author: EVANS, Justice.

text:
    Ex parte Jack C. THOMAS, Relator.
    No. 16709.
    Court of Civil Appeals of Texas, Houston (1st Dist.).
    March 25, 1976.
    Rehearing Denied May 6, 1976.

      Walter R. Grimes, Houston, for appellant.
    Anthony L. Vetrano, Jr., Houston, for appellee.
   EVANS, Justice.

On December 10, 1975, relator was adjudged in contempt of the terms of divorce decree dated November 14, 1972, wherein he was ordered to pay $75.00 per week as child support for his two children. The court determined that relator was in arrears in the amount of $2,275.00 and in its written order entered January 20, 1976, fixed relator’s confinement in the county jail “for a period of three (3) days conditioned that he may purge himself by paying the sum of TWO THOUSAND TWO HUNDRED SEVENTY FIVE & NO/100 ($2,275.00) DOLLARS into the registry of this court on receipt of any funds derived from a workman’s compensation claim and suit resulting from an injury he received on or about July 1,1975, Texas Industrial Accident Board Case No. P-95031-H, for costs of court and upon such payment he shall be released from custody.” This order provided for commitment to issue “after hearing herein.” It bore the approval of the attorneys for both parties.

Subsequently on January 27, 1970, upon petition for contempt filed on behalf of relator’s former spouse, the court ordered relator to appear on February 24, 1976, to show cause why he should not be punished for contempt in failing to comply with the court’s order. The show cause order did not specify the order which relator had allegedly failed to obey and the petition for contempt referred only to the divorce decree and alleged generally that relator had disobeyed that order.

On February 24, 1976, the court entered an order of commitment which recited that relator had disobeyed the terms of the divorce decree dated November 14, 1972, and that he was in arrearage in child support payments in the amount of $2,275.00. The decree fixed his punishment in the county jail of Harris County, Texas, for a period of 30 days. After the entry of this order the court expunged the order from the minutes of the court and substituted an “amended” order of commitment. This amended order reflects that it was entered on February 24, 1976, and it is identical in every respect with the earlier order of that date except that it recites the arrearage to be in the sum of $450.00.

While relator does not contest the court’s determination that the sum of $450.00 represented the amount of the arrearage in his child support payments between the time of the first hearing of December 10, 1975, and the second hearing on February 24,1976, he contends that the court was not authorized to enter the amended order reducing the recited amount of arrearage from $2,275.00 to $450.00 in the absence of notice and hearing. He argues in effect that the trial court’s order of February 24, 1976, is void.

The trial court had the inherent right to correct the recital as to the amount of the arrearage by expunging the original order and entry of an amended order. Wedgeworth v. Pope, 12 S.W.2d 1045 (Tex.Civ.App.—Fort Worth 1928, writ ref’d). Rule 317, T.R.C.P., specifically provides for the correction of misrecitals in the record of the judgment or decree of the court:

“Where in the record of any judgment or decree of a court, there shall be any omission or mistake, miscalculation or misreci-tal of a sum or sums of money, or of any name or names, if there is among the records of the cause any verdict or instrument of writing whereby such judgment or decree may be safely amended, it shall be corrected by the court, wherein such judgment or decree was rendered, or by the judge thereof in vacation, upon application of either party, according to the truth and justice of the case. The opposite party shall have reasonable notice of the application for such amendment.”

In McDonald, Texas Civil Practice, Vol. 4 (1971 rev.), Sec. 17.08.1-D, at page 59, it is stated:

“The court’s power to order the correction of clerical errors in the entry of a judgment is analogous to its power to direct such entry nunc pro tunc. Since every judicial tribunal has inherent power to make the records correctly reflect its activities, no enabling statute or rule is required and in fact the power is beyond legislative control. Since 1846 Texas has had statutes upon the subject, and these are continued in Rules 316 through 319, but these provisions are merely cumulative, in no sense curtailing the court’s inherent power. Assuming always that the order merely corrects a clerical error, the court’s control of its records is virtually unlimited, and it is immaterial how greatly the corrected judgment differs from the incorrect entry. A decree inadvertently or mistakenly entered by the clerk without the court’s approval may be stricken. An inaccurate record may be expunged and a correct decree substituted. Omissions or misstatements in the date of judgment, the names of parties, the amount of judgment or the date from which interest is to be calculated, and any other clerical error may be rectified, and necessary provisions for the enforcement of the judgment may be added.”

While it does not appear that relator or his attorney were given prior written notice of the court’s intention to amend the order, relator does not contend that the amended order incorrectly states the facts found by the court. No exceptions were taken to the petition for contempt prior to the hearing on February 24, 1976, and we have before us no transcript of the evidence heard by the court at that hearing. While it would have been ordinary courtesy to give relator’s counsel notice and opportunity to be heard upon the proposed amendment, relator was not harmed by the nature of the amendment and the fact such notification was not given does not render the court’s order void. Payton v. Hurst Eye, Ear, Nose & Throat Hosp. & Clin., 318 S.W.2d 726 (Tex.Civ.App.—Texarkana, 1958, writ ref’d n. r. e.).

The amended order of commitment was entered on the same date as the original order and since the transcript does not reflect that relator was arrested under the original order, we assume that he was arrested and confined under the amended order. In view of our holding that the court was empowered to enter the amended order and that it was not shown to be void, relator should be remanded to custody.

It is ordered that relator be remanded to the custody of the Sheriff of Harris County, Texas.


source: Caselaw Access Project

author: REYNOLDS, Justice.

license: Public Domain

text:
    Nathan KISER, Appellant, v. LEMCO INDUSTRIES, INC., Appellee.
    No. 8656.
    Court of Civil Appeals of Texas, Amarillo.
    March 29, 1976.
    Rehearing Denied March 29, 1976.

      Suddereth, Woodley & Dudley, Ben D. Suddereth, Comanche, for appellant.
    Warren G. Tabor, Jr., Levelland, for ap-pellee.
   ON MOTION FOR REHEARING

REYNOLDS, Justice.

Our 8 March 1976 opinion is withdrawn and this opinion is substituted.

Summary judgment was rendered in favor of Lemco Industries, Inc., for the $20,-000 difference between the cost of substitute grain and the contract price of the grain Nathan Kiser agreed to, but did not deliver to Lemco. The record fails to demonstrate that no fact issue stands in the way of judgment for Lemco. Reversed and remanded.

Lemco pleaded that a written contract whereby it agreed to buy, and Kiser agreed to sell, one million pounds of grain at $2.50 per hundredweight for delivery from October through December, 1973, was executed in the following form:

that Kiser failed and refused to deliver any grain; that to fill the shortage, Lemco was forced to purchase 1,000,000 pounds of grain on the open market at $4.50 per hundred pounds; and that Lemco suffered damage in the sum of $20,000. After Kiser’s plea of privilege was denied, Kiser v. Lemco Industries, Inc., 521 S.W.2d 142 (Tex.Civ.App.—Amarillo 1975, no writ), Kiser answered and denied liability.

Lemco moved for summary judgment. The motion was supported with the written agreement, the record on the hearing on the plea of privilege, and the affidavit of L. E. Mitchell, Jr., Lemco’s vice-president who had signed the written agreement with Kiser. Mitchell’s affidavit details the circumstances surrounding the execution of the written agreement with Kiser, the re-sale Lemco made of the grain to Bunge, Inc., and concludes:

In late October or early November, being the latter part of the 1973 harvest season for grain, the defendant had come by my office in Levelland, Texas, and had asked to see me, I was out of the office at the time, and did not see the defendant on this occasion.
About the middle of the month of November, 1973, practically all of the grain grown in the area had been harvested. The defendant had not delivered his grain to the elevator of Lemco Industries, Inc., as contracted. At this time, I made a trip to Cochran County for the purpose of locating the defendant’s farm. I located the farm belonging to the defendant and at this time I discovered that all of the grain had been harvested. Upon my return to my office, I attempted to call the defendant by telephone. I did not contact the defendant by telephone at this time, and in the ensuing two or three weeks, I made numerous calls to the defendant’s residence in Comanche, Texas. On each occasion, I was told by the party answering the phone that the defendant was not at home. I was unable to contact the defendant by phone at any time. I made numerous efforts to contact the defendant by telephone through the month of December, 1973.
The defendant, Nathan Kiser, did not deliver the one million pounds of grain as provided by his written agreement. In January of 1974, I was required to have the defendant’s one million pounds of grain in my possession, to cover the contract that I had made for the sale of the grain. Under the terms of the sale made to Bunge Inc., this company could call for the grain from and after January 1,1974 until March 1, 1974. Therefore, it was necessary that I have the one million pounds of grain in my possession to cover this transaction. Therefore, since the defendant did not deliver the one million pounds of grain as contracted, it was necessary that I use company-owned grain to cover the sale to Bunge Inc. As a result of this, Lemco Industries, Inc. had to purchase this grain at a cost of $4.50 per one hundred pounds. The failure of the defendant to perform under his agreement to deliver one million pounds of grain has caused Lemco Industries, Inc. to suffer damages in the sum of $20,000.00.

Kiser responded with .amended pleadings, objections to the motion for summary judgment, and his affidavit in opposition to the motion, the material part of which states:

. In the late part of October or early part of November, 1973, . I did go to the office of L. E. Mitchell, Jr. . and ask to see L. E. Mitchell, Jr. L. E. Mitchell, Jr., was not in his office at that time and was unavailable for me to talk with, according to the personnel at his office. I therefore informed the personnel of the office with whom I talked that I did not intend to, and would not, deliver one million pounds of grain to Lemco Industries, Inc., or deliver the grain harvested by me for the year 1973 to Lemco Industries, Inc.

