author: WARREN, Justice.

text:
    FDIC, receiver of Franklin Bank, Appellant, v. AMERICAN HOME ASSURANCE COMPANY, Appellee.
    No. 17295.
    Court of Civil Appeals of Texas, Houston (1st Dist.).
    April 19, 1979.
    Rehearing Denied June 28, 1979.

      Strasburger & Price, Frank L. Skillern, Jr., Royal H. Brin, Jr., Duncan L. Clore, Dallas, for appellant.
    Woodard, Hall & Primm, Robert A. Hall, Bruce Powers, Houston, for appellee.
    Before EVANS, WARREN and WALLACE, JJ.
   WARREN, Justice.

Federal Deposit Insurance Corporation, Receiver of Franklin Bank, appeals from a declaratory judgment entered on a jury finding that American Home Assurance Company, appellee, had not refused to renew a policy of insurance.

In April, 1972, appellee issued to Franklin Bank a Directors and Officers Liability and Company Reimbursement Policy which according to its terms expired at 12:00 noon, Central Standard Time, on April 3,1975. A renewal application was submitted to the secretary of the bank, Marion Cook, approximately 30 to 45 days prior to the expiration of the policy. At that time, Mr. Cook stated the renewal application would be completed promptly. Thereafter, Mr. Cook was reminded, on more than one occasion, to complete the renewal application but failed to do so.

On March 24, 1975, Franklin Bank closed and was placed in the hands of the Banking Commissioner of the State of Texas, who appointed the Federal Deposit Insurance Corporation (FDIC) receiver.

On April 3, 1975, at approximately 10:45 AM., Central Standard Time, the Receiver discovered that the policy was about to expire. Shortly before 11:00 A.M., Central Standard Time, an attorney for the Receiver telephoned the home office of appellee and talked with Brian Samway. Mr. Sam-way was advised that the bank was in receivership and that claims existed under the policy. The attorney requested the policy be renewed. It is disputed whether American Home was orally advised that if renewal was refused then the receiver elected to exercise the option under paragraph 8(a) of the policy to extend the discovery period. It is undisputed, however, that American Home was advised of the Receiver’s election by telegraph sent and received on the same day.

Paragraph 8(a) of the policy reads as follows:

In the Insurer shall cancel or refuse to renew this policy, the Insureds shall have the right, upon payment of the additional premium of 25% of the three year premium hereunder, to an extention [sic] of the insurance granted by this policy in respect of a claim or claims which may be made against the Insureds, during the period of twelve months, after the date of such cancellation or non-renewal, but only in respect of any Wrongful Act committed before the date of such cancellation or non-renewal.

On April 9, 1975, American Home notified the Receiver that coverage by extending the discovery period under paragraph 8(a) was not available because the policy expired as a result of the actions of the insureds, and not as a result of any action by the insurer. It is American Home’s position that it did not have sufficient time or information, prior to the expiration of the policy, to make an underwriting determination because of the late request and the failure to submit the renewal application. American Home also contends that once the policy expired it was under no obligation to give the renewal request further consideration.

The following issue was submitted to the jury:

“Do you find from a preponderance of the evidence that American Home refused to renew the insurance policy involved in this case.” The jury found that American Home had not refused to renew the policy. Based upon this finding, the trial court entered a take nothing judgment and overruled the Receiver’s motion for judgment notwithstanding the verdict.

The Receiver appeals, asserting that American Home refused to renew the insurance policy as a matter of law. We sustain this point of error.

A judgment notwithstanding the verdict is authorized only when a directed verdict would have been proper. Eubanks v. Winn, 420 S.W.2d 698 (Tex.1967). A jury’s answer to a special issue may be disregarded only when it has no support in the evidence or when the issue is immaterial. C & R Transport, Inc. v. Campbell, 406 S.W.2d 191 (Tex.1966),

Under a directors and officers liability and company reimbursement policy the insurer is liable only for those acts or omissions which occurred and were discovered during the policy period. Stated0 simply, if an officer or director was guilty of conduct during the policy period which gave rise to a claim, but which was not discovered until after the policy expired, then the insurer would have no obligation under the policy. For this reason, the option to extend the discovery period is extremely valuable.

In the instant case, the contract was printed on a standard form prepared by American Home. It is firmly established that ambiguities in contracts are to be construed against the drafter. It is also firmly established that policies of insurance are interpreted and construed liberally in favor of the insured and strictly against the insurer. Vernon v. Aetna Life Ins. Co., 301 F.2d 86 (5th Cir., 1962); Providence Washington Insurance Co. v. Proffitt, 150 Tex. 207, 239 S.W.2d 379 (Tex.1951).

Considering the nature of the contract and the plain meaning of the language used, there is no doubt that the parties intended that the insured would have the option of either renewing the policy or extending the discovery period for one year. In the instant case, the policy only implicitly required a demand for renewal and, therefore, did not prescribe the manner in which or the time by which the demand be made. If American Home had desired to limit either the manner, mode or time of the renewal request, this could have been expressly stated in its standard form contract. For these reasons, the unequivocal oral request for renewal was sufficient as a matter of law.

The issues then become whether American Home was compelled to either accept or reject the renewal request, and whether American Home’s refusal to give the renewal request consideration after the expiration of the policy constituted a refusal to renew as a matter of law. We answer both questions in the affirmative.

As discussed, the option to extend the discovery period was a valuable contract right dependent upon the decision of American Home to either accept or reject the renewal request. It is well established that an optioner may not commit any act or omit to perform any duty which is calculated to impede, delay or otherwise frustrate the exercise of the option. Colligan v. Smith, 366 S.W.2d 816 (Tex.Civ.App. — Fort Worth, 1963, writ ref’d n. r. e.).

American Home was placed under a duty to either accept or refuse the renewal request. American Home could not defeat the right to exercise this valuable option by simply remaining silent and refusing to act. If American Home did not have sufficient time or information to evaluate the request, then American Home was under a duty to refuse the request for these reasons. By failing to do so, American Home refused to renew the policy as a matter of law.

Because of our holding that American Home refused to renew the policy as a matter of law, it is unnecessary to review the sufficiency of the evidence or the adequacy of the special issue and instruction submitted to the jury.

American Home by cross-assignment of error urges that it was entitled to an instructed verdict because the receiver failed to introduce evidence that it had authority to renew the policy of insurance.

It is the primary duty of a receiver to preserve the assets under its control. “Upon the acceptance of the appointment of receiver on liquidation by said Corporation (FDIC), the possession of and title to all the assets, business and property of such banking institution of every kind and nature shall pass to and vest in said Corporation . . . Tex.Rev.Civ.Stat.Ann. art. 489b, § 7 (Vernon 1973).

Given the exigent circumstances existing in this case, the Receiver had the right to request that the policy be renewed or the discovery period extended. This was a right purchased by appellant’s predecessor in interest in 1972 which appellant had a duty to protect. In Thompson v. Phenix Insurance Co., 136 U.S. 287, 10 S.Ct. 1019, 34 L.Ed. 408 (1890), the United States Supreme Court held that “a receiver under exigent circumstances may act without court approval to preserve the property in his custody and that an insurer is without standing to challenge the authority of the receiver to procure insurance without court approval.”

Appellee’s Counterpoint is overruled.

The judgment is reversed and rendered.

ON MOTION FOR REHEARING

On motion for rehearing, appellee urges that the court of civil appeals had no jurisdiction to render judgment for appellant because there was no justiciable controversy to be considered by the trial court. Appellee argues that since it had no duty to defend under the insurance policy in question, the mere pendency of a claim or suit against an officer or director would not present a justiciable controversy and one would arise only if a judgment was recovered against one of the covered officers or directors. In support of this contention, appellee cites Central Surety & Ins. Corp. v. Anderson, 445 S.W.2d 514 (Tex.1969), and other cases wherein declaratory judgments were brought to determine the insurer’s obligation to defend and its liability to pay any judgments recovered against the insured. The courts have held in these cases that the issue as to whether there was a duty to defend was a justiciable one, but a judgment declaring that insurer would be obligated to pay any judgment rendered against the insured was an advisory opinion prohibited by the Constitution.

We have no such issue before us; our issue being whether under an existing policy of insurance, the insureds’ successor in interest had a legal right to renew the policy or extend the period for which the insured could discover claims which would be covered under the existing policy. This right in issue (the right to renew or extend the discovery period) or lack of such right, existed at the termination date of the policy.

The other points urged by appellee having previously been considered and discussed in the original opinion, the motion for rehearing is overruled.


source: Caselaw Access Project

author: EVANS, Justice.

license: Public Domain

text:
    Leon G. WOOD, Jr., and Pullman, Inc., Appellants, v. Dona Dale WOOD, Appellee.
    No. 17383.
    Court of Civil Appeals of Texas, Houston (1st Dist.).
    May 10, 1979.
    Rehearing Denied July 12, 1979.
    Albert S. Low, Jr., Robert E. Morse, Jr.; Alison L. Smith, Vinson & Elkins, Houston, for appellants.
    Nell H. Holloway, Dow, Cogburn & Friedman, Mitchell Ehrlich, Andrew C. Brown, Houston, for appellee.
   EVANS, Justice.

This is an appeal from a temporary order entered December 11, 1978, in a divorce action requiring the husband’s employer to pay over to a court appointed receiver all of the husband’s wages accruing during the pendency of the action.

In her original petition filed on May 25, 1978, the appellee alleged that her husband was temporarily stationed in Saudi Arabia where he was employed by Kellogg Saudi Arabia, Ltd., a subsidiary of Pullman, Inc. On May 30,1978, the appellee filed a motion for substituted service, and on the basis of that petition, the trial court entered an order authorizing service “by any disinterested adult”, but without naming the person authorized to effect such service. On May 31, 1978, an individual named Kenneth Gray served a copy of the original petition and notice of show cause on the appellant, and a return of such service was subsequently filed in the proceedings on June 1, 1978.

On July 10, 1978, a show cause hearing was held in the matter, but only the appel-lee and her attorney appeared. The trial court then entered a temporary order dated July 17, 1978, appointing Barvin & Lewis Company as receiver to manage the parties’ real estate; ordering the appellant to pay to the appellee, as temporary alimony, the sum of $2,000.00 each month pending further order of the court; and temporarily enjoining the parties from disposing of their properties.

