty.

Without reference to the validity of amended article 1119, we are also of opinion that the rate-cutting enterprise inaugurated and persisted in by appellee is against the public policy of this state, as reflected botlj by statutory enactments and constitutional provisions, in that the same is inimicable to the maintenance of legitimate competition in the field of service, and is necessarily destructive of the municipally owned and operated utilities, the means by which, if necessary, a municipality may supply needed competition; that the conduct of appellee in the premises is unwarranted, constitutes an invasion of the rights of appellant, entitling it to the equitable relief sought; therefore the writ of injunction will issue restraining appellee, its officers, servants, or agents from charging, exacting, or collecting any rates lower than those fixed by the governing body for its own observance in tbe operation of tbe municipal plant. •

Counsel for appellant argues ably and with great plausibility tbe proposition that, regardless of the validity, vel non, of either the amended or the original article 1119, R. S., the trial court erred in holding the rate ordinances invalid, in that appellant possessed the implied, if not express, power to enact the same, per force of the regulatory powers conferred by article 1011, R. S.; however, in view of our holdings on the other propositions, we leave that question undecided.

In view of the ponding receivership, here-inbefore mentioned, no process will issue on the judgment here rendered, so long as said receivership is open, except as and when authorized by the honorable District Court of the United States for the Northern District of Texas (Port Worth Division), and the attorneys representing appellant should, in compliance with the order of said court, file therein certified copies of all final orders, decrees, and judgments rendered herein.

In harmony with these views, the judgment of the trial court is reversed, and judgment is here rendered for appellant.

Reversed and rendered.

On Motion for Rehearing.

Owing to the newness and importance of the questions involved, the discussion, first and last, has covered a wide range; however, on the assumption that amended article 1119 is valid, we believe the previous questions may be stated thus: (1) Was the city of Farm-ersville authorized, in the exercise of the rate-making power delegated by said statute, to enact the minimum rate ordinance in question, and is it entitled to the writ of mandamus compelling obedience thereto? (2) In view of the public policy antagonistic to monopolies, as declared in the Constitution and various statutes of the state, in view of the policy that fosters municipal ownership of utilities, as a means of preventing or combating monopolies, and in view of the rate cutting indulged in by appellee, which, unchecked, will result ultimately in the destruction of appellant’s plant and the establishment of a monopoly favorable to appellee, under these circumstances, was appellant justified, without regard to the validity whether or not of the ordinance as a rate regulation, in prescribing minimum rates as .a preventive measure, and is it, in tlie.situation described, entitled to.the equitable relief sought?

Our affirmative answers to these questions will be found in the original opinion, to all of'Which we adhere.

Counsel for appellee insist that we erred in restating the amended statute, that is, in retaining the valid and rejecting the invalid portions, because, as restated, the statute does not truly represent legislative intent, in that the Legislature would not have amended the article as to population, without also making the indicated, change in the rate provision.

On original submission we gave due consideration to this phase of the subject, but did not discuss it in the opinion. The adjudicated cases shed but little light as each decision turned largely upon its peculiar facts. The governing principle, we think, was correctly stated by Justice Depue for the New Jersey Supreme Court, in Johnson v. State, 59 N. J. Law, 535, 37 A. 949, 950, 39 A. 646, 38 L. R. A. 373, as follows: “It is undoubtedly elementary law that the same statute may be in part constitutional and in part unconstitutional, and, if the parts are wholly independent of each other, that which is constitutional may stand, and that which is unconstitutional will be rejected; but if the different parts of the act are so intimately connected with and dependent upon each other as to warrant a belief that the legislature intended them as a whole, and that if all could not be carried into effect the legislature would not have passed the residue independently, and some parts are unconstitutional, all the. provisions which are thus dependent upon each other must fail.”

In reachiríg a decision of the questions, we may consider, among other things, the history of the act. Acts 1931, c. 226. As introduced, the bill (H. B. No. 798) indicated but ■one purpose; that is, to amend the statute by changing the population of towns within its scope from 2,000 to 1,000. In this form it was reported favorably by the committee in charge, but, on a second reading in the House, was amended on the floor in two respects, one by changing the figures 1,000 to 500, wherever they appeared in the bill, thus clothing a larger number of towns with regulatory and rate-making powers, and by striking out the word “less” anfi inserting the words “not more,” thus changing the minimum rate provision of the statute to a maximum rate provision, and as amended the bill was engrossed and finally passed by both Houses.

The emergency clause also sheds light upon the inquiry. It reads in part: “The fact that towns, of populations ranging between five hundred (500) and two thousand (2000) are confronted with the same problems as towns of lax*ger populations, creates an emergency, etc.” Thus it appears that the caption and emergency clause are entirely harmonious, expressing but the one object sought; that is, to amend the statute, so as to bring within .its.scope all towns having in excess of 500 population. Why was this deemed neces-, sary? The emergency clause answers; because all these towns “are confronted with the same problems as towns of larger populations.” The parts of the. act, that is, the part relating to population, and the rate provision, being independent and separable, no reason existed, in our opinion, wliy the Legislature should have made the amendment as to population dependent upon the change in the rate provision.

In the original opinion, we stated in effect that appellee was not permitted to charge and collect for its service in Farmersville any other, either higher or lower, rates than those fixed by the ordinance. This statement is broader than should have been made, as the ordinance authorizes the collection of higher but not lower rates than the miniinum prescribed.; therefore the opinion will be corrected, to conform to the idea that, while appel-lee may charge higher, it is not permitted to charge lower, rates than the minimum fixed by the ordinance adopted by the governing body of appellant.