Without ruling on Kiser’s objections to the motion for summary judgment, the trial court, after hearing the motion and reciting a finding of the absence of genuine issue of any material fact, rendered summary judgment for Lemco in the sum of $20,000. Kiser has appealed, contending that Lemco’s proof did not, as mandated by Gibbs v. General Motors Corporation, 450 S.W.2d 827, 828 (Tex.Sup.1970), establish as a matter of law that there is no genuine issue of fact as to one or more of the essential elements of its cause of action.

Indisputedly, it is established that Kiser breached the agreement upon which Lemco relies. Kiser’s repudiation of the whole contract in clear and unconditional language before the time for his full performance was an anticipatory breach. Western Oil Sales Corporation v. Bliss & Wetherbee, 299 S.W. 637, 638 (Tex.Com.App., 1927). And, disregarding the evidential conflict in the affidavits and accepting as true, as we must, the evidence which supports Kiser’s position in opposing the summary judgment motion, Farley v. Prudential Insurance Company, 480 S.W.2d 176, 178 (Tex.Sup.1972), Lemco knew of the breach not later than early November of 1973. At that time, Lemco had the option of tracking the remedy agreed to by the parties in the last paragraph of the written agreement, which was not made exclusive, or, because the contract of sale is one contemplated by Chapter 2 of V.T.C.A., Bus. & C., of pursuing any remedy available for the breach under the authority of § 2.610. Lemco contends that it elected to pursue its contractual remedy by purchasing substitute grain, which constituted “cover” within the purview of §§ 2.711-2.712.

The contractual remedy is the purchase of substitute grain “at current prices,” within the “(t)ime limit stated in contract” with Kiser liable for any cost in excess of the contract price. The code remedy of “cover” is, as expressed in § 2.712(a), the “making in good faith and without unreasonable delay any reasonable purchase of or contract to purchase goods in substitution for those due from the seller.” Good faith, as applicable to merchant Lemco, is defined by § 2.103(a)(2) as “honesty in fact and the observance of reasonable commercial standards of fair dealing in the trade.” When any action is to be taken within a reasonable time, § 1.204(a) specifies that the parties may fix by agreement, as the parties here fixed, a time which is not manifestly unreasonable. Aside from affording recovery for other damages with credit for expenses saved in consequence of the breach which are not involved in this appeal, § 2.712(b), like the written agreement, measures Lem-co’s recovery from Kiser as the difference between the cost of cover and the contract price.

To summarily recover under the contract for the excess cost of grain purchased in view of Kiser’s breach, Lemco was required to demonstrate that there is no fact issue as to cover under the contract. Thus, Lemco was required to establish as a matter of law a good faith purchase of substitute grain at market price not later than 31 December 1973.

Initially, we cannot say that Lem-co discharged its burden to show as a matter of law cover at market price. We are cognizant that the code presumes that cover is proper and sets the market price with the burden on the seller to show otherwise, but the presumption arises when it is shown the buyer has complied with the requirements of § 2.712, Laredo Hides Company, Inc. v. H & H Meat Products Company, Inc., 513 S.W.2d 210, 221 (Tex.Civ.App. —Corpus Christi 1974, writ ref’d n. r. e.), and makes the purchase of substitute goods on the market. Spies, Uniform Commercial Code: Article 2 — Sales; Performance and Remedies, 44 Tex.L.Rev. 629, 638, 642 (1966). Here, however, the proof is that Lemco did not purchase the substitute grain on the open market. Mitchell’s sworn testimony is that “company-owned grain” was used in lieu of Kiser’s, and that “this grain” was purchased at $4.50 per hundredweight. The burden was on Lemco to show that it complied with the contract the parties made, and this it has not done. See Magnolia Provision Co. v. Coleman, 3 S.W.2d 412, 414 (Tex.Com.App., 1928).

Neither can we say Lemco established with the legal certainty required that it covered within the time agreed upon by the parties. The only time limit stated in the agreement is “October November December 1973.” Although Lemco argues that Mitchell’s affidavit can have but the one interpretation that cover was perfected prior to January, 1974, the affidavit is not that definite. Mitchell does not state when the substitute grain was purchased; at most, he says Lemco was required to have Kiser’s grain “(i)n January of 1974.” Mitchell is an interested party and his testimony is not so clear, direct and positive as to establish cover prior to January of 1974, and thus, his testimony does nothing more than raise a fact issue as to the date of cover. Swilley v. Hughes, 488 S.W.2d 64, 67 (Tex.Sup.1972).

Moreover, we hold that where the parties agree for cover to be effected “at current prices,” the mere showing that the buyer purchased the substitute goods from himself at some price, without more, does not establish good faith. These circumstances invoke the general rule that what constitutes good faith under the circumstances of a particular case is a question of fact to be resolved by the fact finder. Modular Technology Corporation, Metal Board Division v. City of Lubbock, 529 S.W.2d 273, 276 (Tex.Civ.App.—Amarillo 1975, writ ref’d n. r. e.). For this reason, if for no other, Lemco failed to establish cover as a matter of law under § 2.712 and independent of the written agreement.

This record illustrates circumstances where summary judgment is to be applied with caution and should not be granted where there is doubt as to the facts. In re Price’s Estate, 375 S.W.2d 900, 904 (Tex.Sup.1964). Accordingly, the summary judgment proof failed to demonstrate that no fact issue stands in the way of judgment for Lemco. Torres v. Western Casualty and Surety Company, 457 S.W.2d 50, 52 (Tex.Sup.1970).

In its motion for rehearing, Lemco suggests that the liability portion of the judgment is severable and should be affirmed with any remand limited to the issue of damages as provided in Rule 434, Texas Rules of Civil Procedure. That rule was amended effective 1 January 1976 to provide that a separate trial on unliquidated damages alone shall not be ordered if liability issues are contested. Kiser’s contest of liability precludes a partial remand.

The motion for rehearing is overruled. The summary judgment is reversed, and the cause is remanded.

      . All cited sections are referenced to the sections of the Texas Business and Commerce Code (1968).

      . “(C)urrent prices” is synonymous with “market value.” Words and Phrases, “Current Price.”


author: RALEIGH BROWN, Justice.

text:
    Velma Beatrice McFARLEN, Appellant, v. Ruth McFARLEN, Appellee.
    No. 4894.
    Court of Civil Appeals of Texas, Eastland.
    April 1, 1976.

      George D. Beall, Nunn, Griggs, Beall & Wilks, Sweetwater, for appellant.
    R. Temple Dickson, Mays, Moore, Dickson & Roberts, Inc., Sweetwater, for appellee.
   RALEIGH BROWN, Justice.

This is an appeal from a judgment of the County Court of Nolan County setting aside and vacating its previous order admitting the last will and testament of William Arnold McFarlen, deceased, to probate and appointing Velma Beatrice McFarlen Independent Executrix.

After the will was admitted to probate, Ruth McFarlen brought suit contending that the will was null and void under Section 69, Texas Probate Code, V.A.T.S. The trial court agreed. Velma Beatrice McFar-len appeals, contending the court erred in declaring the will and letters testamentary issued to her null and void. We reverse and render in part and affirm in part.

William Arnold McFarlen and Velma Beatrice McFarlen were married October 19, 1932, and were divorced July 12,1968. William McFarlen, as a single man on June 2, 1972, executed the will in question. On October 19, 1972, Velma and William remarried and again divorced January 10, 1974. William then married Ruth McFarlen February 25, 1974, and died August 6, 1974, without having revoked or changed the will dated June 2, 1972.

The will contains four basic paragraphs. Paragraph one provides for the payment of debts and taxes; paragraph two bequeaths and devises all of McFarlen’s estate to Velma Beatrice McFarlen; paragraph three appoints Velma Beatrice McFarlen independent executrix and alternatively appoints First National Bank, Sweetwater, Texas, independent executor “should she (referring to Velma Beatrice McFarlen) fail or refuse to qualify”. Paragraph four provides:

“In the event that VELMA BEATRICE McFARLEN predeceases me, then, in that event and in that event only, I hereby will, devise and bequeath unto my daughter, JOHNNIE LANELL ANYON, all of my estate, real, personal, and mixed, in fee simple.”

V.A.T.S., Probate Code, § 69 (1956), states:

“If the testator is divorced after making a will, all provisions in the will in favor of the testator’s spouse so divorced, or appointing such spouse to any fiduciary capacity under the will or with respect to the estate or person of the testator’s children, shall be null and void and of no effect. Acts 1955, 54th Leg., p. 88, ch. 55.”

We think this statutory provision prohibits Velma Beatrice McFarlen from being either a beneficiary or a fiduciary under the will. Volkmer v. Chase, 354 S.W.2d 611 (Tex.Civ.App.—Houston 1962, writ ref. n. r. e.).

The gift over to Johnnie Lanell Anyon was a contingent bequest and the contingency, that Velma Beatrice McFarlen predecease William Arnold McFarlen, had not occurred at the death of the testator. No property rights, therefore, vested by reason of the gift over. Volkmer v. Chase, supra; White v. Taylor, 155 Tex. 392, 286 S.W.2d 925 (1956); Fain v. Fain, 335 S.W.2d 663 (Tex.Civ.App.—Fort Worth 1960, writ ref.).

Since neither Velma Beatrice McFarlen nor Johnnie Lanell Anyon take under the will, and the will contains no residuary clause, we think the estate of William Arnold McFarlen descended to his lawful heirs. Bittner v. Bittner, 45 S.W.2d 148 (Tex.Com.App.1932, no writ).