On July 26, 1978, the appellant filed his original answer in the proceedings and also filed a motion to set aside the temporary orders on the ground that he had not been afforded notice of the show cause hearing. It does not appear that such motion was ever heard by the trial court.

On October 2, 1978, the appellee filed her first supplemental petition naming as additional parties defendant, Baksh Pullman Kellogg and Pullman Kellogg, divisions of Pullman, Inc. Both such defendants timely filed their answers.

On November 27, 1978, a hearing was held which resulted in the entry of the temporary order of December 11, 1978. In this order, the trial eourt found that the receiver did not have sufficient funds to properly manage the parties’ real estate and that there were funds available, in excess of those needed for the parties’ ordinary living expenses, which the receiver could use for such purposes. The trial court entered a mandatory injunction, effective until final hearing of the cause, commanding the defendant, Pullman, Inc., to pay over to the receiver, pending further order of the court, all monies due and owing, or to become due and owing to the appellant, during the pendency of the action. The trial court’s order further instructed the receiver to disburse such funds according to the following priority: first, to pay the amounts required to discharge certain mortgage indebtedness and taxes due against the real properties; second, to use the funds received from Pullman, Inc., to pay the sum of $2,000.00 monthly to the appellee and the sum of $300.00 monthly to the appellant; and, third, to hold any and all other monies received from Pullman, Inc., pending further order of the court.

The appellant Leon G. Wood, Jr., and his employer, the appellant Pullman, Inc., both appeal from this order.

This court has jurisdiction to consider appeals from interlocutory orders only where authorized by rule or by statute. Johnson Radiological Group v. Medina, 566 S.W.2d 117 (Tex.Civ.App. [14th Dist.] 1978, writ dism’d as moot). Therefore, this court has jurisdiction to hear the appeal from the order in question only insofar as it grants injunctive relief, Rule 385(d) Tex.R.Civ.P. or pertains to the appointment of the receiver. Article 2250, Tex.Rev.Civ.Stat.Ann. (1971).

This court may review that portion of an order which is appealable and refuse to consider that portion which is non-ap-pealable. Martin v. Martin, 519 S.W.2d 900 (Tex.Civ.App,-Houston [1st Dist.] 1975).

The appellants first contend that the trial court’s injunctive order is void because it is tantamount to a garnishment of the husband’s wages in contravention of Article 16, § 28, Texas Constitution and Article 4099 Tex.Rev.Civ.Stat.Ann. (1966). This point will be sustained. Although the order is in the form of' a temporary injunction, this court will look through both form and procedure to determine its true nature.

The record shows that Mr. Wood’s salary was approximately $4,000.00 per month, and the temporary order requires approximately one-half of that amount to be disbursed monthly by the receiver to the ap-pellee as temporary alimony. Thus, the temporary injunction order becomes, in actuality, a device for the collection of the husband’s wages from his employer to use in the payment of temporary alimony to the appellee. This constitutes an illegal garnishment of the husband’s wages. Prewitt v. Smith, 528 S.W.2d 893 (Tex.Civ.App.-Austin 1975, no writ).

The appellant, Leon G. Wood, Jr., also contends that the order in question should be set aside because the prior temporary order appointing the receiver is void for want of personal jurisdiction. He argues that he was not served with citation and notice with respect to the hearing at which the receiver was appointed and, therefore, was not afforded due process.

The appellant, Wood, did not appeal from the order appointing the receiver nor does it appear from the record that the ruling of the trial court was obtained on his motion to vacate the order of appointment. Subsequent to the order of appointment, the appellant, Wood, entered his appearance in the case, and the record reflects that he was given notice of the hearing on the order in question.

This court is granted statutory authority to review an appeal from an interlocutory order appointing a receiver or overruling a motion to vacate an order appointing a receiver. Article 2250 Tex. Rev. Civ.Stat.Ann. Other interlocutory orders pertaining to the receivership proceedings are not appealable in the absence of express statutory authority. Adams v. Impey, 131 S.W.2d 288 (Tex.Civ.App.-Beaumont 1939, no writ). This court, is therefore, without jurisdiction to review the order in question except to the extent that it grants injunc-tive relief.

The trial court’s temporary injunctive order entered December 11,1978 commanding the appellant, Pullman, Inc., to pay over to the receiver monies due and owing to the appellant, Leon G. Wood, Jr., is set aside and the cause is remanded to the trial court for further proceedings consistent with this opinion.

WALLACE and WARREN, JJ., also sitting.


author: DOYLE, Justice.

text:
    JOE T. PRESSWOOD, INC. and Joe Presswood Co., Inc., Appellants, v. HOUSTON INDUSTRIAL WELDING SCHOOL, INC., Appellee.
    No. 17312.
    Court of Civil Appeals of Texas, Houston (1st Dist.).
    May 17, 1979.
    Rehearing Denied July 19, 1979.

      Clark, Lowes & Carrithers, C. Ed Carrith-ers, Houston, for appellants.
    Charles M. Burdeaux, Houston, for appel-lee.
   DOYLE, Justice.

Appellant, Joe T. Presswood, individually and Joe T. Presswood Company, Inc., appeals from a judgment rendered in favor of appellee, Houston Industrial Welding School.

In 1976, appellant, who is an auctioneer, entered into a written contract with appel-lee to sell personal property belonging to appellee at a public auction. The merchandise to be sold included welding machines, machine shop equipment, office equipment and furniture. The gross proceeds of the sale were $59,405.50. Of this total, $5,084.00 was not collected, which amount represented a bad check written by one John Davies to pay for merchandise purchased at the auction.

Immediately following the auction, appellant accepted Davies’ check and authorized delivery of his purchased goods. Davies accepted delivery of the goods except for 42 cans of welding rods totaling an amount of $945.00 which was included in the total price of $5,084.00.

After Davies’ check was dishonored at the bank, appellant recovered all of the goods delivered to Davies, except for six items totaling a price of $840.00, Appellant offered to return said goods to appellee, but it refused to accept them. Appellee filed suit against appellant to recover the full amount of the $5,084.00 Davies' check with interest from November 9, 1976. Appellant answered by denying liability and filed a cross-action against appellee to recover reasonable storage fees for the items recovered and held in its possession from date of tender.

Trial was to the court and judgment was rendered against appellant in the amount of $4,067.89 with interest at 9% per annum from date of judgment until paid. The court in arriving at the judgment, deducted from the bad check amount of $5,084.00, the $945.00 for the 42 cans of welding rods which never left' appellee’s possession; deducted appellant’s 9% commission from the $4,139.00 amount; and then added 6% interest for 16 months on the $3,766.49 total, making a judgment total of $4,067.89. The court also found that $35.00 per month was reasonable compensation for storage of said goods, but denied appellant recovery for such storage fees. The court further ordered appellee to transfer title of said goods to appellant in order that the goods could be sold to mitigate appellant’s loss resulting from the judgment. The court filed findings of fact and conclusions of law.

Appellant sets forth sixteen points of error, the first four of which complain that the trial court erred in finding that the parties entered into an oral contract whereby the appellant agreed to sell appellee’s goods for cash or checks with a letter of credit. Appellant also complains of the court’s conclusions that appellant breached the contract for sale of property by public auction by accepting an out-of-town check from John Davies and allowing the property to be taken away from the sale premises without a release. The trial court concluded that the appellant was negligent in accepting a check for payment of the goods without a bank letter of credit. This, appellant contends, was also error. These four points of error are based on the factual insufficiency of the evidence. Hence, we shall consider the entire record in passing upon them. In re King’s Estate, 150 Tex. 662, 244 S.W.2d 660 (1951). Calvert, “No Evidence” Points of Error, 38 Tex.L.Rev. 361 (1960). These points address the duty of the appellant under the contract with appellee.

An examination of the contract entered into between appellant and appellee on October 12, 1976, shows that appellant is authorized to act on behalf of appellee and that he will receive a 9% commission on the total gross sales. Said contract also authorized him to promote and advertise the auction, but the contract is silent as to check collections or guarantees of bad checks. The question arises as to whether parol testimony is admissible to clarify the handling of checks in the process of selling appellee’s property. In 23 Tex.Jur.2d 502 Evidence Sec. 342 (1961), page 503 the general rule is set out as follows:

In brief, the extrinsic evidence rule ordinarily requires the exclusion of parol evidence of prior or contemporaneous negotiations, conversations, representations, or statements that would add to or vary the terms of written agreements that are clear on their face.

However, in Hubacek v. Ennis State Bank, 159 Tex. 166, 317 S.W.2d 30 (1958), the Texas Supreme Court allowed an oral agreement to be admitted into evidence by parol testimony in order that holders of a note would know how they were to apply the first note payments. Therein it was stated:

the facts and circumstances surrounding the transaction pointed to the probability of the agreement . . . The collateral agreement in this case is one which might naturally have been made by parties situated as were petitioner and respondent. The proof shows that the Citizens National Bank had similar agreements with six other automobile dealers.

Under the facts presented by the case before us, the trial court properly admitted parol evidence of testimony pertaining to oral representations clarifying the procedures for handling checks in the auction of appellee’s property, since a vital point to be determined was who would assume such responsibility for any bad checks tendered.

Testimony elicited at the trial showed that H. W. Darrow Sr. and Brian Jenkins, representatives of appellee, stated that appellant orally represented that he would assume responsibility for all checks. When asked what appellant had stated when the matter of accepting checks was discussed, these answers followed:

“(Mr. Darrow) A. I said, “You assured me several times that you’d check with the bank, that you wouldn’t release anything until the man’s check had been cleared, and if it was bad, ‘you still got your equipment because we don’t let him haul if off,’ said ‘when you get that release from me, I got two men stationed at your place, they are going to deliver the goods that was bought. Before they deliver them they have a slip from me okaying it. When you get that, they know that the check’s then good, everthing’s been paid. We don’t issue them unless we do that.’ ”
“(Mr. Jenkins) A. As I recall, the question was put to Mr. Presswood at the time of our initial meeting with him: What protection we, Houston Industrial Welding School had at the time of the auction against possibly someone buying something and failing to pay for it. He told us that all parties at the auction would have to have a letter of credit before they would accept a check from them, so that we were protected; and he also told us, at the time the auction was conducted, as the parties came to pick up the things that they had bought, he would authorize us to release these items to them, let them physically take them from the premises. That was another thing. That was protection for us. That they would have time to check out this person’s purchasing check, to make sure that it was good, prior to the time they released the items.”