In an addendum to its motion for rehearing, appellee requests additional findings in keeping with and embracing the facts found by the trial court, in paragraphs 7 and 11 of its findings. While we do not deem these material, yet appellee does and is entitled to same, as follows: “(7) The public square of the City of Farmersville is 99 feet wide by 400 feet long, with business houses, approximately forty, located around same and upon streets, leading in various directions therefrom. Upon the commencement of operations of the municipal plant the city agreed with the owners of business houses that if they would pay for and install 25 watt globes along under the awnings in front of their places of business from a foot eighteen inches back from the front of the awning and wire the same, that the city would furnish these customers with free electricity to light up the lights under the awnings, if they would become customers of the city’s municipal plant, and various business men availed themselves of this opportunity, until at this time there are between fifty and sixty business customers of the city plant enjoying the privilege, while the power company had only six or seven business customers, but free current was not and is not furnished now to the business houses who are customers of the power company.” “(11) That the municipal plant, since shortly after it commenced operations, has had two hundred and seventy-five (275) customers, or more, and their income has been sufficient to pay all operating expenses, and produce a net income of more than sufficient to pay off and discharge the monthly payments due upon the purchase price of the municipal plant, and some payments have been paid prior to their due date. That the power company has had approximately 285 customers and their income has been sufficient to pay their operating expe'ns-es and create some small surplus.”

After due consideration, the motion of ap-pellee for rehearing is overruled, and its request for additional findings is granted.


source: Caselaw Access Project

author: BARCUS, J.

license: Public Domain

text:
    TEXAS EMPLOYERS’ INS. ASS’N v. COOK et al.
    No. 1291.
    Court of Civil Appeals of Texas. Waco.
    Dec. 8, 1932.
    Lawther, Cox & Cramer, of Dallas, for appellant.
    L. W. Shepperd, of Groesbeck, and H. L. Kidd, of Mexia, for appellees.
   BARCUS, J.

On January 15, 1932, the Industrial Accident Board made its award against appellant in favor of appellees for compensation for alleged injuries. On February 2, 1932, appellant notified the Industrial Accident Board of its unwillingness to abide by said award. On February 19, 1932, appellant, by registered mail, sent to the district clerk of Limestone county its original petition to set aside said award. It ¿reached Groesbeck on' Saturday afternoon the 20th. By reason of no mail being delivered Saturday afternoon and Sunday, the 21st and Monday, the 22d of February being holidays, the mail was not delivered until the morning of February 23d. which was the twenty-first, day after appellant had given the Industrial Accident Board notice of its unwillingness to abide by said award. Appellees filed their motion to dismiss the cause, for the reason that the suit was not filed within the statutory period of twenty days provided by section 5 of article 8307 of the Revised Statutes, as amended by Acts 1931, e. 224, § 1 (Vernon’s Ann. Civ. St. art. 8307, § 5). The trial court sustained said plea and dismissed the cause.

Section 5, article '8307 of the Revised Statutes, as amended, provides that any party, to an award made by the Industrial Accident Board, if dissatisfied, shall, within twenty days after the award, give notice to the board that he will not abide by said award, “and he shall within twenty (20) days after giving such notice bring suit in the county where the injury occurred to set aside final ruling and decision. * * * If any party to any such final ruling and decision of the Board, after having given notice as above provided, fails within said twenty (20) days to institute and prosecute a suit to set the same aside, then said final ruling and decision shall be binding upon all parties thereto.” Our courts in construing said statute have held that same is jurisdictional, and, unless the suit is filed within said twenty days, the trial court does not obtain jurisdiction thereof. Mingus v. Wadley, 115 Tex. 551, 285 S. W. 1084; Washington v. Travelers’ Ins. Co. (Tex. Com. App.) 290 S. W. 738.

Article 1971 of the Revised Statutes provides that a civil suit in the district court shall be commenced by petition filed in the office of the clerk. Unquestionably under said statute a suit is not instituted until and unless the petition is actually filed with the clerk of the court. The appellant contends that the petition was filed within the statutory time, since it was placed in the mail properly addressed in sufficient time for it to have reached the clerk of the district court within the twenty-day period, and that it should not be .charged with the delay since Monday the 22d of February was a legal holiday. Almost this identical question was decided adversely to appellant’s contention, by the Supreme Court in the case of Long v. Martin, 112 Tex. 365, 247 S. W. 827. In the Long v. Martin Case, the Supreme Court, under article 1742 of the Revised Statutes, held that an application for writ of error must be actually filed with the clerk of the Court of Civil Appeals within thirty days after the motion for rehearing was overruled, and stated that, since the parties had selected the express company as their vehicle, same became their agent, and, if a delay occurred which prevented the package reaching its destination within the statutory period, it was the fault of the sender rather than the receiver thereof. The language used in article 1742, Revised Statutes, relative to filing an application for writ of error, is almost identical with that used in section 5, article 8307, with reference to the time within which suit must be brought in an appeal from the award made by the Industrial Accident Board. In the case at bar, appellant having selected the United States mail as its vehicle, it became appellant’s agent, and appellant was bound thereby. Since appellant did not actually file its petition with the clerk of the court within twenty days after it gave notice that it would not abide by the award made by the Industrial Accident Board, the district court did not acquire jurisdiction thereof.

The judgment of the trial court is affirmed.


author: MARTIN, J.

text:
    BOLDING v. PORTER & BILLINGSLEY.
    No. 3925.
    Court of Civil Appeals of Texas. Amarillo.
    Dec. 14, 1932.
    C. F. Sentell, of Snyder, for appellant.
    R. H. Ratlin and L. W. Sandusky, both of Colorado, Tex., for appellees.
   MARTIN, J.