We find no evidence the will was null and void. Section 69, supra, merely provides that provisions in a will favoring the testator’s divorced spouse are a nullity, not the entire will. We hold the court erred in setting aside the previous order admitting the will of William Arnold McFarlen to probate, and we reverse and render that portion of the judgment. We affirm that portion of the judgment declaring null and void the appointment of Velma McFarlen independent executrix of the estate of William Arnold McFarlen.

Reversed and rendered in part, affirmed in part.


text:
    SEA HOSS MARINE ENTERPRISES, INC., et al., Appellants, v. ANGLETON BANK OF COMMERCE, Appellee.
    No. 16638.
    Court of Civil Appeals of Texas, Houston (1st Dist.).
    April 8, 1976.
    Rehearing Denied May 6, 1976.

      Pope & Waits, Dougal C. Pope, Houston, for appellants.
    Wiley Thomas, Angleton, for appellee.
   EVANS, Justice.

This is a suit on two promissory notes. The makers of the notes appeal from an instructed verdict.

Appellee, Angleton Bank of Commerce, brought this suit to recover on a $44,000.00 promissory note executed by Roger Hoss, individually, and on a $60,000.00 note executed by Hoss and Sea Hoss Marine Enterprises, Inc. Hoss denied liability on the $44,000.00 note, asserting that he had signed a note in blank and that it had been completed without his authorization. Hoss and Sea Hoss Marine Enterprises, Inc. contended that the $60,000.00 note was invalid' in that it had been obtained through duress. At the conclusion of a jury trial, the trial court instructed a verdict in favor of appel-lee for the principal amount due under both notes, interest accrued thereon and for attorney’s fees under both notes in the total sum of $30,000.00. Both Hoss and Sea Hoss Marine Enterprises, Inc. have appealed.

In their first two points of error appellants contend that material fact issues were raised by the evidence as to their liability under the notes in question precluding rendition of an instructed verdict against them. In reviewing these points we accept as true all evidence supporting appellants’ contentions and indulge every reasonable inference which can be drawn in their favor; we reject all evidence and inferences to the contrary. Frazier v. Hanlon Gasoline Co., 29 S.W.2d 461, 471 (Tex.Civ.App.—Eastland, 1930, writ ref’d); Anderson v. Moore, 448 S.W.2d 105 (Tex.1969).

Hoss did not deny signing the $44,-000.00 note dated April 10, 1970, but testified that it had been executed in blank and left with appellee pending his further instructions. He had been in the fishing and ship building business for 30 years, had owned a number of corporations and over a period of about twelve years had borrowed several million dollars from appellee in connection with the operation of his companies. He frequently traveled to Central and South America on business matters and sometimes would sign a note in blank and leave it with appellee upon the condition that if he needed a loan while he was away from the country, appellee could fill in the note in the amount of the loan. This had been a common practice in his dealings with appellee. In March 1970, Hoss was planning to go out of the country on business and signed a note in blank which he left with Mr. Foy Knipp, who was president of appellee at that time. He left this note with instructions that Mr. Knipp could fill in the note in such amount as he might need to borrow up to $15,000.00 from appel-lee while he was away in connection with a “deal pending on a boat called ‘Big John.’ ” Hoss testified that when he signed the note being sued on it had not been filled in for any amount and was not dated. He never gave anyone permission to fill in the note except for the authority which he gave Knipp with respect to the Big John transaction.

The only other witness who testified on these issues was Jimmie Jordan who was president of appellee at the time of trial. Jordan identified appellee’s liability ledger sheets on Hoss which showed the $44,000.00 note listed under date of April 10,1970, but did not show it posted until May 12, 1970. The ledger showed a zero balance as of May 1,1970, and also indicated a $44,000.00 payment posted January 18, 1971, leaving a zero balance on that date. The only bank records produced by appellee indicating that Hoss had received the value of $44,-000.00 for the note was the liability ledger and the note itself. No cancelled checks or deposit slips were produced to show that Hoss had received the amount of the note.

It was appellee’s contention that the $44,-000.00 note represented the purchase price of certain stock in Delta Corporation, a holding company of appellee. Hoss had previously signed in blank a note payable to Bellmead State Bank of Waco dated October 10,1969, which he had authorized Knipp to complete in the amount of $44,000.00. The purpose of that note had been the acquisition by Hoss of 2,000 shares of stock in Delta Corporation and it was subsequently paid off by Delta Corporation to Bell-mead State Bank of Waco. Hoss had carried a liability to Delta Corporation in the amount of that note on his financial statement. It was one of appellee’s theories that the Bellmead State Bank note had been refinanced by Delta with appellee on April 10, 1970, and that the note sued upon in this case represented the indebtedness of Hoss under the prior note. Appellee failed to produce documentary evidence in support of this theory and Hoss denied knowledge of such a transaction.

The evidence also showed that appellee had maintained a bank account at City National Bank in Austin, Texas, and that in October 1969 the Austin bank had made four loans to E. P. Pederson, Jr., Carl Flora, Foy Knipp and A1 Kuvet in the amount of $44,000.00 each. The proceeds of those loans, along with the proceeds of the $44,-000.00 loan made to Hoss by the Bellmead State Bank of Waco, were used to purchase stock in Delta Corporation and were deposited in Delta Corporation’s account with appellee. On March 24, 1970, the Austin bank charged the account of appellee with the amount owing on the Pederson, Flora, Kuvet and Knipp notes and forwarded those notes to appellee. On May 6, 1970, appellee’s loan committee approved four loans of $44,000.00 each to Flora, Kuvet, Pederson and Hoss, for the stated purpose of purchasing Delta Corporation stock. Ap-pellee also theorized that the $44,000.00 note in suit took the place of Knipp’s $44,-000.00 note and that Hoss thereby purchased the 2,000 shares of Delta Corporation stock that Knipp had originally acquired with the proceeds of the note from the Austin bank.

Hoss testified that he thought he was supposed to get 7,000 shares of stock in Delta Corporation and that he had signed a note for $44,000.00 as payment for such stock. He stated he had received the note “paid” back from Bellmead State Bank and his testimony indicated he thought that note represented his payment for the stock. Jordan produced a stock certificate for 5,000 shares of Delta Corporation stock which he testified had been put up by Hoss as security for the $44,000.00 note in question, but Hoss’s signature is not on the stock certificate.

Since Hoss admitted that he signed the $44,000.00 note in question, appellee was entitled to recover on proof that it was the present owner and holder of the note, unless a defense was raised by the evidence. Anderson v. Industrial State Bank of Houston, 478 S.W.2d 215, 217 (Tex.Civ.App.—Houston [14th], 1972, writ ref’d n. r. e.). It is appellee’s position that the defense of unauthorized completion is unavailable to Hoss because it is a holder in due course.

A holder in due course is a holder who takes the instrument for value, in good faith and without notice that it is overdue or has been dishonored or of any defense against or claim to it on the part of any person. A payee may be a holder in due course. Sec. 3.302, Tex.Bus. & Com.Code. When a defense is shown to exist, the party claiming the rights of a holder in due course has the burden of establishing that it is “in all respects” a holder in due course. Section 3.307, Tex.Bus. & Com.Code.

When the defense is raised that the completion was unauthorized, the rules set forth in Sec. 3.407 as to material alteration apply, and the burden of establishing that the completion was unauthorized is on the party asserting that defense. Sec. 3.115, Tex.Bus. & Com.Code. Insofar as applicable here, Sec. 3.407, Tex.Bus. & Com.Code, merely provides that the unauthorized completion of an instrument is a material alteration within the meaning of the Code. Under comment 3(a) of that section, it is suggested that a material alteration will discharge the party to the contract if it is made by the holder or his authorized agent or employee or by his confederates.

In the case before us Hoss testified that the blank note which he left with appellee’s chief executive officer was filled in and completed without his authorization. In our opinion this evidence raised fact issues as to whether there was an unauthorized completion of the note by appellee. Considering the evidence in the light most favorable to Hoss, we hold that there were material issues of fact which precluded rendition of an instructed verdict as to the $44,000.00 note and that the cause must be reversed and remanded for a new trial on those issues. We, therefore, sustain appellants’ first two points of error.

In their third point of error appellants assert that there were material fact issues as to their liability on the $60,000.00 note and that the trial court erred in rendering an instructed verdict in favor of appellee.

The $60,000.00 note dated July 29, 1970, was signed by Hoss on behalf of Sea Hoss Marine Enterprises, Inc. and was covered by Hoss’s written guarantee of all Sea Hoss’s debts.

On June 2, 1970, appellee had loaned the aggregate sum of $47,000.00 to three corporations owned by Hoss. These loan transactions had been handled by Govie Waller who was president and chairman of appel-lee’s board at that time. The loan proceeds were transferred from these corporations to Marine Management & Consultants, Inc. and that company in turn transferred the funds to Cinco Amigos, Inc. At that time Govie Waller was president of Cinco Amigos and owned stock in that company. The proceeds of the $60,000.00 loan to Sea Hoss Marine Enterprises, Inc. were used to pay off the principal and interest on the $47,-000.00 loans and the balance of $12,334.40 was withdrawn and spent by Sea Hoss.

Hoss testified that prior to March 1970 he had owned a 16% interest in Cinco Amigos and that he had transferred the $47,000.00 loan proceeds from his three companies to Cinco Amigos because Waller had told him to do so. Hoss testified that his corporations owed appellee about $250,000.00 on loans which he had personally guaranteed and since he didn’t have the money to pay off the loans in case they were called due, he did what Waller told him to do. Hoss testified that Waller had told him that Cin-co Amigos would repay the $47,000.00 in four or five days but that it was never repaid. Waller had called him about July 29, 1970, and told him that the bank examiners had criticized the $47,000.00 loans and that the bank would loan Sea Hoss Marine Enterprises, Inc. $60,000.00 so that the $47,-000.00 indebtedness and accrued interest could be paid. The $47,000.00 loans were not then due but that Waller wanted them repaid. The $47,000.00 loans had been made on condition that the loan proceeds would be transferred from Hoss’s corporations to Cinco Amigos and that the $60,-000.00 loan had been made on condition that the proceeds would be used to pay off the principal and accrued interest on the $47,-000.00 loans.