Appellant by his testimony admits responsibility by stating:

“A. They agreed. They said that— I — in approaching anyone with having an auction sale, of course, we try to tell them that we accept the responsibility of collecting the funds.”

Further, appellant in advertising this auction recited in his brochure:

“Terms: Company or Personal Check will be accepted with Bank Letter of Credit.”

Appellant contends, however, that these terms are not to be literally construed, but only to scare off insolvent purchasers. He states that he uses MIE to protect against bad checks and requires identification, but not a bank letter of credit. He further explains that while he does accept responsibility for collecting funds, that in his thirteen years in the auction business he has never guaranteed checks at auction sales and that it is a customary practice and procedure for auctioneers not to guarantee checks of purchasers at auction sales. Notwithstanding such avowals, it clearly appears that appellee was led to believe that appellant would be responsible for the clearance of any check tendered for the purchase of its merchandise. By his oral representations, printed brochures and his policy of not releasing goods until any check given therefor had been honored, appellant set a standard of care for himself and his auction company which revealed that he was cognizant of the grave consequences that could result from dishonored checks. Appellee contends that appellant was negligent in not complying with his outlined standard of care with regards to collecting checks and that such negligence constituted a tortious breach of the agreement between the parties. We agree with this contention.

The legal relationship created between appellant and appellee was one of agent and principal. 7 Tex.Jur.2d Auctions and Auctioneers § 5, § 1 (1975) and 7 Am.Jur.2d Auctions and Auctioneers § 64 (1963).

As the relation between an auctioneer and one for whom he undertakes to conduct an auction is purely contractual, the nature and extent of his liability to the vendor depend in each instance upon the terms of the particular contract existing between them . . . . He is also personally responsible for any loss that is a consequence of his negligence — that is, failure to use ordinary care and skill in the performance of the duties confided in him. 7 Am.Jur.2d, supra at 276.

The record reveals that the appellant had been an auctioneer for about thirteen years and had encountered the bad check situation before in his business. Adherence to the standard of care which he proclaimed to the appellee, would have avoided the consequences herein involved. In Van Velzer v. Houston Land & Trust Co., 16 S.W.2d 865 (Tex.Civ.App.-Beaumont 1929 no writ) the court discussed negligence of an agent against his principal.

Ordinary care was the measure of duty owed by defendant to plaintiff in looking after and protecting the property from injury. The inquiry is whether the negligent act of defendant alleged by plaintiff, if true, was the proximate cause of plaintiff’s damages. The general rule is that, in order to constitute the proximate cause of an injury or damage, the damage must be the natural and probable result of the negligent act or omission and that it ought to have been foreseen in the light of the attending circumstances (citations omitted).

The trial court, after listing supportive findings of fact, made these conclusions of law:

1. Defendants breached the agreement by accepting an out-of-town check which had not been cleared by the bank on which it was written.
2. Defendants breached the agreement by allowing the goods, (except the welding rods) to be taken away from the premises without a release.
3. Defendants were negligent in the manner in which they breached the agreement, which negligence was a proximate cause of Plaintiff’s damage.
4. Plaintiff is entitled to interest in the amount of 6% from the date of the sale for 16 months on the amount of $3766.49 or $301.40.
5. Plaintiff was not obligated to accept the partial list of goods from Defendant which had been retrieved from Davies loaded with expenses of recovery and storage.

We find the evidence sufficient to support findings 1, 2 and 3 above and accordingly overrule appellant’s first four points of error.

In view of our opinion on the issue of negligence, we hold appellant’s points of error five through eight to be without merit. They jointly complain of the trial court’s errors in concluding that appellee was not obligated to accept the tender of a part of the merchandise recovered; that appellant was not entitled to recover storage charges; and that title to the goods in question passed from appellee to appellant. If appellant had sold the property to a solvent buyer, or had required a bank letter, or had withheld any release of the goods until the buyer’s check had cleared, there would have been no need to tender back any goods; no question of title; and no problem of storage space. These occurrences were foreseeable consequences of appellant’s negligence and the trial court did not err in finding these points against him.

Appellant cites buyer-seller statutes in his argument, but agent-principal rules apply in this instance and the agent is responsible for damages to the principal’s property. Van Velzer v. Houston Land & Trust Co., supra.

Appellant further states he is entitled to recover storage fees under the equitable remedy of quantum meruit.

In Colbert v. Dallas Joint Stock Land Bank, 129 Tex. 235, 102 S.W.2d 1031, the court listed two prerequisites to recover under the theory of quantum meruit.

It is based upon the promise implied by law to pay for beneficial services rendered and knowingly accepted. 5 C.J. p. 1389, § 21; 28 R.C.L. pp. 668, 669, Sec. 3, 4. . The right is founded upon the rule that it would be inequitable for one who has accepted the services of another to refuse to pay for them. 10 Tex. Jur. p. 412 § 238.

Our case is clearly distinguishable from the Colbert case relied upon by appellant. In Colbert a realty broker had secured a buyer for the defendant’s land; the sale had been made; and the defendant refused to pay the realty broker (Colbert). The Texas Supreme Court reversed both the district court and the court of civil appeals and remanded on the grounds that the case was tried on a contract theory rather than on quantum meruit which the evidence tended to support. The claim for storage fees, in the case before us, arose as a direct result of appellant’s negligence based upon a contract with appellee, which the trial court found that appellant breached to ap-pellee’s damage. The trial court was correct in denying the storage claim.

The remaining points of error by appellant principally submit that the trial court erred by applying the wrong measure of damages. These points are overruled.

Appellant specifically claims that he owes appellee only for the items not recovered, and not the amount of profit from the sale as made. We do not agree with this contention. Upon a finding that the contract involved has been tortiously breached, “Lost profits properly constitute an element of damages in actions for breach of contract and also in actions to recover damages for a tort.” 17 Tex.Jur.2d Damages Sec. 137 (1960) p. 203 and the cases therein cited. Further, where there is a finding that negligence is the proximate cause of the damages claimed, and damages are awarded, they are measured by “ . . . the value thereof at the time and place immediately before and immediately after the injury, with legal interest . .” Chase Bag Co. v. Langoria, 45 S.W.2d 242 (Tex.Civ.App.-Waco 1931, writ dism’d). Once appellee had established its entitlement to damages with interest, such interest was payable from the date of the wrongful detention of its money by appellant, i. e., from and after November 9, 1976, a period of 16 months. Since interest may be awarded for wrongful detention of money, we find no error in the trial court’s award. Riverside, Inc. v. Gulf States Utilities Company, 289 S.W.2d 945 (Tex.Civ. App.-Beaumont 1956, writ ref’d n. r. e.).

The appellant’s contention that the trial court found that title to the goods in question-passed from appellee to appellant is not supported by the record. Neither the findings of fact, the conclusions of law, nor the judgment reveal any such determination by the court. Appellant is correct in stating that he would be liable for conversion if he sold property for which he did not have legal title. Anderson v. King, 370 S.W.2d 775 (Tex.Civ.App.-Texarkana 1963, no writ). In the case at bar, however, the judgment recites plaintiff must “do any act or give any title necessary or cooperate in any way needful for the defendant to dispose of the property . . . .” All other points of error presented in complaint of the judgment have been considered and are overruled.

The judgment of the trial court is affirmed.

EVANS and WARREN, JJ., also sitting.


author: PEDEN, Justice.

text:
    ROYLEX, INC., Appellant, v. LANGSON BROS. CONSTRUCTION CO., INC., Don K. Langson, Richard K. Langson, Bruce K. Langson and Fidelity and Deposit Company of Maryland, Appellees.
    No. 17328.
    Court of Civil Appeals of Texas, Houston (1st Dist.).
    May 17, 1979.
    Rehearing Denied July 12, 1979.

      George M. Bishop, Houston, for appellant.
    Bailey & Black, David B. Black, Fulbright & Jaworski, William L. Maynard, Houston, for appellees.
   PEDEN, Justice.

Roylex, Inc. (Roylex) appeals from a judgment denying recovery against individual defendants and awarding Roylex a recovery of $10,764.26 against only Langson Brothers Construction Co., Inc. (Langson, Inc.) plus attorney’s fees. Roylex alleges that the trial court erred in failing to award prejudgment and post-judgment interest, in failing to find that Langson, Inc. was the alter ego of the three Langson brothers, and in entering summary judgment in favor of Fidelity and Deposit Company. On crosspoint, the appellees assert that Roy-lex’s cause of action was barred by limitations. We amend to provide prejudgment interest and affirm.

On June 21, 1973, Langson, Inc. and Roy-lex entered into a construction contract on a project known as Pool & Patio Town-homes (Townhomes). Roylex was to supply the material and labor necessary to lay concrete for a street, Boardwalk Lane, curb and lane markers and curb inlets, the preparation for the street, and the hauling away of dirt. On August 20, 1973, the parties entered into a second contract for flat concrete work on the Garden Homes project, and they had entered into an oral contract on August 8, 1973, for concrete work on the Townhomes.

Mr. Royce Teel, president of Roylex, explained that while there were only two written contracts and two projects, there were the three “jobs” mentioned above. The only job not paid for is the construction of Boardwalk Lane under the June 21 contract, and by amendments filed as the trial began, Roylex sued on that contract alone, admitting that payment had been received on the other agreements theretofore sued upon.