Appellees sued and recovered judgment against appellant for $722.50 alleged to be due them as commission on' a sale of real estate. The answer of defendant, without stating it in detail, presented defenses in bar of plaintiff’s cause of action and contained a cross-action for the sum of $1,000. The trial was before the court.

When judgment for appellees was announced in open court, appellant orally requested findings of fact and conclusions of law and had such request noted upon the docket and gave notice at that time that he intended to file a written formal motion requesting such action at the hands of the court. This was later filed. The trial court failed to comply with such request and a bill of exception was taken to his action and is brought forward in the record. This is qualified by the trial judge to show that the written motion was not called to his attention.

An oral request was all that was necessary, a written request not being a. condition precedent to appellant’s right to same. Dennis v. Kendrick (Tex. Civ. App.) 163 S. W. 693.

The action of the court in failing and refusing to file findings, of fact and conclusions of 'law is the only law question brought forward for review.

It is the statutory right of a litigant to have these matters separately and distinctly stated. Article 2208, R. S. 1925; Callaghan v. Grenet’s Estate, 66 Tex. 236,18 S. W. 507.

This question has been the prolific source of much discussion by the Appellate Courts of Texas. No useful purpose could be served .by adding to a subject that has already filled many pages of our reports. We content ourselves, therefore, with the citation of only the recent case of Fidelity Union Fire Insurance Co. v. Pruitt (Tex. Civ. App.) 13 S.W.(2d) 717, and (Tex. Com. App.) 23 S.W.(2d) 681. The Court of Civil Appeals at Dallas affirmed this case and in its opinion will be found an extensive collation of authorities upon the different phases of this question. No statement of facts was brought forward in the above case. None appears in the instant case. It was held by the Dallas Court of Civil Appeals that, since no valid defense could have been proven under appellant’s answer, the trial court’s action in failing to file findings of fact and conclusions of law was harmless error. Such, however, is not the case here, as shown by the statement of pleadings above set out. It was further stated in this opinion that the appellant having failed to bring forward a statement of facts could not ask the court to indulge the presumption that the error of the trial court was prejudicial. A writ of error was granted and the Supreme Court commission, speaking through Judge Critz, held that, in the absence of a statement of facts, unless it could be said affirmatively and conclusively that appellant was not injured by the failure of the trial judge to file such findings and conclusions, the case must be reversed. This case was reversed, and furnishes a precedent which^compels like action here.

Reversed and remanded.


author: ALEXANDER, J.

text:
    HOME INS. CO. v. LEWIS et ux.
    No. 1288.
    Court of Civil Appeals of Texas. Waco.
    Dec. 15, 1932.
    Seale & Seale, of Centerville, and Thompson, Knight, Baker & Harris and Robert Lee Guthrie, all of Dallas, for plaintiff in error.
    M. L. Bennett, of Normangee, for defendants in error.
   ALEXANDER, J.

' J. N. Lewis and wife brought this suit against the Home Insurance Company to recover the amount claimed to be due them as fire insurance on a stock of merchandise. The case was tried before a jury, and resulted in a verdict and judgment for the plaintiffs, and the defendants sued out a writ of error.

Giving'the evidence that construction most favorable to the plaintiffs, as we are required to do, the facts are as follows: On August 10, 1929, the defendant insurance company issued and delivered to the plaintiffs a fire insurance policy on the stock of merchandise in question, being a stock of millinery goods. Mrs. Lewis had charge of the millinery store, and the policy was payable to her. It expired on August 10, 1930. The plaintiffs also carried a fire insurance policy on their residence, which policy was payable to J. N. Lewis. This policy was issued by another company, and expired about October 27, 1930. Both of these insurance companies were represented by the same agent — Mr. Ford. Mr. Ford did not write either of the original policies, ■ but had succeeded to the agencies after they were delivered. On August 10, 1930, on the date the old policy on the stock of merchandise expired, Mr. Ford, as agent for the defendant, wrote a new policy on the stock of merchandise, and carried it to the store for the purpose of making delivery and collecting the premium. He handed it to Mrs. Lewis, and advised her that the old policy expired on that day. Mrs. Lewi§ testified that she did not accept the new policy. She further testified: “He (the agent) brought the policy in and I said I didn’t have the money; that I would have to see Mr. Lewis. * * He took the policy and went away.” She further testified that she later spoke to her husband about the matter, and he agreed to see the agent and take care of it. The agent kept the policy in his office for about ten days, and, not having heard from Mr. Lewis, returned it to the insurance 'company for cancellation. In the latter part of October, 1930, either on the same day, or just a few days before the policy on the residence expired, the agent met Mr. Lewis on the street and said, “your policy is about to expire and do you want it renewed?” Mr. Lewis testified, “I told him certainly I did, I had never cancelled an insurance policy.”- The agent advised him that ■he had written á new policy and had it in his office. Mr. Lewis said, “Keep the policy and I will come and see you about it.” At that timé the agent had written a new policy on the residence and had it in his office. A few days after said street conversation between; Mr. Lewis and the agent, the store building burned, and the stock of merchandise was destroyed. At the trial of the case, Mr. Lewis contended that at the time of said street conversation he and the agent had in. inind a renewal of the policy on the stock of merchandise, and that the company through said agent thereby agreed to renew the in-shrance on the merchandise under the same terms as the old policy, and that by reason thereof plaintiffs were entitled to recover. The agent testified that he had in mind and intended a renewal of the policy on the zes-idence.

Opinion.