The gist of Hoss’s testimony is that he applied a substantial portion of the loan proceeds to the purpose specified by the appellee’s executive officer and that a material fact issue was presented as to whether the note had been obtained through duress.

Hoss contends that he was induced to execute the $60,000.00 note under economic duress imposed by appellee’s chief executive officer, Waller. Assuming without deciding that the conduct of Waller might be imputed to appellee, we must determine whether the facts, considered in a light most favorable to Hoss’s contention, might support ’a judgment in his favor based upon the defense of duress.

In Sanders v. Republic Nat. Bank of Dallas, 389 S.W.2d 551 (Tex.Civ.App.—Tyler, 1965, no writ), the maker of a promissory note contended that he had given the note under economic duress and that a representative of the bank had demanded payment of past due rent as a condition to the completion of a purchase of the property under contract of sale. The trial court’s judgment for the bank was affirmed on the ground that there was evidence showing that the payment had been voluntarily made and that the bank had a legal right to assert its claim to rental under the provisions of the sales contract. The court stated:

“. . . It is well established that there can be no duress unless there is a threat to do some act which the party threatening has no legal right to do. Such threat must be of such character as to destroy the free agency of the party to whom it is directed. It must overcome his will and cause him to do that which he would not otherwise do, and which he was not legally bound to do. The restraint caused by such threat must be imminent. It must be such that the person to whom it is directed has no present means of protection. Where the demand is wrongful and it is necessary for the demanding party to resort to the courts to enforce it, there is no duress. But where the party making the demand has, or is supposed to have, the power to injure the business or property interests of the one upon whom the demand is made, without resort to the courts to enforce the demand, and threatens to do an act which would cause such injury, and which he has no right to do, and thereby enforces compliance with his demand, against the will of such party through fear of injury to his business or property, such threats amount to duress, if it appears that the party making such demand ought not in good conscience to retain the benefit received by reason thereof. Dale v. Simon, 267 S.W. 467, 470, (Tex.Com.App.); Lawrence v. J. M. Huber Corporation, 347 S.W.2d 5, (Tex.Civ.App.).”

In Fonville v. Wichita State Bank & Trust Co., 161 Ark. 93, 255 S.W. 561 (1923), the Supreme Court of Arkansas was faced with a similar question. In that case the maker of the note contended that the president of the bank came to his place of business and insisted he give the bank a new note to cover the amount of a debt which had been discharged in bankruptcy and stated that he had better sign the note or he would have the “ill will” of the bank. He stated that the bank’s president had insisted that if he did not sign the note that he would be given “trouble all the time on my credit.” He stated that he had thereafter renewed the note from time to time because the bank “had a chain around my neck” and that there had been nothing for him to do other than sign it. Affirming the judgment of the trial court in favor of the bank, the Arkansas Supreme Court stated:

“. . .It does not appear from the appellant’s testimony that the officer of the bank made any direct or tangible threat, but merely held out to him that by refusing to sign the note he would incur the ill will of the bank. This is not sufficient to constitute duress such as would avoid the contract. The parties were dealing entirely at arm’s length and there was no such intimidation or coercion as was calculated to put appellant in fear either of his person or property

In the instant case Hoss denied that he was physically afraid of Waller and admitted that Waller made no overt threats against him. He conceded that Waller had not said that the bank would call his notes if he did not sign the $60,000.00 note and that Waller didn’t say anything that threatened him financially. He stated only that Waller had led him to believe that “we sort of swam or sank together” and that if he, Waller, “sank”, that Hoss was also going to “sink” with him.

Duress is a matter of degree and whether or not circumstances of duress are established is generally a question of fact. Sanders v. Republic National Bank of Dallas, supra. However, whether established facts will constitute the legal defense of duress is a matter of law to be determined by the court. Fairbanks v. Gossett, 118 S.W.2d 945 (Tex.Civ.App.—San Antonio, 1938, writ dism’d); 11 Am.Jur.2d, Bills and Notes, Sec. 725. Under the facts presented by Hoss’s own testimony we believe the trial court properly determined, as a matter of law, that no factual issue was presented on the defense of duress. We overrule appellant’s third point of error.

Since we have sustained appellants’ first two points of error, which require a retrial of the issues presented with respect to the $44,000.00 note, we need not consider appellants’ points of error 4 and 6 asserting that Hoss’s liability on said note should have been offset by a $45,422.68 check issued by Delta Corporation to appellee bearing notation that it had been issued to “Pay off Roger Hoss Delta stock note, principal $44,-000.00, interest $1,422.68”, and by the value of 5,000 shares of Delta stock held by the appellee as security for the $44,000.00 note.

In view of another trial we briefly consider appellants’ seventh point of error asserting the trial court’s error with respect to the use of a bank examiner’s report on appellee issued by the Texas Department of Banking. During the course of cross-examination of appellee’s president by the appellants’ attorney, the trial court ordered this report delivered to the court; after placing the report under seal, the court allowed the report to be returned to appellants’ attorney but did not permit such attorney to utilize the report in the course of his further examination. Appellee argues that Article 342-210, Tex.Rev.Civ.Stat.Ann., protects the report from disclosure as privileged and confidential information of the Banking Department and contends that any use of such information in a legal proceeding would constitute a violation of the statute. We have not been called upon to determine the admissibility of this report; only whether the trial court erred in denying appellants’ counsel use of the report during his examination of the witnesses. Unless it is shown that the report was illegally obtained, we see no basis for denying appellants the use of the report during further trial proceedings. See Benson v. San Antonio Savings Association, 374 S.W.2d 423, 428 (Tex.1963).

In their fifth point of error appellants assert the trial court erred in awarding an attorney’s fee of $30,000.00 on the two notes in question, which each provide that the holder is entitled to a reasonable attorney’s fee of not less than 10% of the amount of the unpaid principal and interest. Appellee’s attorney testified that reasonable attorney’s fees under the two notes would amount to the aggregate sum of $30,000.00. Although no contradictory evidence was offered as to the amount of such fees, the question as to the reasonableness of attorney’s fee is one of fact. Smith v. Davis, 453 S.W.2d 340, 347 (Tex.Civ.App.—Fort Worth, 1970, writ ref’d, n. r. e.). Thus, it was reversible error to instruct a verdict on this issue. Stein v. Lewisville Independent School Dist., 481 S.W.2d 436 (Tex.Civ.App.—Fort Worth, 1972, writ ref’d, n. r. e.), certiorari denied 414 U.S. 948, 94 S.Ct. 272, 38 L.Ed.2d 203. This issue is severable and may be retried upon remand with the issues as to the $44,000.00 note.

The judgment of the trial court is affirmed insofar as it awards judgment in favor of appellee against appellants for the amount of the $60,000.00 note and interest accrued thereon. The judgment of the trial court is reversed and remanded for new trial as to the award with respect to the $44,000.00 note and interest accrued thereon, and as to the award of attorney’s fees with respect to both such notes.

Costs of appeal are taxed one-half against appellee and one-half against appellants.


author: SPURLOCK, Justice.

text:
    ROADRUNNER INVESTMENTS, INC., Appellant, v. TEXAS UTILITIES FUEL COMPANY, Appellee.
    No. 17704.
    Court of Civil Appeals of Texas, Fort Worth.
    April 9, 1976.
    Rehearing Denied May 14, 1976.

      Wilbur T. Knape, Bedford, for appellant.
    Jennings, Montgomery & Dies, Graham, Worsham, Forsythe & Sampels, and John P. Pinkerton, Dallas, for appellee.
   OPINION

SPURLOCK, Justice.

This is an appeal from a summary judgment granted defendant, Texas Utilities Fuel Company, in a suit brought by Roadrunner Investments, Inc., in which it seeks a permanent injunction prohibiting continuing trespass upon its property and an order for the defendant to remove its pipeline from plaintiff’s property. Plaintiff contends, among other things, that defendant is a naked trespasser upon its property.

Plaintiff contends that the defendant has constructed a pipeline across its property outside of an easement claimed by defendant. Thus, one of its contentions is that the defendant, to the extent that its pipeline lies outside the boundary of the easement, is a trespasser.

We reverse and remand.

Roadrunner Investments, Inc., will be referred to as Roadrunner, and Texas Utilities Fuel Company will be referred to as TUFCO.

Roadrunner, in its petition, makes numerous contentions. Among them is the assertion that TUFCO is not a public utility, did not take Roadrunner’s property for public use, does not regularly supply the public with a commodity or service, is a private enterprise, and the taking of Roadrunner’s property violates Article 1, Section 17, of the Texas Constitution, because the acts of TUFCO constitute an unlawful invasion and appropriation of and trespass upon Roadrunner’s property in violation of the above section of the Constitution.

TUFCO, in its answer, denies it has trespassed upon Roadrunner’s property and contends that it has the right to use the right-of-way on which it has constructed a pipeline because of condemnation proceedings pending in this same court.

By way of “Conditional Cross-Petition” TUFCO states that its pipeline is not within the boundaries of the easement which it acquired through condemnation proceedings in Cause No. 12280, then TUFCO says it is entitled to condemn an additional easement in the cause now before this Court so that the pipeline it has heretofore constructed on the property will be within the new easement it is now seeking by way of cross-petition so that TUFCO would not then be trespassing upon Roadrunner’s property. The summary judgment did not dispose of the cause of action asserted in this cross-petition.