Mr. Teel testified that each time concrete was poured, the yardage was measured and a draw or bill was sent by Roylex. Mrs. Teel, the bookkeeper for Roylex, stated that on September 21, 1973, the date of completion, $18,030.61 was owed to Roylex on the Townhomes project and $164.20 on the Garden Homes project. When Roylex received a check for Garden Homes in the amount of $7,266.35 in October, Mrs. Teel credited $164.20 of it to the Garden Homes project and the remainder to Townhomes. When asked why she had credited to Townhomes more than seven thousand dollars from a check that was marked for Garden Homes, she replied:

Well, I had to put it somewhere. Well, I — because it said — it said Garden Homes, but they — so I credited the rest of it to the other job, because that’s the only place to put it.

The only testimony offered by the Langsons was a small portion from a deposition.

Roylex’s first two points of error complain of the trial court’s failure to award prejudgment and post-judgment interest on its recovery. Roylex contends that since this is a suit on a written contract, it is entitled to the statutory prejudgment interest rate of 6% as provided by Article 5069-1.03, Vernon’s Texas Civil Statutes. The Langsons point out that because of the confused state of Roylex’s pleadings, Langson did not know until the time of trial which contract was being sued upon or what amount Roylex was claiming.

It is the general rule in Texas that prejudgment interest cannot be allowed eo nomine (under that name) unless provided for by contract or statute. There are instances, however, where the courts have not been consistent or rigid in applying the rule in a manner that would deny a party legal compensation for the use or detention of his money. Phillips Petroleum Co. v. Stahl Petroleum, 569 S.W.2d 480 (Tex.1978).

“Interest” is defined as “the compensation allowed by law for the use of forebearance or detention of money.” Article 5069-1.01(a) Vernon’s Tex.Civ.Stat. (1971). Where a written contract is silent as to rate of interest the law provides that “interest at the rate of six percent per annum shall be allowed on all written contracts ascertaining the sum payable, from and after the time when the sum is due and payable.’'1 Article 5069-1.03 (1971).

In our case, the contract in question called for payment of $29,500. It provided that Roylex would submit a payment schedule to Langson, Inc. for its approval. Ten percent of the total contract price was to be deducted before the calculation of any progress payments, with the 10% to be due and payable 45 days after completion of the contract. In addition, the contract provided that payment was to be made as follows: 30% when steel was installed, 60% when concrete was installed and 10% upon completion. The payment procedure outlined in this contract is one that is commonly employed. At any given stage of the contract not only the project’s progress but also the obligor’s payment liabilities can be readily ascertained. Clearly, Langson, Inc. was furnished the means of ascertaining with reasonable certainty the extent of its liability. It is true that there was some confusion as to whether the payments were credited to the correct accounts, but the only questionable bookkeeping entry did not adversely affect Langson, Inc.

The Texas Supreme Court has twice ruled since entry of judgment in our case that prejudgment interest may be awarded under Art. 5069-1.03 if a plaintiff proves a written contract ascertaining a sum payable on a date certain. Phillips Petroleum Co. v. Stahl Petroleum Co., supra; Republic National Bank v. Northwest National Bank, 578 S.W.2d 109 (1978).

We sustain the appellant’s first point.

As to the lack of a specific award in the judgment of 9% post-judgment interest, “[a]ll judgments of the courts of this State shall bear interest at the rate of nine percent per annum from and after the date of the judgment.” Article 5069-1.05 Tex.Rev. Civ.Stat.Ann. (Supp.1975). The award of $10,764.26 plus attorney’s fee bears interest at the rate of 9% even though the judgment is silent as to post-judgment interest. See Broadway Drug Store of Galveston, Inc. v. Trowbridge, 435 S.W.2d 268 (Tex.Civ.App. 1968, no writ).

Points of error 3, 4, 7, 8, and 9 concern the theory of alter ego. Roylex maintains that Don K. Langson, Bruce K. Langson, and Richard K. Langson treated Langson, Inc. as their alter ego and that the trial court erred in refusing to submit a special issue and an instruction on alter ego. The court expressly stated in the judgment that “[n]o evidence exists nor was any presented which would support plaintiff’s assertion of an alter ego ground of recovery against the LANGSON BROTHERS, Individually or in their partnership capacity.”

“Courts will not disregard the corporation fiction and hold individual officers, directors or stockholders liable on the obligations of a corporation except where it appears that the individuals are using the corporate entity as a sham to perpetrate a fraud, to avoid personal liability, avoid the effect of a statute, or in a few other exceptional situations.” Pace Corp. v. Jackson, 155 Tex. 179, 284 S.W.2d 340, 351 (1955). Generally, the corporate form will be disregarded (1) where it is used as a means for perpetrating fraud; (2) where the corporation is organized and operated as the mere tool or business conduit of another corporation; (3) where resort is made to the corporate fiction in order to avoid an existing legal obligation; (4) where the corporate form is used to achieve or perpetuate monopoly; (5) where the corporate structure is used as a vehicle for circumventing a statute; or (6) where the fiction is invoked in order to protect crime or justify wrong. Sutton v. Reagan & Gee, 405 S.W.2d 828, 837 (Tex.Civ.App.1966, writ ref. n. r. e.); Pacific American Gasoline Co. of Texas v. Miller, 76 S.W.2d 833 (Tex.Civ.App.1934, writ ref.). “Whether or not a shareholder will be insulated from personal liability should depend on the use or misuse which that shareholder is making of the corporate form. The only shareholders who should be held personally liable are those who have used the corporation to bring about results which are condemned by the general statements of public policy which are enunciated by the courts as ‘rules’ which determine whether the courts will recognize their own child.” Sutton v. Reagan & Gee, supra.

Texas courts emphasize failure to follow corporate formalities in deciding whether to impose shareholder liability. Those acts or misuses which may cause a court to “pierce the corporate veil” include the commencement of business without the issuance of shares, a lack of shareholder meetings or directors’ meetings or of the signing of consents, the making of decisions by shareholders as if they were partners, failure to distinguish between corporate property and personal property, use of corporate funds to pay personal expenses without proper accounting, or failure to maintain complete corporate and financial records. There seems to be little reason to punish errant shareholders unless their actions are directed toward defrauding another party. Hamilton, Business Organizations, 19 Texas Practice 233, § 234.

We hold that the evidence in our case does not raise the issue of alter ego. The only evidence offered showed that Langson, Inc. followed standard corporate procedures and policies; shares were issued; minutes were kept and meetings were held. Each brother contributed $50,000 to the capital of the corporation. There was evidence that the brothers incorporated so that the business would be eligible for larger loans. At least one of the brothers loaned money to the corporation, but it was not shown whether it was repaid. The appellant points out that it “has never sought to ground its claim of alter ego on fraud as such but on the fact that the corporation was used ... to avoid personal liability for the Langson brothers and as a vehicle for which they could have their personally owned projects paid for while attempting to avoid responsibilities for the costs incurred in improving their personally owned holdings.”

We hold that the evidence showed, rather that the payments made by the Langsons and their corporation were applied between the three contracts at the discretion of the bookkeeper for Roylex. There was no evidence of corporate misuse or of failure to follow corporate formalities, no evidence of fraud or bad faith, and no evidence to support the submission of an issue and instruction on alter ego. See Moore & Moore Drilling Co. v. White, 345 S.W.2d 550 (Tex.Civ.App.1961, writ ref. n. r. e.).

The appellant raises points of error asserting that the trial court erred in failing to render judgment against Don and Richard Langson 5) because they entered into a bond in which they agreed to be liable for double the amount of the plaintiff’s lien on the property in question plus interest, costs and attorney’s fees, and 6) based on their being principals on the bond. At trial, Roy-lex’s current pleading was amended further, and when the trial judge was considering exceptions to the bond allegations, counsel for Roylex represented to the court that those allegations were a part of its alter ego allegations. The trial judge then sustained the defendants’ special exception, ruling that any allegations in the second paragraph of § VI of the plaintiff’s petition could be considered only in connection with the alter ego allegations. The bond was not admitted in evidence and no issue concerning its effect on the alter ego allegations was raised in the trial court. We overrule the appellant’s points 5 and 6.

Points of error 10-12 concern the forfeiture of the Langson, Inc. corporate charter because of non-payment of taxes. Roylex asserts that the trial court erred in refusing to allow Teel to testify as to the state of Langson’s charter, in refusing to admit into evidence a certificate from the Secretary of State showing when the corporate charter had been forfeited, and in refusing to allow Roylex to call Langson’s attorney to the witness stand.

The certificate from the Secretary of State was offered in a bill of exception. It shows that the charter of Langson, Inc. was not forfeited until March 15,1976. The contract which Roylex is suing on was entered into almost three years earlier, on June 21, 1973, and the work done under it had long since been completed before the charter was forfeited. A forfeiture at that time did not make the shareholders or officers personally liable on the contract. The trial court did not err in excluding the evidence concerning forfeiture of the charter.

Roylex asserts in its final point of error that the trial court erred in entering summary judgment for Fidelity and Deposit Company of Maryland. (Fidelity). On January 7, 1974, Roylex filed a $5,513.64 lien on certain real property of Langson, Inc., Don K. Langson and Richard Langson for materials and labor Roylex had furnished pursuant to a construction contract. On April 25, 1974, Fidelity, as surety, delivered to Roylex a bond pursuant to the provisions of Article 5472c, V.T.C.S. Fidelity was not joined as a party to this suit until July 30,1976, two years after the bond was executed, served and recorded. Fidelity moved for summary judgment alleging that the action was barred as a matter of law by the one year statute of limitations provision of Art. 5472c § 4. Rule 31 of the Texas Rules of Civil Procedure provides that “[n]o surety shall be sued unless his principal is joined with him, or unless a judgment has previously been rendered against his principal, except in cases otherwise provided for in the law and these rules.” Roylex asserts that since Langson, Inc. was in Chapter XI bankruptcy proceedings, a suit against Fidelity was therefore stayed and the statute of limitations tolled from the time the Langson, Inc. bankruptcy action was filed on November 11, 1974, until September 17, 1976, the date the stay order was lifted. However, Art. 1987, V.T.C.S., provides that a surety may be sued without joining the principal obligor if the principal obligor is actually or notoriously insolvent. Non-join-der of the principal is permitted if an adequate excuse is alleged. Zimmerman v. Bond, 392 S.W.2d 149 (Tex.Civ.App.1965, no writ.). We overrule this point.