The plaintiffs were seeking to recover on an oral contract for the renewal of a fire insurance policy. They alleged that they had previously carried a policy of insurance on éaid property which expired August 10, 1930, and that on or about said date the defendant, through its agent,, orally agreed to re-insure said property for another year on the same terms that it had theretofore been insured. They did not, however, allege that they had paid, or agreed to pay, any consideration for such contract to reinsure. The defendant directed á general demurrer to the petition, and here assigns as error the action of the court in overruling the demurrer.

Where one sues to recover on an oral contract to insure property, the burden is on -him to allege and prove that he has paid, of agreed to pay, some consideration for the contract of insurance. Since the petition m this ease did not allege such consideration, it was subject to the general demurrer, and the court erred in overruling same. Couch on Insurance, vol. 8, § 2223; Texas Mutual Life Ins. Co. v. Davidge, 51 Tex. 244; Swift v. Central Union Fire Ins. Co., 279 Mo. 606, 216 S. W. 935; Royal Insurance. Co. v. Eggleston, 19 Ala. App. 638, 99 So. 828; 10 Tex. Jur. 498; J. M. Radford Grocery Co. v. Jamison (Tex. Civ. App.) 221.S. W. 998, par. 4; Terrell, Atkins & Harvin v. Proctor (Tex. Civ. App.) 172 S. W. 996, par. 2; Tumlinson v. York, 20 Tex. 694.

The defendant further contends that the evidence was insufficient to show a contract to renew the policy of insurance, and that the court should have given an instructed verdict in its behalf. If the company ever made an agreement to renew the policy on the stock of merchandise, it was by virtue of the street conversation between the agent and Mr. Lewis. The language used by the parties in said street conversation is uncertain and ambiguous. There is' nothing therein contained which makes it necessarily applicable only to a renewal of the policy on the stock of ..merchandise. Such language is certainly as applicable to a renewal of the policy on the residence as it is to a renewal of the policy on the merchandise. The undisclosed intention or understanding of the partiefe therefore became a material inquiry. The rule in such cases, as stated in the Restatement of Law of Contracts, § 71, is as follows:

“Except as stated in ⅜§ 55 and 70, the undisclosed understanding of either party of the meaning of his own words and other acts, or of the other party’s words and other acts, is material in the formation of contracts in the following cases and in no other:

“(a) If the manifestations of intention of either party are uncertain or ambiguous, and he has no reason to know that they may bear a different meaning to the other party from that which he himself attaches to them, his manifestations are operative in the formation of a contract only in the event that the other party attaches to them the same meaning.
“(b) If both parties know or have reason to know that the manifestations of one of them are uncertain or ambiguous and the parties attach different meanings to the manifestations, this difference prevents the uncertain or ambiguous manifestations from being'operative as an offer or an acceptance.
“(e) If either party knows that the other does not intend what his words or other acts •express, this knowledge prevents such words or other acts from being operative as an offer or an acceptance.”

See, also, 10 Tex. Jur. 27, § 13; Hubbard City Cotton Oil & Gin Co. v. Nichols (Tex. Civ. App.) 89 S. W. 795; Stong v. Lane, 66 Minn. 94, 68 N. W. 765.

The point here under consideration is well illustrated by the old English case of Raffles v. Wichelhaus, 2 H. & C. 906, 33 L. P. Exch. 160. In that case one party contracted to buy, and the other to sell, a certain number of bales of cotton “to arrive ex Peerless from Bombay.” It developed that there were two ships called “Peerless” sailing from Bombay, one to arrive in October and the other in December. One party contended that the cotton was to be delivered in October and the other contended that it was to be delivered in December. The court said: “There is nothing on the face of the contract to show that any particular ship called the Peerless was meant; but the moment it appears that two ships called the Peerless were about to sail from Bombay there is a latent ambiguity, and parol evidence may be given for the purpose of showing that the defendant meant one Peerless and the plaintiff another. That being so. there was no concensus ad idem, and therefore no binding contract.”

We have examined the evidence very carefully for the purpose of determining whether or not the evidence was sufficient to show that the agent had in mind a renewal of the policy of insurance on the merchandise, or knew or should have known that Mr. Lewis had in mind a renewal of such policy, and we have serious doubt of the sufficiency thereof. However, in view of the fact that the case must be reversed for the reason heretofore given, we have concluded to remand the case for further development without further comment on the evidence.

The only issue submitted to the jury was as follows: “At the time of the conversation between J. N. Lewis, one of the plaintiffs in this case, and Sam Seay Ford about a renewal of-the policies of the said J. N. Lewis was it understood by both J. N. Lewis and Sam Seay Ford that he referred to the policy of insurance on the millinery establishment run in the name of Mrs. Lewis and that both the said J. N. Lewis and the said Sam Seay Ford were speaking with reference to the policy in the name of J. N. Lewis as well as the policy in the name of Mrs. Lewis.” To which the jury answered, “Xes.”

In view of another trial, we deem it proper to call attention to the fact that the issue as submitted to the jury does not accurately and clearly submit to the jury the issue of the intention and understanding of each of the parties at the time of the conversation in question. We suggest that the court submit to the jury in a separate issue the question of the intention or understanding of each of the parties.

The plaintiffs’ contention is that, since the agent actually wrote a renewal policy on the merchandise, and did not thereafter advise them that it had been canceled, the new policy remained in force. -The evidence is clear, however, that the agent took the policy to Mrs. Lewis for the purpose of making delivery and collecting the premium, but that Mrs. Lewis did not accept the policy. She testified that she did not accept it at that time because she did not have the money. There was therefore no acceptance of the policy of insurance at that time, and the company did not thereby become bound as the insurer.

The judgment of the trial court is reversed, and the cause remanded for a new trial.


author: BAUGH, J.

text:
    NATIONAL AUTO SERVICE CORPORATION v. STATE.
    No. 7783.
    Court of Civil Appeals of Texas. Austin.
    Nov. 30, 1932.
    Rehearing Denied Dec. 21, 1932.