TUFCO’s summary judgment proof consists of various affidavits to the effect that TUFCO is chartered as a public utility and is authorized to build and operate pipelines for the purpose of transmitting natural gas and is therefore, by existing statutes, authorized to condemn property to carry out its purpose. The affidavits reflect that TUFCO purchases gas from producers and transmits it to electric utility companies. In the spring and fall of each year when the demand for gas is low it stores the gas in underground reservoirs to be withdrawn and used during periods of time when there is a peak load demand, when a pipeline may have erupted, and during other emergencies.

TUFCO’s summary judgment proof reflects that it had filed a petition in Cause No. 12280 seeking an easement across Roadrunner’s property, commissioners were appointed, Roadrunner was served with notice of hearing, the special commissioners awarded damages, the amount awarded was paid into the registry of the court. Therefore, TUFCO is entitled to immediate possession of the easement. Thereafter TUFCO filed an amended petition in that cause seeking a new easement that would encompass the pipeline it had theretofore constructed across Roadrunner’s property. That cause is now pending in the same trial court from which this Cause No. 12304 has been appealed to this Court.

Roadrunner’s summary judgment proof consists of an affidavit by its President stating that TUFCO is a naked trespasser upon Roadrunner’s property.

TUFCO contends that Roadrunner’s points of error should be overruled because they are indefinite and too general to comply with Rule 418, T.R.C.P.

In Malooly Brothers, Inc. v. Napier, 461 S.W.2d 119 (Tex.Sup., 1970) the Supreme Court ruled that the simple statement, “THE TRIAL COURT ERRED IN GRANTING THE MOTION FOR SUMMARY JUDGMENT” is sufficient to comply with Rule 418, T.R.C.P. This interpretation of Rule 418 requires this Court to consider arguments as to all possible grounds upon which summary judgment should have been denied.

Roadrunner in its statement, argument and authorities asserts the trial court erred in granting the summary judgment because TUFCO invaded and trespassed upon un-condemned land-owned and possessed by Roadrunner. It further contends that TUFCO did not negative the fact that it is a naked trespasser upon Roadrunner’s land and therefore failed to meet movant’s burden of proof.

In Gibbs v. General Motors Corporation, 450 S.W.2d 827, 828 (Tex.Sup., 1970) that court stated: “. . . the question on appeal, as well as in the trial court, is not whether the summary judgment proof raises fact issues with reference to the essential elements of a plaintiff’s claim or cause of action, but is whether the summary judgment proof establishes as a matter of law that there is no genuine issue of fact as to one or more of the essential elements of the plaintiff’s cause of action.” See also Great American R. Ins. Co. v. San Antonio PL Sup. Co., 391 S.W.2d 41 (Tex.Sup., 1965).

Most of the summary judgment proof offered by Roadrunner cannot be considered by this Court because in the main it consists of hearsay, conclusions of law, sworn pleadings, and statements of what Roadrunner expects to prove. Ordinarily, pleadings, even if sworn, cannot be considered as summary judgment evidence. Hidalgo v. Surety Savings and Loan Association, 462 S.W.2d 540 (Tex.Sup., 1971).

However, by sifting through Roadrunner’s summary judgment proof it appears that Roadrunner has raised the issue of trespass upon its property. TUFCO’s summary judgment proof did not negate the contested issue of whether TUFCO is trespassing upon Roadrunner’s property.

To be entitled to a summary judgment in this case it was essential that TUF-CO establish as a matter of law that the pipeline it had constructed was located entirely within the easement it was entitled to use by reason of the previous condemnation action instituted by it.

It is our opinion that TUFCO, as movant, failed to sustain its burden of proof as above indicated, and for that reason was not entitled to summary judgment.

This point of error is sustained.

Judgment is reversed and remanded.


text:
    Clarence C. BURNETT, Individually and as Representative of the C & G Trust and Estate of Gladys C. Burnett, Deceased, Appellant, v. The FIRST NATIONAL BANK OF WACO, TEXAS, Appellee.
    No. 4867.
    Court of Civil Appeals of Texas, Eastland.
    April 15, 1976.
    Rehearing Denied May 13, 1976.

      Jack N. Price, Price & Williams, Austin, for appellant.
    Minor L. Helm, Jr., Waco, for appellee.
   RALEIGH BROWN, Justice.

The First National Bank of Waco, Texas, sued Clarence C. Burnett, individually, and as representative of the C & G Trust and Estate of Gladys C. Burnett, deceased. The suit was predicated on Burnett’s guarantees to the bank on debts incurred by C & G Trust of which the bank served as trustee. Burnett filed a counterclaim against the bank alleging the bank had failed to properly discharge its duties as trustee of the C & G Trust. Robert and Clarence E. Burnett, sons of Clarence C. and Gladys Burnett, intervened individually and on behalf of their children who were the ultimate beneficiaries of the C & G Trust asserting a like cause of action as alleged by Clarence Burnett in his counterclaim. The trial court directed a verdict in favor of the bank and entered judgment for $452,884.75 plus attorney’s fees of $45,288.84 together with interest on the attorney’s fees at the rate of 6% per annum from August 26, 1974, and with interest on $28,464.43 at the rate of 7% per annum from August 26,1974, and interest on $424,420.32 at the rate of 8% per annum from August 26, 1974. The judgment further authorized foreclosure of the bank’s security interest in 11,017 shares of common stock in Franklin Life Insurance Company. Clarence C. Burnett, the inter-venors and cross-plaintiffs were denied any relief. Clarence C. Burnett individually and as representative of the C & G Trust and the Estate of Gladys C. Burnett, deceased, appeals. No appeal bond was filed on behalf of any other party. We affirm.

The appellant presents sixteen points of error. Six of the points were not properly perfected. The remaining points urge two matters: (1) a challenge to the court’s action with reference to the bank’s claim against Burnett on his guarantees and his defenses thereto and (2) Burnett’s claim against the bank as trustee for its failure to properly perform its duties as trustee of the C'& G Trust.

The C & G Trust, established October 20, 1964, was a revocable trust at all times in question. It was created by legally competent adult grantors, Clarence C. and Gladys C. Burnett, dealing with community property with themselves as lifetime beneficiaries. Gladys Burnett died in 1971 and her interest vested in an irrevocable trust with her grandchildren as beneficiaries. The First National Bank of Waco was trustee. The Trust borrowed money from the bank and loaned and advanced money to entities owned and controlled by Clarence Burnett or persons associated with him. Loans were made by C & G Trust to Fidelity Finance Company, to an oil venture operated by the JPG Oil Company, to the M & B Development Company, to Wayne McKeth-an, and to Rudy Spell.

Fidelity Finance Company was a corporation in which Clarence Burnett was Secretary-Treasurer and owned one-third of its stock. Ed Burnett, a son of Clarence C. Burnett, was a director and owner of one-third of the stock. Rudy Spell, the President of the corporation, owned the remaining stock.

M & B Development Company is a land development corporation of which Clarence Burnett was President. Clarence C. and his son, Ed, are stockholders and Wayne McKethan was a business associate in the company.

Clarence C. Burnett had an interest in the oil venture operated by JPG Oil Company. He was a successful businessman having been in the insurance business for many years, being a C.L.U. Burnett had dealt in oil and gas, real estate, finance companies, and had served as a director of a bank for over twenty years. By instrument dated April 27, 1967, Burnett guaranteed “the payment of indebtedness now existing or hereafter incurred by C & G Trust to The First National Bank of Waco, Texas, . This guaranty shall be without limitation as to amount, and shall be effective until written notice is delivered to the Trustee, to the effect that the undersigned, C. C. Burnett is no longer connected with the business enterprises being financed by said trust, . ” No such notice was furnished the trustee.

The powers granted the trustee by the trust instrument were broad and specifically granted the trustee the power to deal with the First National Bank of Waco, to borrow money from said bank and to give such security as it may deem appropriate with respect to the loans.

Burnett contends the bank, as trustee, is liable to him, as beneficiary, for making loans to Fidelity Finance Company and to the JPG oil venture. He argues the bank failed to perform its discretionary functions as trustee because it did not exercise its own judgment before making the loans. We disagree.

The following is found in 128 A.L.R. 6 (1940):

“It is a well-established rule in the law of trusts, that a beneficiary may, by his consent, acquiescence, or ratification, be estopped to complain of' a breach of trust by the trustee. In other words it would seem that the principles of estoppel apply to cestuis que trust just as fully as to persons in other relationships . .”

See also Murphy-Bolanz Land & Loan Co. v. McKibben, 236 S.W. 78 (Tex.Com.App.1922, jdgmt. adopted).

The rule has support in the Restatement of the Law of Trusts § 216 and § 218 (2nd ed., 1959):

“§ 216. Consent of Beneficiary
(1) Except as stated in Subsections (2) and (3), a beneficiary cannot hold the trustee liable for an act or omission of the trustee as a breach of trust if the beneficiary prior to or at the time of the act or omission consented to it.
(2) The consent of the beneficiary does not preclude him from holding the trustee liable for a breach of trust, if
(a) the beneficiary was under an incapacity at the time of such consent or of such act or omission; or
(b) the beneficiary, when he gave his consent, did not know of his rights and of the material facts which the trustee knew or should have known and which the trustee did not reasonably believe that the beneficiary knew; or
(c) the consent of the beneficiary was induced by improper conduct of the trustee.
(3) Where the trustee has an adverse interest in the transaction, the consent of the beneficiary does not preclude him from holding the trustee liable for a breach of trust not only under the circumstances stated in Subsection (2), but also if the transaction to which the beneficiary consented involved a bargain which was not fair and reasonable.”
“§ 218. Discharge of Liability by Subsequent Affirmance
(1) Except as stated in Subsection (2), if the trustee in breach of trust enters into a transaction which the beneficiary can at his option reject or affirm, and the beneficiary affirms the transaction, he cannot thereafter reject it and hold the trustee liable for any loss occurring after the trustee entered into the transaction.
(2) The affirmance of a transaction by the beneficiary does not preclude him from holding the trustee liable for a breach of trust, if at the time of the affirmance
(a) the beneficiary was under an incapacity; or
(b) the beneficiary did not know of his rights and of the material facts which the trustee knew or should have known and which the trustee did not reasonably believe that the beneficiary knew; or
(c) the affirmance was induced by improper conduct of the trustee; or
(d) the transaction involved a bargain with the trustee which was not fair and reasonable.”