By cross-point, Langson, Inc., alleges that Roylex’s cause of action was barred by the statute of limitations and that the court erred in overruling its motion for judgment notwithstanding the verdict and entering judgment against it. The problem was complicated by Roylex’s having amended its pleadings substantially on three occasions.

Its original petition, filed January 2, 1974, alleged that Langson, Inc., had failed to pay for work completed on the Pool and Patio Townhomes project. This work “included preparation and construction of walks, patios, pools decks, turn-down curbs, stand-up curbs, drives, approaches, brick wall footings and steps, as well as other concrete work on the Defendant’s project.” Roylex’s first amended petition, filed July 30,1976, recited the same allegations. The second amended petition, filed January 25, 1978, asserts in addition to the allegation found in the previous petitions, “that the Defendant LANGSON BROS. CONSTRUCTION CO., INC. entered into a construction contract with the Plaintiff on or about June 21, 1973, to lay concrete for Boardwalk Lane.” At trial, Roylex’s third amended petition was further amended and the issue narrowed to non-payment on the Boardwalk contract.

Article 5539b, V.T.C.S., provides:

Whenever any pleading is filed by any party to a suit embracing any cause of action, cross-action, counterpclaim, or defense, and at the time of filing such pleading such cause of action, cross-action, counterclaim, or defense is not subject to a plea of limitation, no subsequent amendment or supplement changing any of the facts or grounds of liability or of defense shall be subject to a plea of limitation, provided such amendment or supplement is not wholly based upon and grows out of a new, distinct or different transaction and occurrence. Provided, however, when any such amendment or supplement is filed, if any new or different facts are alleged, upon application of the opposite party, the court may postpone or continue the case as justice may require.

To ascertain whether Roylex’s claim is barred by the statute of limitations, we must determine whether or not the claim in Roylex’s third amended petition is wholly-based upon and grows out of a new, distinct or different transaction and occurrence. City of Houston v. Magness, 364 S.W.2d 702 (Tex.Civ.App.1963, writ ref.). The original petition makes reference to the Pool and Patio Townhomes project. The contract sued on states that the building of Boardwalk Lane is for the Pool and Patio Town-homes project. It appears to us that the cause of action is not “wholly based upon . a new, distinct or different . occurrence.” The trial court correctly ruled that the cause of action was not barred.

The judgment of the trial court is amended to provide that the plaintiff shall recover from Langson Bros. Construction Co., Inc., prejudgment interest at the rate of 6% per annum from November 5, 1973, (45 days after completion of the contract) to the date of judgment, June 7, 1978. The judgment need not be amended to recite the award of post-judgment interest since it is provided by law. As amended, the judgment is affirmed.

COLEMAN, C. J., and WALLACE, J., also sitting.


author: WALLACE, Justice.

text:
    Russell C. WOLF, Appellant, v. LITTLE JOHN CORPORATION OF LIBERIA et al., Appellees.
    No. 17228.
    Court of Civil Appeals of Texas, Houston (1st Dist.).
    May 31, 1979.
    Rehearing Denied July 12, 1979.

      W. James Kronzer, Kronzer, Abraham & Watkins, Maurice A. Lehmann and Firman A. Hickey, Jr., Houston, for appellant.
    Bean & Manning, Jack B. Manning, Houston, for appellees.
    Before COLEMAN, C. J., and DOYLE and WALLACE, JJ.
   WALLACE, Justice.

This is an appeal in a suit on a promissory note. Trial was to a jury which answered all issues adverse to plaintiff. Prior to trial, summary judgment had been entered against Little John Corporation of Liberia.

Plaintiff herein, Russell C. Wolf, (Wolf) was holder of the subject note. The suit named Little John Corporation of Liberia, John W. Mecom (Mecom, Sr.) and John W. Mecom, Jr. (Mecom, Jr.) as defendants. Wolf alleged that Little John Corporation of Liberia was the alter ego of Mecom, Sr. and also of Mecom, Jr.; that Mecom, Sr. promised to personally pay the note when he had no intention to do so; that Mecom, Jr. failed to advise Wolf that there were two corporations named Little John Corporation, both of which were owned by Me-com, Sr., and that such failure constituted fraud. The issues submitted to the jury and answered adversely to Wolf were (1) Little John Corporation (Liberia) was the alter ego of Mecom, Sr., (2) Little John Corporation (Libera) was the alter ego of Mecom, Jr., (3) promise by Mecom, Sr., to personally pay the note, (4) Little John Corporation of Liberia was insolvent when note was executed and (5) failure of Mecom, Jr., to identify which Little John Corporation was the maker of the "note was material. The last three issues above were each the first in a series necessary to establish fraud.

Appellant assigns seven points of error. The first four are directed to the personal liability of Mecom, Jr., under Texas Business and Commerce Code. The remaining three points are directed toward the factual sufficiency of the evidence to support the jury finding on alter ego.

LIABILITY UNDER TEXAS BUSINESS AND COMMERCE CODE

The note in question was for the amount of $113,451.00, was dated June 18,1968, and signed “Little John Corporation By John W. Mecom, Jr., President.” Consideration was a personal note from Mecom, Sr., to Wolf for $50,000.00 dated January 1, 1963, and the unpaid portion of a series of notes from Pan American Industries, Inc., to Wolf in the original amount of $70,115.00. Pan American Industries, Inc., was owned by Mecom, Sr. and Wolf.

Mecom, Sr., was engaged in an effort to borrow approximately $50,000,000.00 as part of a refinancing plan for his various enterprises. Frank A. Learman was working for Mecom, Sr., as a financial consultant to structure the refinancing program. At the suggestion of Learman the note in question was prepared and executed. As part of the transaction, all of Wolf’s interest in Pan American Industries, Inc., was transferred to Mecom, Sr. There were two corporations named Little John Corporation. One was a Delaware corporation and the other was a Liberia corporation. Wolf was unaware that two corporations named “Little John Corporation” existed. The record shows that Wolf took the note with knowledge that Little John Corporation was the principal maker and Mecom, Jr., signed it in a representative capacity. Wolf contends that Mecom, Jr., is liable on the note as a matter of law under Section 3.403 of Tex. Bus. & Comm.Code. His contention is based on the premise that when there exist two principals with identical names and the note does not indicate the one intended to be named, that is equivalent to naming no principal. This is a case of first impression.

Tex.Bus. & Comm.Code, Section 3.403 states:

(a)A signature may be made by an agent or other representative, and his authority to make it may be established as in other cases of representation. No particular form of appointment is necessary to establish such authority.
(b) An authorized representative who signs his own name to an instrument
(1) is personally obligated if the instrument neither names the person represented nor shows that the representative signed in a representative capacity;
(2) except as otherwise established between the immediate parties, is personally obligated if the instrument names the person represented but does not show that the representative signed in a representative capacity, or if the instrument does not name the person represented but does show that the representative signed in a representative capacity.
(c) Except as otherwise established the name of an organization preceded or followed by the name and office of an authorized individual is a signature made in a representative capacity.

Wolf urges that section 3.403(b)(2) should be interpreted in its broadest sense in order to sustain his contention that the note in effect does not name a principal. Section 3.403(c) must also be considered in interpreting section 3.403(b)(2). When the two are considered together we find that the drafters of the code anticipated the present situation when they provided:

(c) . . . the name of an organization preceded or followed by the name of an authorized individual is a signature made in a representative capacity.

Therefore, even though there is ambiguity or confusion as to the actual identity of the principal, if the note contains the name of an organization followed by the name of an authorized individual, plus his office, there is a prima facie showing that the individual signed in a representative capacity, and is thus not personally liable on the note.

This brings us to the question of whether Mecom, Jr., was authorized to sign the note in question. He was president of both Little John Corporations. He and his two sisters were the only directors of both corporations. A resolution of the board of directors of Little John Corporation (without indicating which one) authorizing Me-com, Jr., to execute the note in question was executed by all three directors. In a separate memorandum Wolf acknowledged reading the resolution which stated that consideration to Little John Corporation for the note was credit to the corporation on a debt it owed to Mecom, Sr. This resolution and the memorandum executed by Wolf were placed in the records of Little John Corporation (Liberia). This is evidence that Mecom, Jr., was authorized to sign the note as president of Little John Corporation (Liberia). Mecom, Jr.’s lack of authority was an independent ground of recovery for Wolf. As such, Wolf had the burden of proving that Mecom, Jr., was not authorized to sign the note. No such issue was requested by Wolf and was therefore waived. Rule 279, T.R.C.P.; Wichita Falls & Oklahoma Ry. Co. v. Pepper, 134 Tex. 360, 135 S.W.2d 79 (1940); Grant v. Marshall, 154 Tex. 531, 280 S.W.2d 559 (1955).

The first three points of error are overruled.

By his point of error number four Wolf contends that Mecom, Jr., had the burden of affirmatively pleading and proving that he was not individually liable on the note. Wolf cites Seale v. Nichols, 505 S.W.2d 251 (Tex.1974), and Griffin v. Ellinger, 530 S.W.2d 329 (Tex.Civ.App.-Aus-tin, 1975) aff’d 538 S.W.2d 97 (Tex.1976), as authorities. Those cases are distinguishable from the present one.

In Seale v. Nichols the note was signed

The Fashion Beauty Salon

Carl V. Nichols (typewritten)

Carl V. Nichols (handwritten)

The note thus did not comply with section 3.403 Tex.Bus. & Comm.Code in that the office of Carl V. Nichols was not shown. The court held that to defeat personal liability Nichols was required to plead and prove that he signed in a representative capacity, and that he made that fact known to the payee at the time of signing.

In Griffin v. Ellinger, supra, the drafts in question were imprinted with the name of the corporation. Griffin signed the drafts on the regular signature line with no indication that he was signing other than as an individual. There were no words such as “By” or the name of an office as part of the signature. The supreme court stated: “an examination of the drafts does not show prima facie that appellant signed them in a representative capacity”. Appellant in that situation was thus charged with the burden of pleading and proving that the parties “otherwise established” that he was signing in a representative capacity. The note in the present case bears the name “Little John Corporation By John W. Mecom, Jr., President”. It shows prima facie that Me-com, Jr. signed in a representative capacity; it was thus Wolf’s burden to prove otherwise. The fourth point is overruled.