      Emmett B. Cocke and John A. Drossos,. both of San Antonio, for appellant.
    Jas. V. Allred, Atty. Gen., Everett L. Looney, of Houston, and Sidney Benbow, Asst. Atty. Gen., for the State.
   BAUGH, J.

Suit by quo warranto by the state at the instance of the insurance commission to forfeit the charter of appellant on the ground that it was writing insurance without complying with the insurance laws. The trial court canceled the charter and appointed a receiver to wind up its affairs; hence this appeal.

Appellant was organized under the acts of the Forty-First Legislature (1929), p. 102, c. 47, now subdivision 91 of article 1302, Vernon’s Ann. Civ. St. This act provides: “Corporations may be created to establish, support and maintain automobile clubs for the mutual benefit and protection of automobile operators, with power to acquire and own all property incidental to such business. Nothing in this Act shall be construed as legalizing corporations to write insurance as agents.”

Appellant’s charter contained substantially the language of the act, and authorized the corporation to enter into and execute such contracts as are essential to the conduct of the business of giving protection to the operators of automobiles. Appellant’s original capital was $1,000, which was subsequently increased to $25,000, all of the $24,000 increase being subscribed by Mrs. A. Mar-garitis, one-half of which was paid as follows: $2,500 to A. L. Drossos, attorney for the corporation for services rendered, and the conveyance to the corporation of a $9.-500 equity in real estate located in San Antonio.

The corporation issued to its members a “membership certificate,” which provided, among other things, that for annual dues of $25 it would cause to■ be repaired in its membership garages during that year any damage to the members’ automobile caused by accident not less than $7.50, nor more than $250. A certificate for a maximum repair charge not to exceed $500 was also issued for an annual charge of $45. The certificate also contained certain provisions limiting liability of the company, as to notice, expulsion, and nonassessment of members, etc., not pertinent here, and the following clause: “It must be clearly understood that this is not insurance, as the corporation never pays its members any money, as indemnity, except to repair any damage to member’s automobile at the corporation’s authorized repair shop as hereinabove provided.”

The record discloses that the corporation operated in accordance with the provisions of the certificate; that is, when a member’s car was damaged by accident in an amount in excess "of $7.50, it was repaired at a designated garage, and the bill paid by the company, no money being paid to the member. The dues were a fixed charge, and paid annually by each holder of a certificate.

Appellant makes two contentions on this appeal: First, that its method of doing business did not constitute writing insurance, but was merely a service charge to its membership; and second, that if its certificate was an insurance policy, it was impliedly authorized by the language of the statute that “nothing in this Act shall be construed as legalizing corporations to write insurance as agents.” (Italics ours.) That is, that the law contemplated that the corporation might insure its own membership.

We do not sustain either of these contentions. What constitutes insurance has been defined by statute in many states, and has been frequently defined by the courts. Its essential elements as relate to property are that it provides, for a consideration, indemnity against loss or damage to property, in which the assured has an interest which may result from some uncertain or unforeseen contingency. Cooley’s Briefs on Insurance (2d ' Ed.) vol. 1, p. 6, defines an insurance contract as “an agreement by which one party for a consideration promises to pay money or its equivalent or do some act of value to the assured upon the destruction or injury of something in which the other party has an interest.”

Couch’s Cyc. of Insurance Law, vol. 1, p. 2, defines such contract as “an undertaking by one .party to protect the other party from loss arising from named risks, for the consideration and upon the terms and under the conditions recited.” A multitude of cases from the various state and United States courts dealing with this subject are found in the annotations in 63 A. L. R. 711 to 772, and extended discussion of them is unnecessary. See, also, 32 C. J., 975; 14 E. C. L., 840. Whether or not a contract is one of insurance is to be determined by its purpose, effect, contents, and import, and not necessarily by the terminology used, and even though it contain declarations to the contrary. Southern Surety Co. v. Austin (Tex. Com. App.) 17 S.W.(2d) 774, 776; Allin v. Motorist’s Alliance of America, 234 Ky. 714, 29 S.W. (2d) 19, 23, 17 A. L. E. 688. Nor is it essential that loss, damage, or expense indemnified against necessarily be paid to the contractee. It may constitute insurance if it be for his benefit and a contract on which he, in case of a breaeh thereof, may assert a cause of action. Allin v. Motorist’s Alliance, supra; 63 A. L. R. 715. In the instant case we think it clearly appears that the purpose of the contract made by appellant was, for a fixed consideration, to indemnify the holder of the certificate against loss resulting from accidental damage to his ear within the limits fixed by the certificate, and that it constituted an insurance contract under the rules above announced.

There is no contention that appellant made any effort to comply with the insurance laws of the state. The record discloses the contrary. It was incorporated under the general incorporation statute and not the laws relating to insurance companies. Certainly it had no express authority acting as a principal to insure its members. If the last sentence of the act authorizing its incorporation be omitted, it is obvious that it was not authorized to issue any form of insurance contract. The House Journal discloses that, as originally introduced in that body, the bill did not contain the last sentence now appearing in the act, but that same was added by amendment (H. J. 41st Leg. p. 390). The Legislature was undoubtedly cognizant that under the original bill such corporation could not write insurance as a principal, and, in order to prevent appellant from operating any sort of insurance business, it took the additional precaution that it should not be permitted to do so as an agent for some other' corporation which might be authorized to do so; that is, that it intended to authorize such corporation to act only as a service club, outside of the insurance field, and to prevent it from writing insurance, either as principal or agent, leaving that business entirely to the supervision and regulation of the insurance commission as provided by law.