Art. 7425b-23, Y.A.C.S. (1960) provides similarly:

“Power of beneficiary
Any beneficiary of a trust affected by this Act may, if of full legal capacity and acting upon full information, by written instrument délivered to the trustee, relieve the trustee as to such beneficiary from any or all of the duties, restrictions, responsibilities and liabilities which would otherwise be imposed on the trustee by this Act, including the release of the trustee from any or all liability to such beneficiary for past violations of any of the provisions of the Act, except as to the duties, restrictions, and liabilities imposed on corporate trustees by Sections 10, 11, and 12 herein. Acts 1943, 48th Leg. p. 232, ch. 148 § 23.”

The court in Slay v. Burnett Trust, 143 Tex. 621, 187 S.W.2d 377 (1945) said:

“. . . the established rule is that while a beneficiary’s consent to an act of his trustee which would constitute a violation of the duty of loyalty precludes him from holding the trustee liable for the consequences of the act, the beneficiary is not precluded from holding the trustee unless it is made to appear that when he gave his consent the beneficiary had full knowledge of all the material facts which the trustee knew. In re Trusteeship of Stone, 138 Ohio St. 293, 34 N.E.2d 755, 134 A.L.R. 1306; Scott’s The Law of Trusts, Vol. 2, pp. 1149-1153, Sec. 216; Restatement of the Law of Trusts, Vol. 1, pp. 609-619, Sec. 216.”

The evidence conclusively establishes Clarence C. Burnett was at no time during the period in question under a disability. He was an adult beneficiary of a revocable trust. Letters and instruments delivered to the bank by Burnett established his consent, acquiescence, ratification, and/or release of the acts of the trustee in making the loans to Fidelity Finance and to the JPG oil venture. The points of error are overruled.

Appellant further contends the trial court erred in rendering judgment in favor of the bank because the evidence raised issues of fact as to the gross negligence and constructive fraud of the bank in failing to (1) preserve, collect, and apply the proceeds of notes representing loans by Fidelity Finance, assigned to the bank as collateral security for loans to the C & G Trust, to the indebtedness of the C & G Trust to the bank; (2) in failing to ascertain that the necessary assignment of leasehold interest had been obtained by the JPG Oil Company prior to advancing $50,000 loaned to JPG Oil Company by the bank as trustee of the C & G Trust in September and November of 1966; and (3) as trustee of the C & G Trust, in obtaining loans from the bank, as creditor, for the purpose of making advances to Fidelity Finance from and after July 13, 1966. We disagree.

Considering all the evidence in the light most favorable to Burnett and indulging every reasonable inference from the evidence in Burnett’s favor, we find no evidence the bank, as trustee, failed to disclose full information to Burnett regarding its handling of all the questioned loans; nor is there evidence that the bank misrepresented anything to Burnett with respect to its handling of the loans; nor is there any evidence of wilful, deliberate conduct on the part of the bank, as trustee, to constitute gross negligence. Anderson v. Moore, 448 S.W.2d 105 (Tex.1969); Seideneck v. Cal Bayreuther Associates, 451 S.W.2d 752 (Tex.1970); Triangle Motors of Dallas v. Richmond, 152 Tex. 354, 258 S.W.2d 60 (1953).

We overrule appellant’s contention the trial court erred in rendering judgment for the bank because the transfer of the M & B, McKethan, and Spell notes by the bank as trustee of the C & G Trust to the Burnett Trust which it also served as trustee was illegal and in direct violation of the Texas Trust Act. This argument is founded on the provisions of Art. 7425b-13, V.A. C.S. (1960) which states:

“Trustee selling from one trust to another trust
A trustee shall not as trustee of one trust sell property to another trust estate of which it is trustee, except bonds, notes, bills and other obligations issued, or fully guaranteed as to both principal and interest, by the United States of America, which may be so sold and transferred by the trustee, from one trust estate to another, at the current market price. Acts 1943, 48th Leg. p. 232, ch. 148 § 13.”

Article 7425b-22, V.A.C.S. (1960) provides:

“Power of trustor
The trustor of any trust affected by this Act may, by provisions in the instrument creating the trust, or by an amendment of the trust if the trustor reserved the power to amend the trust, relieve his trustee from any or all of the duties, restrictions, and liabilities which would otherwise be imposed upon him by this Act; or alter or deny to his trustee any or all of the privileges and powers conferred upon the trustee by this Act; or add duties, restrictions, liabilities, privileges, or powers to those imposed or granted by this Act; but no act of the trustor shall relieve a corporate trustee from the duties, restrictions, and liabilities imposed upon it by Sections 10, 11, and 12 of this Act. Acts 1943, 48th Leg. p. 232, ch. 148 § 22.”

The trust agreement gave the trustee full power “to sell, exchange, partition, convey, dispose of, invest and reinvest said trust estate upon such terms as to it may be deemed advisable.” The trustee also “is hereby granted, full and complete general right, power and authority to do and perform any and all acts necessary or convenient in the handling of the trust property, and in the administration of the trust estate, and in carrying out the powers granted to the Trustee, and to execute any and all instruments or documents necessary or convenient in connection therewith, to the same extent as if the Trustee were the owner of the full fee simple title to the trust property, it being understood that the enumeration of specific powers in any part of this instrument shall not be construed to limit the general authority hereby granted to the Trustee.” The trustee was given specific power to deal with The First National Bank of Waco. The instruments also provide “the Trustee shall have authority to make loans or investments without any restrictions and at its sole judgment and discretion.”

The trust instrument relieved the trustee of any restrictions on investment. This is permitted by Section 22 except as to Sections 10, 11, and 12. Therefore, Section 13 is not controlling. There was no violation of the Texas Trust Act by the trustee in the transfer of the notes.

Burnett urges the trial court erred in rendering judgment in favor of the bank because the evidence raised fact issues as to misrepresentations by the bank to him at and prior to the execution of the guarantees and/or indemnities of September 27, 1966, and April 27, 1967. He contends the following misrepresentations were made:' (1) the bank was performing its discretionary functions in the discharge of its duties as trustee of the C & G Trust; (2) the nature of the performance of loans by Fidelity Finance Company which were pledged to the bank as collateral for the repayment of loans by the bank to the C & G Trust; and (3) the bank’s intention to rely solely upon such guarantees and/or indemnities, and not on the prudence of the investments by the bank as trustee of the C & G Trust in making loans and advances, as creditor, to the C & G Trust.

Such arguments challenge the trial court’s action in denying Burnett’s defensive theory of fraud in the inducement of the guarantees and/or indemnities of September 27, 1966, and April 27, 1967. There are no contentions of accident or mistake.

The trial court having instructed a verdict in favor of the bank, there must be no evidence having probative force upon which a jury could have made a finding in favor of Burnett. Anderson v. Moore, 448 S.W.2d 105 (Tex.1969). To make this determination all evidence must be considered in the light most favorable to Burnett and every reasonable inference deducible from the evidence is to be indulged in his favor. Seideneck v. Cal Bayreuther Associates, 451 S.W.2d 752 (Tex.1970); Triangle Motors of Dallas v. Richmond, 152 Tex. 354, 258 S.W.2d 60 (1953).

Burnett gave the only testimony in support of his position. He testified as follows:

“Well, Mr. Harrison whom I had known and been doing business with for many, many years, called me and told me that the Examiners had been here examining the thing and he said they are — they have consolidated your personal loan. At that time I owed this Bank quite a lot of money, personally, for which I had Franklin Life stock pledged as collateral; that was what my stock was pledged for as collateral for my personal loan and my son had some money borrowed here. Well, he told me that the Bank Examiners had lumped all of my personal loans, the loans of my sons and the loans to the C & G Turst into one ball of wax and that it threw me to be well over their legal limit. And he said, ‘Now we can handle that part of it but we’re going to have to have your guarantee of the loans made to the C & G Trust.’ And I said, ‘Mr. Harrison, that wasn’t the purpose of my setting up the Trust. My purpose was to get away from the personal liability and to put the responsibility for management on the Trust,’ and I said, ‘This doesn’t strike me as being the right thing to do.’ And he said, ‘Well, now, Clarence,’ he said, ‘We didn’t think that they would throw these loans all together but they have and that has created the problem.’ And, he said, ‘If you don’t do that we are going to have to call in all of these loans of Fidelity Finance,’ and he said, ‘That would be a shame because you’re doing so well, Fidelity Finance is doing so well.’ He said, ‘You think about it and call me back or go over and see Mr. Dennis in a few days.’ . . . But when I talked to Mr. Dennis about this situation and about what Mr. Harrison had said to me, Mr. Dennis assured me that there wasn’t anything wrong, that this was a beautiful operation and that it was simply to satisfy the Examiners.”