ALTER EGO

Wolf’s points of error number five through seven contend that the jury’s failure to find that the two Little John corporations were the alter ego of Mecom, Sr., and Mecom, Jr., were against the great weight and preponderance of the evidence.

Mecom, Sr., owned 100% of the stock of the Delaware corporation. The Delaware corporation owned 100% of the stock of the Liberia corporation. Neither corporation had a bank account or any regular employees. Neither corporation was intended to make a profit. All expenses of the corporation were paid from the personal account of Mecom, Sr. Financial records were kept of the accounts due Mecom, Sr., for monies advanced the corporations and the accounts due the corporations for work performed by Mecom, Sr. Records, including minutes of director’s meetings, were kept for the corporations. All records were kept at Mecom, Sr.’s office on West Gray Street, Houston, Texas. All record keeping was done by employees of Mecom, Sr., individually, or other corporations owned by him.

Courts will not disregard the corporate fiction and hold individual officers, directors or stockholders personally liable on the obligations of a corporation unless it appears that the individuals are using the corporate entity as a conduit for violation of important principles of public policy. Pace Corporation v. Jackson, 155 Tex. 179, 284 S.W.2d 340 (1955). Generally, the corporate form will be disregarded (1) where the corporation is used as a means for perpetuating a fraud; (2) where the corporation is organized and operating as a mere “tool” or' “business conduit” of another corporation; (3) where resort is made to the corporate fiction in order to avoid an existing legal obligation; (4) where the corporate form is used to achieve or perpetuate a monopoly; (5) where the corporate structure is used as a vehicle for circumventing a statute; or (6) where the fiction is invoked in order to protect crime or justify a wrong. Sutton v. Reagan & Gee, 405 S.W.2d 828 (Tex.Civ.App.-San Antonio 1966, writ ref’d n.r.e.); Pacific American Gasoline Co. of Texas v. Miller, 76 S.W.2d 833 (Tex.Civ. App.-Amarillo 1934, writ ref’d n.r.e.).

Those acts or misuses which will cause the court to “pierce the corporate veil” include the commencement of business without the issuance of shares, a lack of shareholder or directors meetings, failure to sign consents, decisions being made by shareholders as if they were partners, failure to distinguish between corporate property and personal property, use of corporate funds to pay personal expense without requisite proper accounting; or failure to maintain complete corporate and financial records. Hamilton, Business Organizations, Volume 19, Texas Practice, Section 234, pages 232, 233.

In the instant case requisite shareholders and directors meetings were held and records of same properly kept; shares were issued; property of the corporation was distinguished; records were kept of funds advanced to the corporation by Me-com,’ Sr., and amount due the corporation from Mecom, Sr., as a result of services performed for his benefit. This constituted evidence that the corporation was not the alter ego of Mecom, Sr., or Mecom, Jr. The jury answered these issues contrary to Wolf. The evidence was factually sufficient to support those answers. Points of error five through nine are overruled.

The judgment of the trial court is affirmed.


text:
    T. W. LYLES, H. H. Muntz, Appellant, v. Jim JOHNSON, Appellee.
    No. 17350.
    Court of Civil Appeals of Texas, Houston (1st Dist.).
    June 7, 1979.
    Rehearing Denied July 12, 1979.

      McFarland & Tondre, Van E. McFarland, Houston, for appellant.

      Loftis, Rowan, Files, Bain & Clayton, Jerry Bain and Samuel M. George, Tyler, for appellee.
    Before WARREN, DOYLE and EVANS, JJ.
   WARREN, Justice.

This is an appeal by T. W. Lyles and H. H. Muntz from a judgment entered on a jury verdict awarding Jim Johnson special and exemplary damages.

The facts of this case are particularly complicated, involving numerous transactions between the parties in their individual capacities as well as between the appellee and Rancheo, Inc., a Texas corporation, wholly owned by the parties.. Prior to November of 1971, the appellants, medical doctors, had invested in several tracts of land which they were interested in selling. An agreement was entered between the appellants and the appellee, a licensed realtor, to form a corporation for the primary purpose of investing in real property. On January 14,1971, they formed Rancheo, Inc., naming each party a director and issuing to each party one-third of the corporate stock. Thereafter, appellee became the president of the corporation and was authorized to purchase and convey realty on behalf of the corporation. As the corporation’s president, appellee received a salary of five hundred dollars per month, a car, and an expense allowance.

Shortly after the formation of the corporation, the appellants conveyed their property to it. By August of 1972, all the property which had been conveyed by the appellants had been conveyed by the corporation to other persons.

After the corporation had been formed, the appellee performed real estate services for the appellants in their individual capacities. During this period of time, an option was obtained to purchase an 18.446 acre tract of land. The option was taken in the name of Goss Townes as trustee; however, it failed to identify the legal entity for whom the option was held in trust. On June 14, 1972, the option was exercised in part and Goss Townes took legal title to approximately six acres of land. Once again the instruments failed to identify the legal entity (ies) who were the beneficial owners of the property.

In August of 1972, a dispute arose pertaining to the appellee’s management of the corporate finances which culminated in a resolution of the corporation’s board of directors removing him from office. On October 19, 1972, the parties entered into an agreement purporting to define their rights and obligations pertaining to the management of the corporate funds, the stock of the corporation, and the 18.446 acre tract. This agreement, after reciting that a dispute existed pertaining to the appellee’s management of the corporation’s finances, provided:

This contract and its performance is contingent upon and will only be in effect in the event the . . . [appellants] . start construction of and establish the Village South Nursing Home to be located in College Station, Texas. In the event such nursing home is not built and established, then this agreement shall be null and void and of no further force and effect.

In the following provisions, appellee agreed to convey his one-third interest in the nursing home, his interest in the land on which the nursing home was to be located, and his interest in the option to purchase additional land adjacent to the tract of land already purchased. The contract then described the 18.446 acre tract of land owned by or held under option by Goss Townes as trustee. Appellee further agreed to lend his best efforts and to execute any and all necessary documents to facilitate the construction of the nursing home.

The next paragraph of the contract recited that Goss Townes held the option to purchase the remaining acreage of the tract as trustee for the corporation. This paragraph authorized the trustee to exercise the option and to convey the property to the corporation or to any party designated by the appellants. Appellee also agreed to execute proper conveyances to the party or parties designated by the appellants.

Following these provisions the contract stated:

The following items to be performed are not contingent upon the successful completion of the nursing home . but are to be performed absolutely .

The contract then provided that the ap-pellee would execute a promissory note in the amount of $7,500 payable to the appellants and that the appellee, by executing the contract, was selling, transferring, assigning and conveying his interest in the stock of the corporation, as well as his interest in any property, real or personal, owned or claimed to be owned by the corporation. The contract was executed by the parties and no one signed in a representative capacity for the corporation.

In December of 1972, the option to purchase the remainder of the property was exercised. By November of 1973, no significant progress had been made in establishing a nursing home on the property. The appellee notified the appellants of his one-third interest in the tract and further asserted a claim for real estate commissions pertaining to transactions unrelated to the 18.446 acre tract of land.

In December of 1973, the trustee conveyed the property to the appellants who then conveyed the property to O. C. Cooper.

On April 26, 1974, the appellee filed a trespass to try title suit against Cooper. In June of 1977, Cooper sued the appellants for breach of the covenants contained in the general warranty deed. In December of 1977, the appellee sued the appellants alleging that they fraudulently induced the trustee, a joint agent, to convey the property and sought damages for one-third of the fair market value of the 18.446 acre tract.

In March of 1978, the corporation filed a petition in intervention which was joined by the appellants.- The appellants requested the following relief: (1) reimbursement from the appellee for overdrafts on commissions in the approximate amount of $13,400 for sales of real estate made by the appellee on behalf of the appellants individually; (2) damages in the approximate amount of $5,400 for money had and received by ap-pellee on behalf of the appellants individually; and (3) for a set-off of one-third of the amount of expenses incurred in attempting to establish the nursing home if, and only if, it was determined that the appellee had an interest in the 18.446 acre tract.

The appellee then filed a third amended petition expanding his previous cause of action by requesting exemplary damages and by adding an additional cause of action. The essence of the additional cause of action was that the appellants owed the ap-pellee an accounting for sums due the ap-pellee arising from his relationship with the corporation. Specifically the appellee prayed for one-third of the net profits of the corporation, for real estate commissions, and for travel reimbursement. No cause of action was asserted against the corporation and no relief was requested against the corporation.

After the conclusion of the evidence, O. C. Cooper was granted a directed verdict. The appellee’s causes of action against the appellants were submitted to the jury on five special issues. The first special issue related to the “accounting” cause of action and purportedly covered the transactions between the parties exclusive of their interests in the 18.446 acre tract. The remaining four issues pertained to the tract and inquired as to the amount of damages, actual and exemplary, if any, the appellee was entitled to recover from the appellants. The jury answered all five issues affirmatively awarding damages in response to the first cause of action in the amount of $6,135.35, and in response to the second cause of action in the amount of $27,730.00 actual damages and $50,000.00 punitive damages.

Appellants assign 23 points of error which are too numerous and lengthy to identify individually. We have carefully reviewed the appellants’ assignments of error and agree that reversible error was committed. For the reasons hereinafter stated, we reverse the judgment of the trial court and render judgment for the appellants.

I.

The “Accounting” Cause of Action

The first special issue read as follows,

What sum of money.if now paid in cash, if any, do you find from a preponderance of the evidence to be due and owing from Lyles and/or Muntz as a result of their business relationships, excluding the 18.446 acre tract of land in question.