An additional reason may have impelled the Legislature in adopting the amendment. From 1911 to 1925 the insurance commission had refused to issue a license to any corporation to act as an agent in writing insurance of any kind. Article 5064, E. S. 1925, expressly prohibits the licensing' of a corporation to act as agent in writing life insurance. But the codification of 1925 omitted article 4955 of the E. S. 1911, in construing which the insurance commission had interpreted the inhibition against licensing a corporation as an agent for life insurance to apply to all kinds of insurance. Thereafter, in 1931, James N. Tardy Company, a corporation, by mandamus compelled the insurance commissioner to issue to it a license to act as agent in writing fire, marine, and casualty insurance. See James N. Tardy Co. v. Tarver, 120 Tex. 591, 39 S.W.(2d) 848. But the Forty-Second Legislature by statute forbade the issuance of an agent’s license to a corporation to write any form of insur- . anee. Acts 42d Leg. c. 96, § 3, p. 151 (Vernon’s Ann. Civ. St. art. 5062a, § 3). And it is to be noted that the amendment to the original bill under which appellant was incorporated is not limited merely to corporations formed thereunder, but alpplies to corporations generally. These matters disclose a legislative policy against authorizing corporations to write insurance, as agents. We conclude, therefore, that the addition of the last sentence to the act under which appellant was incorporated did not give appellant any more authority to act as an insurer than that contained in the preceding provisions, under which it had no authority to issue insurance policies to its members.

The judgment of the trial court is affirmed.

Affirmed.


author: PELPHREY, C. J.

text:
    NAIL v. McCUE.
    No. 2744.
    Court of Civil Appeals of Texas. El Paso.
    Dec. 15, 1932.

      Harrison, Scott & Rasberry, of El Paso, for-appellant.
    J. U. Sweeney and J. E. Quaid, both of El Paso, for appellee.
   PELPHREY, C. J.

This is a suit by appellee against appellant seeking to recover the sum of 1168.50, alleged to he the balance due on an oral contract to do certain plumbing on the property of appellant located on lots 15 and 16, block B, Alamo Heights addition to the city of El Paso, Tex., together with certain extra work performed by'appellee at the request of appellant, and to foreclose a laborer and ma-terialman’s lien on the above-described property.

Appellee filed in the office of the county clerk of El Paso his affidavit fixing his lien on the property November 6, 1924, and on J uly 19, 1926, filed, his original petition in this suit. Appellant filed his original answer on August 10, 1926, and thereafter on December 13, 1929, filed a bond in the sum of .$337, conditioned that he and his surety, if appellee established his claim as asserted in. his affidavit, would pay the same together with all costs. On the same date a notice of the filing of said bond was given to appellee.

On December 23, 1929, appellee filed his second amended petition in which he made the Mortgage Investment Company, a corporation, a party defendant, alleging that it was asserting some interest in the property.

On March 10, 1931, appellant filed his first amended answer, demurring generally and specially to appellee’s amended petition, generally denied the allegations thereof,' and specially denied that appellee had completed his contract, that he ever accepted the work or contracted for the extras claimed by ap-pellee.

Appellant also alleged certain expenses and damages incurred by him, on. account of ap-pellee’s breach of contract and filed a cross-action therefor.

On March 21,1932, appellant and Mortgage Investment Company filed a motion to abate the suit, setting out the filing of the bond for $337, the giving of notice thereof, and that no suit having been filed to foreclose the lien or recover on the bond within tfie time prescribed by section 4 of article 5472c of Vernon’s Ann. Civ. St., appellee was barred from maintaining or prosecuting his suit.

This plea was overruled by the court.

App'fellee dismissed as to the Mortgage Investment Company, and the cause proceeded to trial before a jury, who found that appel-lee complied substantially with his contract; that $110 was still due appellee thereon; that the extra work was done at the instance and request of appellant; that $48.50 was due appellee by reason of the extra work; and that appellee had instituted his suit and caused the issuance of citation thereon within two years from the time the money was due and payable.

Judgment was rendered that appellee recover the full amount sued for together with interest and foreclosing his lien upon the property:

Opinion.

The question to this court on this appeal is as to the construction and effect of article 5472c, Vernon’s Ann. Civ. St. This article' reads:

“Sec. 1. Whenever any lien or liens, other than liens granted by written contracts of the owners of property, shall be fixed or attempted to be fixed, secured or claimed by any instrument filed of record under the provisions of Chapter 2, of Title 90 of the Revised Civil Statutes of 1925, then the owner of the property on which the lien or liens are claimed or the contractor or subcontractor through whom such lien or liens are claimed or either of them, may file a bond with the County Clerk of the County in which the property is located as herein provided. Such bond shall describe the property on which lien or liens are claimed, shall refer to the lien or liens claimed in manner sufficient to identify them and shall be in double the amount of the claimed lien or liens referred to and shall be payable to the party or parties claiming same. Such bond shall be executed by the party filing same as principal and by a corporate surety authorized under the Daws of Texas, to execute such bonds as surety and shall be com ditioned substantially that the principal and surety will pay to the obligees named or their assigns the amounts of the liens so claimed by them with all costs' in the event same shall be proven to be liens on such property.
“Sec. 2. Upon the filing of such bond, the County Clerk shall issue a notice thereof to all obligees named therein. Such notice shall have attached thereto a copy of the bond. Such notice may be served upon each of such obligees by having a, copy thereof delivered to him by any person competent to make oath thereof. The original notice shall be returned into the office of tlie County Clerk issuing same and the person making service of any copies thereof shall make oath on the back thereof showing on whom and on what date such copies were served.
“Sec. 3. Such bond, when filed, and such notice, when issued, and returned together with the return thereon shall be recorded by the County Clerk in the Mechanic’s Lien Records, and any purchaser or lender may rely upon the record of such bond, notice and return in acquiring any interest in said property and shall absolutely be protected thereby.
“Sec.' 4. No action shall be brought or maintained in any court to establish, enforce or foreclose any lien or claim of lien referred to in such bond unless same shall be brought within thirty days after the service of notice thereof as herein provided. After such 30 days and at any time within one year from the date of such service, the party making or holding such claim of lien may sue upon such bond but no action shall be brought upon such bond after the expiration of such period. One action upon said bonds shall not exhaust the remedies thereon but each ob-ligee or assignee of an obligee named therein may maintain a separate suit thereon in any court having jurisdiction.
“Sec. 4a. In case the lien holder shall recover in a suit upon his lien or in a suit upon the bond he shall be entitled to recover in addition to his debt, a reasonable attorney’s fee.”