His testimony regarding the execution of the April 27, 1967, instrument was:

“Q Do you recall the circumstances under which it was executed?
A Yes. Mr. Burleson called me and wanted me to come by his office and when I did he handed this four or five page deal over to me and said, ‘Now we’ve got to satisfy the Examiners and you need to sign this,’ more or less clarifying how we are operating and maybe he said something about in case of my death, why, they’d want it for the record, you know, how this thing was to be handled. Actually, he didn’t call it a guarantee or I wasn’t really thinking of it as a guarantee at the time that I signed it although it had some representation in it to that effect

Burnett as stockholder, director, and Secretary-Treasurer of Fidelity Finance who signed the monthly reports furnished the bank as to Fidelity’s financial condition was aware of its conditions.

Fraud is an affirmative defense. The court in Oilwell Division, United States Steel Corporation v. Fryer, 493 S.W.2d 487 (Tex.1973) said:

“The authorities announce the general rule that to constitute actionable fraud it must appear: (1) That a material representation was made; (2) that it was false; (3) that, when the speaker made it, he knew it was false or made it recklessly without any knowledge of its truth and as a positive assertion; (4) that he made it with the intention that it should be acted upon by the party; (5) that the party acted in reliance upon it; and (6) that he thereby suffered injury . Each of these elements must be established, . . . and the absence of any one of them will prevent a recovery .” (emphasis added)

There is no evidence of any false representations by the bank of any material fact either as to how it was performing its functions as trustee, or the nature of the performance of loans by Fidelity pledged to the bank or that the bank relied solely on the guarantees. The points of error are overruled.

We overrule Burnett’s complaint that the trial court erred in denying his recovery of the shares of Franklin Life Insurance Company stock. He argues the undisputed evidence shows the stock was pledged and accepted only as collateral for his personal loans which were paid at the time Burnett demanded return of the stock.

The collateral agreement dated June 1, 1970, which was received in evidence without objection and no claim that the instrument was ambiguous provided in part:

“The Undersigned, for a valuable consideration, agree with THE FIRST NATIONAL BANK OF WACO, TEXAS, as follows:
For the purpose of securing said Bank in the payment of all indebtedness now owing to it or which may hereafter become owing to it by the undersigned or by
C. O. BURNETT
or by any or all of such parties, the undersigned hereby pledge, transfer and deliver to said Bank the following securities, to-wit:
11,017 Shares Franklin Life Insurance Co. The undersigned further agree with said Bank as follows:
That any and all securities or other property heretofore, now or hereafter pledged or delivered by any of the undersigned to said Bank to secure any indebtedness to said Bank, shall be held and construed to be pledged hereunder and as if fully described herein, and may be held by said Bank as security for any and all debts and obligations of any or all of undersigned to said Bank for the payment of money, whether such debts, liabilities and obligations now exist or are hereafter incurred or else and whether the obligation or liability thereon of the undersigned or any of them be direct, contingent, primary, secondary, joint, several, joint and several, or otherwise, and whether such obligations be of the same character or different . .

The language was the same as contained in a collateral agreement interpreted by the court in Moore v. First National Bank of Abilene, 345 F.2d 638 (5 Cir. 1965). In the Moore case, Estes had given a note to the bank and executed a separate collateral agreement covering various stocks. Subsequently, First National of Abilene obtained from First National of Pecos certain notes signed by another person and endorsed by Estes. On default, the stock was sold and the monies received were applied both to the direct obligation of Estes and the obligations on which he was secondarily liable. The court said:

“Two questions are presented on this appeal. First, the substantive question of whether the broad language of the Collateral Agreement was properly interpreted to include the debts of Estes as surety on the Dingier notes. It is difficult to conceive how more inclusive language could have been used, and in view of the pattern of dealings between the parties we are of the opinion that the determination of the District Judge was clearly correct.”

Burnett argues the trial court erred in failing to dismiss or abate the bank’s cause of action on the guarantees and/or indemnities because the bank failed to make C & G Trust a party defendant or involuntary plaintiff. He contends the bank’s action against him should have been abated until judgment had been obtained against the C & G Trust and all collateral pledged by the trust to secure the repayment of the loans by the bank was collected and applied to the indebtedness of the trust to the bank.

Burnett did not file a motion for new trial which is a necessary prerequisite to a consideration of the matters stated in Rule 325, T.R.C.P. The rule provides:

“In cases of motions for continuance, or for change of venue, or other preliminary motions made and filed in the progress of the cause, the rulings of the court thereon shall be considered as acquiesced in, unless complained of in the motion for new trial; and the judge may recite in his order disposing of the motion for new trial the grounds of such ruling. Nothing in Rule 324 shall render a motion for new trial unnecessary in the instances mentioned in this Rule nor in instances of newly discovered evidence, misconduct, fraud or the like.”

In analyzing other preliminary motions to which Rule 325 refers, the court in City of Roma v. Starr County, 428 S.W.2d 851 (Tex.Civ.App.—San Antonio 1968, writ ref. n. r. e.) said:

“The language of Rule 325 falls into a familiar pattern. It consists of an enumeration wherein general words follow specific terms. The specific terms are ‘motion for continuance’ and motions ‘for change of venue,’ followed by the general words ‘other preliminary motions.’ The specific words refer not only to preliminary motions, but to preliminary motions of a certain class . . . The specific terms are descriptive of preliminary maneuvers which result in the entry of an order which is interlocutory, rather than final, in the sense that no appeal lies therefrom in the absence of special provisions authorizing an appeal seeking appellate review of such order prior to the rendition of a final judgment. In accordance with a well recognized canon of construction which, while it rests purely on form, has been frequently applied, in such a situation the general terms will be construed to embrace only things similar in nature to those enumerated by the preceding specific terms ... If the general language of Rule 325 is restricted to motions of the same class as those specifically enumerated, the Rule does not apply to a ‘preliminary’ ruling which terminates the litigation . .

These complaints of Burnett are to preliminary rulings of the court which would not terminate the litigation. The points of error were not properly perfected in a motion for new trial. They are overruled. City of Corpus Christi v. Gregg, 155 Tex. 537, 289 S.W.2d 746 (1956); Miller v. Riata Cadillac Company, 517 S.W.2d 773 (Tex.1974); Goldring v. Goldring, 523 S.W.2d 749 (Tex.Civ.App.—Fort Worth, 1975, writ dism’d).

Burnett contends the trial court erred in failing to submit any issues inquiring whether the bank delegated the performance of its discretionary functions as trustee of the C & G Trust to another and whether the bank’s action, as creditor, prejudiced and wasted collateral given as security for loans by the bank to the Trust.

Rule 324, T.R.C.P., provides in part: “In all cases tried in the county or district court, where parties desire to appeal from a judgment of the trial court, a motion for new trial shall be filed as a prerequisite to appeal; provided that neither a motion for new trial nor an assignment therein shall be a prerequisite to the right to complain on appeal of the action of the court in giving a peremptory instruction, or in withdrawing the case from the jury and rendering judgment, or in rendering or refusing to render judgment non ob-stante veredicto or notwithstanding the finding of the jury on one or more special issues, or in overruling a motion for judgment on the verdict made by the party who becomes appellant; . .

Chief Justice McCloud said in Spillman v. City of Dallas, 535 S.W.2d 717 (Tex.Civ.App.—Eastland, 1976):

“Where the court, in a jury case, grants an instructed verdict and an appeal is taken without filing a motion for new trial, the appellant is limited on appeal to a complaint that the court erred in granting the instructed verdict.
In Wagner v. Foster, 161 Tex. 333, 341 S.W.2d 887 (1960), the court said:
‘The case was tried to a jury, and the first question to be decided is whether respondents-appellants were required by the Rules of Civil Procedure to file a motion for new trial and to preserve the error complained of . .’
‘While trial court action denying a motion for judgment non obstante vere-dicto would seem, under the literal wording of Rule 324, to eliminate altogether the necessity for filing a motion for new trial as a prerequisite to appeal, except as to the matters designated in Rule 325, it was not so intended and it has not been and should not be so construed . . . The purpose of the quoted provision of Rule 324 as it relates to a party whose motion non obstante veredicto is denied is to authorize appeal on the grounds stated in the motion without the necessity of incorporating the grounds in a motion for new trial. It was not the purpose of that language to eliminate the necessity for complaining in a motion for new trial of other errors committed on the trial. A party whose motion for judgment non obstante veredicto is denied may forego the filing of a motion for new trial and predicate his points of error on appeal on the matters included in such motion. If he follows that course, he may complain on appeal only of the denial of the motion non obstan-te veredicto . . .’ (emphasis added)”

The complaints of the trial court’s failure to submit the requested issues were not assigned as error in a motion for new trial. They are overruled. Goldring v. Goldring, supra.

We have considered and overruled all points of error.

The judgment of the trial court is affirmed.