The appellee’s trial pleadings asserted that the appellants owed him an accounting “for the sums due him from Rancheo, Inc.” The petition then alleged the appellee’s relationships and transactions with the corporation, Rancheo, Inc. The proof offered at trial was that the corporation had breached certain contracts with the appellee for real estate commissions and for travel reimbursement. Additionally, the appellee asserted that he was entitled to one-third of the corporation’s profits. It is clear that the appellee was awarded a judgment against the appellants on pleadings and evidence which, at most, alleged causes of action against the corporation. The record is devoid of any pleadings or evidence which could be construed to impose liability on the appellants for the corporation’s actions. In Texas, it is well established that a judgment can not stand unless it is supported by both pleadings and evidence. Jennings v. Texas Farm Mortgage Co., 124 Tex. 593, 80 S.W.2d 931 (1935). In the instant case, it was improper for the court to submit the issue to the jury because the appellants objected on grounds of no evidence and no pleadings. See Tex.R.Civ.P. 277; Scott v. Atchison Topeka & Santa Fe Ry. Co., 572 S.W.2d 273, 277 (Tex.1978). Moreover, in the instant case the statute of frauds, art. 6573a, § 20 V.A.C.S., Supp. (1978-1979) would prevent any recovery against appellants for real estate commissions, and section 26.01, Texas Business and Commerce Code, would prevent appellee from holding the appellants responsible for the debt or default of the corporation. Both of these defenses were plead and properly preserved by the appellants.

II.

“The 18.446 Acre Tract”

The appellants contend that the appel-lee’s cause of action for fraudulently inducing the joint agent to convey the property was barred by the two-year statute of limitations. Appellee does not dispute the applicability of the two year statute of limitations but asserts (a) that the statute of limitations did not begin to run until a directed verdict was granted to O. C. Cooper; (b) that article 5539c V.A.T.S. permitted him to file his causes of action in response to the petition in intervention; and (c) that the appellants waived the limitations defense by failing to request a special issue.

Appellee’s primary assertion is that his cause of action did not accrue until the defendant Cooper obtained a directed verdict. Appellee argues that it was only at this point he sustained damages. In support of this contention, reliance is placed on Atkins v. Crosland, 417 S.W.2d 150 (Tex. 1967).

Atkins v. Crosiand reaffirmed the general rule that absent a statutory exception or fraudulent concealment, a cause of action sounding in tort accrues when the tort is committed, provided the tortious act invades some personal or property right of the plaintiff. Once this legal injury is sustained, the statute begins to run even where little, if any, damages are immediately apparent.

The appellee’s cause of action for fraud pertained to the misrepresentations made by the appellants inducing the transfer of the property. The fraud, although constructive in nature because it was indirectly perpetrated on the appellee through his agent(s), was complete and the tort committed by December 13, 1973. The effect of the transaction constituted a legal injury because the appellee was fraudulently induced to convey his interest in the property. The appellee manifested his knowledge of the fraud when he instituted suit against Cooper on April 26, 1974, a period of approximately three years and three months before he sought to recover damages for the fraud.

A similar case is Dunn v. Travelers Insurance Co., 362 S.W.2d 412 (Tex.Civ.App.-San Antonio 1962, writ ref’d n.r.e.). In that case, an employer falsely represented that he had filed a workman’s compensation claim on behalf of an employee. The employee, after learning of the fraud, filed his own claim which was rejected. Thereafter, the employee sued the employer for fraud to which the employer plead limitations. The court of civil appeals rejected the employee’s contention that the cause of action accrued when his compensation claim had been refused. Instead, the court held that the cause of action accrued when the employee learned of the fraud. For these reasons, we hold that the appellee’s cause of action accrued when he discovered the fraud which had invaded his legal interests.

Appellee also urges that the limitations defense was waived because the appellants did not request a special issue. Tex.R.Civ.P. 279 provides that a defense shall be waived if the party relying upon the defense fails to request an issue. This rule applies, however, only where the defense has not been conclusively established. Texas Reserve Life Ins. Co. v. Security Title Co., 352 S.W.2d 347, 351 (Tex.Civ.App.-San Antonio 1961, writ ref’d n.r.e.); 3 McDonald Texas Civil Practice, § 12.36.2 at 433 (1970). In the instant case, the dates of the conveyances have been conclusively established. Moreover, the appellee’s pleadings conclusively demonstrate that he had full knowledge of the tortious act by April 26, 1974, when he instituted suit against O. C. Cooper. Based on these dates, which were undisputed and conclusively established, there was no material issue of fact to be submitted to the jury for determination. See Neuhaus v. Kain, 557 S.W.2d 125 (Tex. Civ.App.-Corpus Christi 1977, writ ref’d n.r.e.) (holding that defense of fraud was waived where no special issue was submitted and there was disputed evidence). Under these circumstances, the question was purely one of law which had been properly presented to the trial court by the appellants’ motion for judgment notwithstanding the verdict.

Appellee also asserts that the limitations bar was lifted for a period of 30 days by virtue of Tex.Rev.Civ.Stat. art. 5539c because the appellants joined in the petition for intervention seeking affirmative relief. In order for article 5539c to be applicable, three requirements must be met: (1) a pleading must be filed which seeks affirmative relief, (2) the responsive pleading must arise out of the same transaction or occurrence as the pleading seeking affirmative relief, and (3) the responsive pleading must be filed within 30 days. The instant case does not present an issue as to the third requirement. In order to determine whether the appellee can rely upon article 5539c, it is necessary to examine the appellants’ allegations contained in the petition for intervention.

The appellants, in their individual capacities, were seeking the following relief: (1) reimbursement for the overdraft of real estate commissions in the amount of $13,-405.58 paid to the appellee by the appellants, (2) damages in the amount of $5,376.78 for money had and received by appellee belonging to the appellants individually and (3) a set-off of one-third of the amount of expenses incurred in attempting to establish the nursing home if, and only if, it was determined that the appellee had an interest in the 18.446 acre tract.

The first two claims are unrelated to the conveyance of the 18.446 acre tract, and therefore did not arise out of the same transaction or occurrence. The remaining claim, an off-set, is not an affirmative claim. This claim is in response to the appellee’s earlier pleading and is conditional upon the appellee establishing an interest in the property. As such, it would be determined only if the appellants’ affirmative defenses were found to be without merit. The appellee can not rely on this allegation to lift the bar of limitations. See Hobbs Trailers v. J. T. Arnett Grain Company, Inc., 560 S.W.2d 85 (Tex.1977).

The remaining affirmative allegations in the petition for intervention must be construed as being asserted by Rancheo, Inc. It is apparent that the appellants, having no justiciable interest in these matters, would have no standing to assert them. Appellee can not rely on these allegations, because they are being asserted by a different party and, by logical necessity, constitute a different transaction or occurrence.

For these reasons, article 5539c is not applicable to the facts of the instant case and we conclude that the appellee’s claim for fraud was barred by limitations.

The judgment of the trial court is reversed and is rendered that the appellee take nothing.


author: MURRAY, Justice.

text:
    Alvin SANTLEBEN, Appellant, v. TAYLOR-EVANS SEED COMPANY, Appellee.
    No. 16076.
    Court of Civil Appeals of Texas, San Antonio.
    June 13, 1979.

      James L. Branton, J. Tullos Wells, Bran-ton & Mendelsohn, San Antonio, for appellant.
    Thomas H. Crofts, Jr., Groce, Locke & Hebdon, San Antonio, for appellee.
   OPINION

MURRAY, Justice.

This is a venue case. Plaintiff, Santle-ben, sued defendant, Taylor-Evans Seed Company, in Medina County, Texas, for damages resulting from plaintiff’s purchase and use of allegedly defective seed manufactured by defendant. Defendant filed a plea of privilege to be sued in the county of its residence, Swisher County, Texas. Plaintiff timely filed his controverting plea contending venue was proper in Medina County under subdivisions 7, 23, and 31 of Article 1995, Texas Revised Civil Statutes. After a hearing before the court, the trial court sustained defendant’s plea of privilege and transferred the cause to Swisher County. Santleben has perfected his appeal to this court.

Santleben, appellant, is a farmer in Medina County. On March 3, 1975, appellant purchased seed corn manufactured by ap-pellee from Mumme’s, Inc., which is in Medina County. Appellant planted the seed corn on fifty acres, and only one-fourth of it sprouted. On August 13, 1975, appellant harvested and sold thirty-nine bushels of corn per acre from these fifty acres. Appellant testified that based on his fifty years of experience in farming, he anticipated that according to the weather and rainfall they had that year, he should have harvested seventy-five or more bushels per acre from the fifty acres. Appellant also testified that he did everything he should have done in attempting to raise the corn and produce it as a good crop.

Santleben’s brother planted corn in an adjacent field. It was planted at approximately the same time, but the brother did not use Taylor-Evans seed brand. With the same weather conditions for both fields, the brother harvested approximately ninety bushels per acre. Based on appellant’s experience in raising corn, appellant gave his opinion that the seed did not grow because it was weak and that he did not know of any other reason why the crop did not grow other than it being a bad batch of seed. Santleben admitted that he has never worked in the seed industry, or in a seed laboratory.

Appellee, Taylor-Evans Seed Company, is a private corporation whose residence is in Swisher County, Texas. On appeal, appellant contends that this suit is maintainable in Medina County under subdivision 23 of Article 1995, Texas Revised Civil Statutes. Subdivision 23 provides in part:

Suits against a private corporation, association, or joint stock company may be brought ... in the county in which the cause of action or part thereof arose; or in the county in which the plaintiff resided at the time the cause of action or part thereof arose, provided such corporation, association or company has an agency or representative in such county . . .

Tex.Rev.Civ.Stat.Ann. art. 1995, subd. 23 (Vernon 1964). Under this part of the subdivision, plaintiff must prove by a preponderance of the. evidence all the elements of a cause of action against the corporate defendant whose plea of privilege is being contested. Pesek v. Murrel’s Welding Works, Inc., 558 S.W.2d 39 (Tex.Civ.App.— San Antonio 1977, writ dism’d); Ralston Purina Company v. Wiseman, 467 S.W.2d 669 (Tex.Civ.App. — El Paso 1971, no writ); 1 R. McDonald, Texas Civil Practice §§ 4.30.2,4.30.3 (rev. 1965). Here, appellant was not required to prove that appellee is a corporation because this venue fact was undisputed and not specifically denied by verified denial. Tex.R.Civ.P. 86, 93(a).