The above act was passed by the 41st Legislature (chapter 211), and became effective June 12, 1929, long after appellee had filed his affidavit fixing his lien and had filed his original petition in this suit.

Appellant argues that the Legislature intended the act to apply to all liens filed and claimed under chapter 2, title 90, of the Revised Statutes of 1925, at the time the act became effective, and that it was not intended that it should apply only to those filed after its effective date.

While it is true that ordinarily where a statute contains no exception as to existing cases, the courts are not at liberty to construe it in such manner as to except them from its provisions, yet we cannot believe that the Legislature here intended that a person who had a constitutional lien, and who had secured that lien as provided for by the statutes, would by the act be forced to accept, in lieu of his right to look to the property for his debt, the right to sue upon a bond which the owner of the property had seen fit to execute.

The giving of such an effect would, in our opinion, render the act invalid, and it is a well-settled rule of construction that where one construction will render an act invalid and another will render it valid, the latter construction must be given to it.

We find no error in the trial court’s action in overruling appellant’s motion to abate the suit or in overruling the plea in bar.

The judgment is affirmed.


author: SMITH, J.

text:
    CRAVENS, DARGAN & CO. et al. v. RAYMONDVILLE INDEPENDENT SCHOOL DIST. et al.
    No. 8935.
    Court of Civil Appeals of Texas. San Antonio.
    Dec. 7, 1932.

      Jesse G. Poster, of Raymondville, for appellants.
    A. B. Crane, of Raymondville, for appellees.
   SMITH, J.

Hays Scisson was the local agent at Ray-mondville for the Camden Pire Insurance Company, of which Cravens, Dargan & Company, at Houston, were general agents, to whom Scisson reported and accounted. It was the latter’s duty to collect full premiums on policies sold by him, and, deducting his commissions, remit the balance, or net premiums, to the general agents'.

Now, it so transpired that Scisson was also at the same time secretary .to the board of trustees, and tax assessor and collector of the Raymondville Independent Schqol District.

In November, 1929, Scisson asked the district board of trustees to “let him have” a part of the district fire insurance, to which the trustees assented. In pursuance 'of this permission Scisson, through said general agents, procured two policies of insurance issued by the Camden Company in favor of the district upon the latter’s school buildings. The gross premiums upon these policies aggregated $732, which the district paid on November 23, 1929, in the form of a cheek payable to Scisson, who held it until June 25, 193Q, when he cashed it and embezzled the proceeds of it.

The net premium due the insurance company, after deducting Seisson’s commission thereon, was $460.62, and in June, 1930, the general agents wrote Scisson demanding that he remit his “November balance $4¾0.62,” stating that:

“Mr. Rorick Cravens agreed to carry the above for you until April 1st. If further complications have arisen, Mr. Scisson, we will have to ask that you arrange the matter at that end of the line so we can have our money as we cannot carry the account longer.
“Awaiting your remittance, we are. * * * ”

Scisson exhibited this letter to the board of trustees, and to its president, who had signed the previous check, which, like all board checks, was in turn countersigned by Scisson as secretary of the board. In exhibiting the letter to the board Scisson stated it was claimed in the letter that “more insurance was due,” that the board “owed more money for the insurance.” Whereupon, on April 22, 1930, the board’s check, for the amount of said balance, $460.62, signed by T. A. Fuller as president and Scisson as secretary, payable to Cravens, Dargan & Company, and bearing a notation that it was in payment of the premiums on the two policies in question, was delivered to Scisson, who forwarded it to the payees in settlement of said “November account.” Scisson thereupon, on June 25, 1930, cashed the original check for $732, issued to him by the board on November 23, 1929, and embezzled the proceeds thereof. By this manipulation Scisson swindled his principal, the school board, out of the amount of the net premium upon the insurance policies in question.

Subsequently the district brought this action and recovered judgment against Scisson, the insurance company, and the latter’s general agents in the amount of the net premium paid the insurance company through the second check issued.

We conclude the court erred in rendering judgment against the insurance company and its general agents, Cravens, Dargan & Company. Scisson was the agent of both the insurer and the insured. The former had no knowledge or means of knowledge of his acts in making the double collection, while the latter, either with knowledge or because of gross carelessness, paid over the item in question to its secretary in aid of the latter’s fraud. In other words, the school board paid the amount over to its secretary for the obvious purpose of settling the secretary’s individual indebtedness to Cravens, Dargan & Company. Even if the knowledge of its secretary was not imputed to' the board, the trustees had full opportunity to inspect the letter exhibited to them as a basis for the expenditure now sought to be recovered. And .in any event, if he deceived and defrauded hisx principal, the school board, then certainly by the same process and in the same transaction and to the same extent he defrauded his other principal, Cravens, Dargan & Company, and the insurance company. The only difference is the latter had no knowledge of or means of ascertaining the facts constituting the fraud, whereas, the school board knew, or by the exercise of even a slight degree of diligence would have known of and could have prevented the fraud. In such case, if either principal is to suffer it should •be the one whose carelessness causes the loss.