      . Letter dated July 13, 1966. Plaintiffs exhibit 7:
      “The First National Bank of Waco
      P.O. Box 950
      Waco, Texas
      Gentlemen:
      Re: C & G Trust U/A
      By agreement dated October 20, 1964, your bank accepted the duties of Trustee of a revocable trust executed by C. C. and Gladys Burnett for the benefit of grantors.
      The purpose of this trust is to create a reasonable to high current rate of income for the beneficiaries, and the assets will mainly consist of stocks, real estate and loans obtained or negotiated for by C. C. Burnett. Such loans from the trust will usually be to individuals associated with Mr. Burnett or to corporations in which he has a substantial interest.
      Accordingly, this letter authorizes you, as Trustee of the C and G Trust U/A to make loans to the Fidelity Finance Company, the M and B Development Company and individuals associated with each of these companies. No maximum limit is to be placed on such loans so long as C. C. Burnett is associated with the companies, and C. C. Burnett hereby agrees to hold the bank, individually and as trustee, harmless from any and all liability which might arise because of the aforementioned loans or other similar loans hereinafter made. This indemnity shall be binding on the heirs, legal representatives and assigns of C. C. Burnett.
      /s/ C. C. Burnett
      C. C. Burnett”
      Plaintiffs exhibit 8:
      “The First National Bank of Waco, Texas,
      Trustee
      Gentlemen:
      Loan by you, as Trustee of the ‘C & G’ Trust, to JPG Oil Company is satisfactory to me, and I absolve the trust and the Trustee of any liability or loss by virtue of the making of said loan and the collection thereof.
      /s/ Clarence C. Burnett
      Clarence C. Burnett”
      Letter dated April 4, 1967. Plaintiffs exhibit 9:
      “Mr. C. C. Burnett
      1216 Austin
      Waco, Texas
      Dear Mr. Burnett:
      This letter shall constitute an understanding and agreement between the undersigned, C. C. Burnett, and The First National Bank of Waco, Texas, Trustee, with reference to the past, present and future administration of C & G Trust, and shall restate, reaffirm and clarify the liability of the undersigned, C. C. Burnett, under the guaranty executed by him under date of July 13, 1966, and under the terms and provisions of this agreement.
      1.
      The Trust Indenture executed by Clarence C. Burnett and wife, Gladys C. Burnett, as ‘Grantors’ and The First National Bank of Waco, Texas, Trustee, by which the C & G Trust was created, which said Trust Indenture is dated October 20, 1964, and all of the right, power and authority, together with all duties, liabilities and responsibilities therein granted and imposed, are hereby expressly ratified and confirmed, and shall be interpreted in accordance with the memorandum executed by the undersigned, C. C. Burnett, and directed to The First National Bank of Waco, Texas under date of February 2, 1965.
      2.
      The assets constituting the corpus or principal of the C & G Trust, as of the date of this agreement, consist of the following: 1312 shares Franklin Life Insurance Company common stock
      833 shares Transamerica Corporation common stock
      Advancements made to Fidelity Finance Company — $203,181.00
      JPG Oil Company note dated August 13, 1966, in original amount of $30,000, bearing interest at 7% per annum, payable on or before four years from date, interest payable semi-annually, principal balance $27,500.
      J P G Oil Company note dated November 11, 1966, in original principal amount of $25,000, payable in monthly installments of $425 each, plus interest, at 7% per annum, payable semiannually, balance due $25,000.
      JPG Oil Company note dated September 20, 1966, in original principal amount of $25,000, payable on or before four years after date, interest at 7% per annum, payable monthly, principal balance due $23,888.
      Wayne W. McKethan note dated February 4, 1966, in original principal amount of $10,000, payable on or before three years after date and bearing 8% interest; renewed and increased to the amount of $12,500 by new note dated April 4, 1966; principal balance due $12,500.
      M & B Development Company note dated December 30, 1966, in the amount of $1,000, bearing interest at 8% per annum and payable December 30, 1967, principal balance due $1,000.
      Carl R. Spell note dated June 28, 1965 in the amount of $10,771.22, due on demand and bearing interest payable annually at 8% per annum, principal balance due $10,771.22.
      Wallace and Naomi McKethan note dated May 5, 1965, in the principal amount of $12,500, payable on or before three years after date and bearing interest at 8⅛% per annum, payable semi-annually, principal balance due $12,500. The Franklin Life Insurance Company stock and Transamerica Corporation stock listed above as assets of the C & G Trust constitute contributions from the Grantors of said trust. All notes listed above as assets of C & G Trust were made with the express knowledge, consent and approval of the undersigned, C. C. Burnett, and at his express or implied direction. The security for the payment of said notes has been expressly approved by the undersigned, C. C. Burnett, and the retention of said notes as assets of said trust is hereby expressly ratified, confirmed and approved.
      It is understood and agreed that the notes of Fidelity Finance Company are recorded as long term notes of said company, but in truth and in fact, at the request, understanding and direction of the undersigned, C. C. Burnett, these obligations constitute cash advances made to Fidelity Finance, and are not represented by notes, for business reasons. The Trustee is authorized to continue to make such cash advances, at the request of Carl R. Spell, and may either designate such advances as ‘long term notes’ or as cash advances, or in any other manner which will properly identify such advancements.
      3.
      The liabilities of C & G Trust, as of the date of this agreement, are as follows:
      Note to The First National Bank of Waco, Texas in the amount of $50,000, bearing interest at 6½% per annum, payable March 31, 1967, and note to The First National Bank of Waco, Texas in the principal amount of $30,000, bearing interest at &h% per annum, due and payable May 17, 1967, the two notes aggregating $80,-000 principal amount, and representing money borrowed to make loans to JPG Oil Company.
      Note to The First National Bank of Waco, Texas in the amount of $10,771.22, bearing interest at 6'⅛% per annum, due and payable June 28, 1967, and representing money borrowed for the purpose of making loan to Carl R. Spell.
      Note to The First National Bank of Waco, Texas in the principal amount of $12,500, bearing interest at 6'/2% per annum, due and payable May 5, 1967, and representing money borrowed for the purpose of making a loan to Wallace McKethan.
      Note to The First National Bank of Waco, Texas, in the amount of $12,500, bearing interest at 6⅝% per annum, and due and payable May 7, 1967, representing money borrowed for the purpose of making loan to Wayne McKethan. Various notes to The First National Bank of Waco, Texas, aggregating principal amount of $171,335.02, bearing interest at 6⅛% per an-num, and due and payable at various dates within six months from the date hereof, representing money borrowed for the purpose of making advancements to Fidelity Finance Company.
      All of the notes listed above have been made with the express or implied knowledge and consent of the undersigned, C. C. Burnett, and the actions of the Trustee in creating said obligations of the trust are hereby authorized, ratified and confirmed. Such borrowings have been for legitimate business purposes of the trust and are authorized by the Trust Indenture creating the trust, and the memorandum executed by C. C. Burnett dated February 2, 1965.
      4.
      The Trustee of C & G Trust is hereby authorized to continue making loans and cash advances for the purpose for which the loans listed in the assets of the C & G Trust were made, and to continue to borrow money from The First National Bank of Waco, Texas for the purpose for which the liabilities of C & G Trust, above enumerated, were created.
      The undersigned, C. C. Burnett, hereby agrees to indemnify and hold the Trustee harmless from any liability or responsibility accruing to it by reason of making these specific loans enumerated herein as assets of C & G Trust, or borrowing money from the First National Bank of Waco, Texas for the uses and purposes, or similar uses and purposes, for which the specific loans listed as liabilities of C & G Trust were made.
      Furthermore, the undersigned, C. C. Burnett, for himself, his heirs, executors, administrators and personal representatives, hereby guarantees the payment of indebtedness now existing or hereafter incurred by C & G Trust to The First National Bank of Waco, Texas, whether such indebtedness is or shall be represented by note, guaranty, surety, or otherwise. This guaranty shall be without limitation as to amount, and shall be effective until written notice is delivered to the Trustee, to the effect that the undersigned, C. C. Burnett, is no longer connected with the business enterprises being financed by said trust, but such notice shall not affect the liability of the guaranty accruing prior to the delivery of said notice.
      If this letter sets forth the understanding and agreement between the parties, please execute a copy of the letter provided for your signature, and this letter will constitute a contract and agreement between the parties, and an addendum to the original Trust Indenture and the memorandum dated February 2, 1965.
      Yours very truly,
      THE FIRST NATIONAL BANK OF WACO, TEXAS, Trustee,
      C & G Trust
      Bv/s/ E. B. Burleson
      Vice President
      AGREED this 27 day of April, 1967.
      /s/ C. C. Burnett
      C. C. Burnett”
      Letter dated April 28, 1967. Plaintiff’s exhibit 10.
      “The First National Bank of Waco, Trustee Waco, Texas
      Gentlemen:
      In connection with the loans made by you, as Trustee of the ‘C & G Trust’, to the JPG Oil Company, upon my authorization, I hereby ratify and approve the acts of the Trustee in the making of said loans and the taking of security therefor, and in foreclosing liens on the property of JPG Oil Company by Trustee’s sale or, if tendered, by accepting a deed from Paul Goldsmith of 15/128ths undivided operating interest in the Rousseau Gas Unit in lieu of Trustee’s deed for a l/8th interest therein. If said deed is tendered and accepted, I authorize you to release this lien pertaining to Dr. Paul Goldsmith.
      You will recall that at the time the JPG Oil Company executed certain Deeds of Trust to the First National Bank of Waco, Texas, Trustee of the C & G Trust it was understood that JPG Oil Company had sold or assigned certain interests to various individuals including myself to obtain working capital for the operation of JPG Oil Company. Some of these assignments had been duly executed and placed of record and others had not and it was agreed that when these assignments had been completed and recorded that they would be released from the Deeds of Trust executed by JPG Oil Company. In other words, it was known at the time of the execution of the Deeds of Trust that JPG Oil Company did not own 100% of the interest covered by the Deeds of Trust.
      Consequently, I also authorize you to deliver partial releases of the deed of trust lien executed by JPG Oil Company covering individual interests heretofore assigned by the JPG Oil Company, as per copies of releases attached hereto. I will indemnify the Bank, as Trustee, or otherwise, against any losses, claims or expenses in connection with the making of said loans, the collection and foreclosure thereof, and the operation of the interests received, by foreclosure or otherwise from the JPG Oil Company and Dr. Paul Goldsmith.
      Yours very truly,
      /s/ Clarence C. Burnett
      Clarence Burnett”