Appellee should be denied recovery upon another ground. Where a person effecting an agreement between two parties is the agent of both, either party may repudiate the-contract, or affirm it by ratification. 2 Joyce on Ins. (2d Ed.) § 659 et seq. Here, Scisson was not only the local agent of the insurance company but was also the secretary of the-school board, and it was upon his representations and advice as such secretary, rather than as an agent of the insurance company, that the board paid the item it now seeks to' recover. The insurance company had no knowledge of his collection or embezzlement. •of the first item paid by the board," and therefore could not have ratified his rascality.

The judgment will be reversed, but it is possible the facts may be better developed upon another trial, to which end the cause is remanded.


author: BLAIR, J.

text:
    SOUTHERN NATIONAL CO. v. BECK & BRIDGES.
    No. 7815.
    Court of Civil Appeals of Texas. Austin.
    Nov. 30, 1932.
    Rehearing Denied Dee. 21, 1932.
    IV. B. Jack Ball, of San Antonio, for appellant.
    Kelley, Looney & Norvell, of Edinburg, for appellees.
   BLAIR, J.

This is an appeal from an order sustaining •a plea of privilege and a plea of res adjudi-•cata as to the venue of this suit on a note, payable in Comal county.

Venue is conceded to be in Comal county unless the following proceedings are res adju-•dicat'a of that issue:

A legal holder brought suit on the note in Bexar county. Appellee Bridges filed his plea of privilege to be sued in the county of his •domicile. No controverting affidavit or plea was ever filed, nor was the plea of privilege called to the attention of the court or adjudicated in any manner during the pendency of the suit, which was for several terms of the court. Appellant purchased the note while that suit, was pending, but without notice of it, and the plaintiff then took a voluntary nonsuit, or a judgment of dismissal without prejudice to any right of action on the note. Later appellant filed this suit on the note in Comal county, where it was made payable. Appellee Bridges then filed his plea of privilege in this suit, which appellant duly controverted; and, in reply, appellee pleaded the aforementioned proceedings as res adju-dicata of the venue issue.

The mere fact that the uncontrovert-ed plea of privilege was pending when plaintiff took a voluntary nonsuit or a dismissal of his suit without prejudice to any right of action on the note was not res adjudicata of the venue question, because there was no adjudication of that issue. A plea of res ad-judicata must rest upon a hearing or an opportunity therefor, and a determination of the issue, or upon an order made or judgment entered after a bearing on the issue. This conclusion is sustained by the holding in the case of Hewitt v. DeLeon (Tex. Civ. App.) 5 S.W.(2d) 236, where.it is held that, since there was no order or adjudication of the venue issue, a judgment of dismissal entered on plaintiff’s voluntary nonsuit was not res adjudi-cata of the venue question merely because of the pendency of an undisposed of plea of privilege, which had not been controverted within the time allowed by law.

The law is now settled that plaintiff may take a voluntary nonsuit, or cause a judgment of dismissal without prejudice to be entered, although there is pending in the case an uneontroverted and undisposed of plea of privilege. Atlantic Oil Producing Co. v. Jackson, 116 Tex. 570, 296 S. W. 283. In that ease, where a plea of privilege has been filed before the nonsuit was taken, the Supreme Court refused to permit the filing of a petition for mandamus to require the trial judge to reinstate and to transfer the case, both because the nonsuit was properly entered and because the reinstatement and transfer of the case, which plaintiff would still be free to dismiss, would be a futile proceeding. In support of these conclusions, the Supreme Court cited the case of Watson Co. v. Cobb Grain Co. (Tex. Com. App.) 292 S. W. 174, and appellee contends the latter case holds that the taking of a nonsuit by a plaintiff with an uncontroverted plea of privilege pending is res adjudicata of the venue issue as to any subsequent suit by plaintiff on the same cause of action. It is manifest that, if such had been the rule announced in the Watson Company Case, the Supreme Court would have refused the petition for mandamus in the Atlantic Oil Producing Company v. Jackson Case upon the additional ground that the venue question had been adjudicated by the taking of a nonsuit by plaintiff with the un-controverted plea of privilege pending. It seems, however, that the Commission intended in the Watson Co. v. Cobb Grain Co. Case to base its opinion on a finding that the venue issue had been determined by the dismissal judgment. Certain recitals from the judgment of dismissal were set out, and from these it was held that these recitals in the judgment unalterably fix venue of any subsequent suit. As further evidence of this intention, the Commission cited the case of Old v. Clark (Tex. Civ. App.) 271 S. W. 183, which simply holds that, where a plea of privilege is adjudicated prior to the taking of a nonsuit by plaintiff, and adversely to plaintiff, such judgment on the plea of privilege is not affected by the judgment of dismissal, and that it is res adjudieata of the venue issue of any subsequent suit plaintiff may file on the same cause of action. Such is the holding of other cases where the nonsuit is taken after the plea of privilege has been adjudicated. But the mere fact that a voluntary nonsuit is taken with an uncontroverted plea of privilege pending is not res adjudieata of the venue issue, because there is no adjudication of the venue issue upon which to base the. plea.

The orders appealed from are set aside, and the cause is reversed and remanded, with instructions to overrule both the plea of privilege and plea of reS adjudieata.

Reversed and remanded, with instructions.