Appellant contends that his cause of action against appellee arose in Medina County and characterizes it as an injury resulting from the purchase and use of defective seed. As a result, appellant was required to establish that the seed in question was defective at the time it left appel-lee’s control. There being no findings of fact or conclusions of law in the record, it is presumed on appeal that the trial court resolved all fact issues raised by the evidence in support of the judgment. W. G. Tufts and Son v. Herider Farms, Inc., 461 S.W.2d 257 (Tex.Civ.App. — Tyler 1970, no writ). Thus, the judgment implies that the trial court failed to find from a preponderance of the evidence that the seed purchased by Santleben was defective. In order to prevail on appeal, appellant must show that the evidence establishes his right to maintain venue in Medina County as a matter of law. LaSorsa v. Burr, 516 S.W.2d 265 (Tex.Civ.App. — Houston [14th Bist.] 1974, no writ).

Appellant argues that there is circumstantial evidence of a defect. Circumstantial evidence can be sufficient to support a trial court’s judgment sustaining venue, See O. M. Franklin Serum Co. v. C. A. Hoover & Son, 410 S.W.2d 272 (Tex.Civ. App. — Amarillo), writ ref’d n. r. e. per cu-riam, 418 S.W.2d 482 (Tex.1966), but to overturn a judgment, the circumstantial evidence must conclusively show as a matter of law that the seed was defective. An ultimate fact is conclusively shown by circumstantial evidence only if the circumstances are so clear that reasonable minds would not differ on the inference to be drawn. Cavanaugh v. Davis, 149 Tex. 573, 235 S.W.2d 972 (1951); Neale v. Kirkland, 486 S.W.2d 165 (Tex.Civ.App. — Dallas 1972, no writ).

In this case, the circumstantial evidence shows that the yield from the crop was not what Santleben expected it to be, that Santleben’s brother on an adjacent farm harvested a much higher yield using a different brand of seed, and that in Santle-ben’s opinion the seed was defective. There is no evidence in the record of how and for what period of time the seed was stored before planting, of the soil conditions on the fifty acres, of appellant’s cultivation techniques, or of how and with what the crop was treated. It is just as reasonable to infer that the below-average crop yield resulted from a myriad of other possibilities as it is to infer that the seed was defective. The poor crop could have been caused by poor soil, disease, insects, inadequate cultivation, or improper spraying and fertilization. Santleben’s general testimony that he did everything necessary to produce a good yield does not negate as a matter of law other possibilities that are reasonably infer-able from the eireumstanees in evidence. The evidence here is not so dear, positive, and conclusive that it establishes that the seed was defective at the time it left appel-lee’s control as a matter of law. Therefore, appellant did not prove as a matter of law all the elements of his cause of action.

The judgment of the trial court is affirmed.


author: CADENA, Chief Justice.

text:
    Tomas A. CHAVEZ, Appellant, v. MURREL’S WELDING WORKS, INC., Appellee.
    No. 16077.
    Court of Civil Appeals of Texas, San Antonio.
    June 20, 1979.
    Kermit Fox, Jr., San Antonio, for appellant.
    Edward P. Fahey, Thomas H. Crofts, Jr., Groce, Locke & Hebdon, San Antonio, for appellee.
   OPINION

CADENA, Chief Justice.

Plaintiff, Tomas A. Chavez, appeals from an order of the district court of Atascosa County sustaining the plea of privilege filed by defendant, Murrel’s Welding Works, Inc., and transferring the case to Hockley County.

Plaintiff’s sole contention here is that his suit was properly filed in Atascosa County, the county of his residence, under subdivision 31 of the general venue statute, which provides, “[sjuits for breach of warranty by a manufacturer of consumer goods may be brought ... in the county where the plaintiff or plaintiffs reside.” Article 1995, Tex.Rev.Civ.Stat.Ann. (Vernon Supp. 1978-1979).

Plaintiff sustained physical injury when a “hot oil truck,” manufactured by defendant and sold by it to plaintiff’s employer, Associated Services, exploded.

A hot oil truck is used to heat oil as it comes from the well head or oil which has been stored in a tank. The oil, whether it comes directly from the well or from the storage tank, passes through hoses into lines located above the truck’s “heater box.” The heated oil is then passed through lines or hoses which lead to a storage tank. The purpose of the process is to reduce the viscosity of the oil and facilitate its transportation. Plaintiff’s employer, as part of its business, furnished such oil heating services to its customers.

The trial court, after finding that the truck was not used for “personal, family, or household purposes,” concluded that it did not come within the category of “consumer goods” as that term is used in subdivision 31.

The venue statute contains no definition of “consumer goods.” It is clear that the trial court, in interpreting the venue provision, adopted the definition found in § 9.109(1), Tex.Bus. & Com.Code Ann. (Vernon Supp. 1978-1979), which defines “consumer goods” as goods “used or bought for use primarily for personal, family or household purposes."

Apparently, only two Texas cases have considered the meaning of “consumer goods” in subdivision 31. In Maintenance and Equipment Contractors v. John Deere Co., the court, pointing out that the term is not defined in the venue statute, said that it should be construed “in the sense in which it is understood in common language” and that “a broad interpretation should be used.” 554 S.W.2d 28, 32 (Tex. Civ.App. — Houston [14th Dist.] 1977, writ dism’d). No attempt was made to reconcile this conclusion with the rule that exceptions to the venue statute must be strictly construed in favor of the defendant. See National Life Co. v. Rice, 140 Tex. 315, 322, 167 S.W.2d 1021, 1025 (1943); Stephens v. Dunn, 417 S.W.2d 608, 612 (Tex.Civ.App.— Tyler 1967, no writ).

In John Deere plaintiff sought recovery for personal injuries sustained by him when a tractor, leased by his employer, overturned while plaintiff was operating it. The court pointed out that subdivision 5(b) of the venue statute applies to suits “founded upon a contractual obligation of the defendant to pay money arising out of or based upon a consumer transaction for goods, services, loans, or extensions of credit intended primarily for personal, family, household or agricultural use" (emphasis original). After referring to this as “a broad definition of consumer goods,” the court concluded that the tractor in question “is a consumer good as contemplated under subdivision 31 . .” 554 S.W.2d at 32-33.

In Trucker's Equipment, Inc. v. Sandoval, 569 S.W.2d 518, 523 (Tex.Civ.App. — Corpus Christi 1978, no writ), the court interpreted John Deere as holding that “consumer goods” includes, for venue purposes under subdivision 31, “goods used for agricultural purposes.”

Plaintiff in John Deere sought recovery only on theories of negligence and strict liability in tort. 554 S.W.2d at 29. It is, therefore, difficult to understand the necessity for examination of subdivision 31, since that subdivision applies only to suits based on breach of warranty. Perhaps the John Deere court had in mind the “implied warranty” theory which was used as the basis for imposing liability on the manufacturer in Jacob E. Decker & Sons v. Capps, 139 Tex. 609, 164 S.W.2d 828 (1942). However, today it cannot be said that a suit based on theories of negligence or strict liability in tort is a suit for breach of warranty.

The John Deere opinion notes that the Code distinctions between consumer goods, equipment, farm products and inventory “are very narrow and have been written into article 9 [of the Code] which applies generally to transactions involving security interests.” 554 S.W.2d at 32. Whether this fact influenced the court in its determination that the definition of “consumer goods” should be expanded for venue purposes by adding goods intended for agricultural use to the definition found in § 9.109(1) is not readily determinable, but it should be pointed out that § 2.103(c) of the Code expressly provides that the definition of “consumer goods” found in § 9.109 apply to Chapter 2 of the Code. The provisions of the Code concerning .warranties in connection with sales of goods (§§ 213 and 214) appear in Chapter 2.

Although John Deere cannot be regarded as being a suit based on warranty, Sandoval appears to be based, at least in part, on implied warranty. 569 S.W.2d at 522. That case, then, must be interpreted as holding that “consumer goods,” as that term is used in subdivision 31, includes goods purchased to be used for agricultural purposes.

The Deceptive Trade Practices Act (DTPA), §§ 17.41-17.63 of the Code (Vernon Supp. 1978-1979), contains no definition of the term “consumer goods,” but it contains the following definitions of the two component words of that term: “(1) ‘Goods’ means tangible chattels or real property purchased or leased for use. . (4) ‘Consumer’ means an individual, partnership, corporation, or governmental entity who seeks or acquires by purchase or lease, any goods or services.” Id. at § 17.45.

We decline to construct a definition of “consumer goods” by combining the separate definitions of “goods” and “consumer” found in § 17.45. If a definition is thus constructed and then used as the definition of “consumer goods” in subdivision 31, the result would be to make subdivision 31 applicable to “suits for breach of warranty by a manufacturer of tangible chattels or real property.” While some manufacturers may produce tangible chattels which, through annexation to realty, are considered part of the realty for certain purposes, manufacturers do not produce real property.

Whether we apply the definition found in § 9.109(1) of the Code, or the “broad” definition which John Deere found in subdivision 5(b) of the venue statute, a subdivision which does not contain the term “consumer goods,” it is clear that the hot oil truck in question was not a consumer good. Plaintiff presents no point questioning the sufficiency of the evidence to support the finding that the truck was not used for “personal, family or household purposes,” nor does he contend that it was used for agricultural purposes.

The judgment of the trial court is affirmed.

      . The Texas Business and Commerce Code will be Identified In subsequent portions of this opinion simply as "Code,”

      . “At the time of Decker’s writing, the consumer had little remedy for losses caused by defective products. To compensate for this lack of remedy, Decker created ‘an implied warranty imposed by operation of law as a matter of public policy.' . . . This remedy has been described as, ‘a freak hybrid bom of the illicit intercourse of tort and contract.’ . . The protection of Texas consumers no longer requires the utilization of an ‘implied warranty as a matter of public policy.' Since the Decker decision, Texas has adopted section 402A of the Restatement (Second) of Torts and the Uniform Commercial Code . . . These adoptions furnish the user of defective products remedies which were unavailable at the time of Decker's writing. Today, section 402A . . . and the Uniform Commercial Code rather than Decker’s ‘implied warranty as a matter of public policy’ should determine a manufacturer’s liability.” (citations omitted). Nobility Homes of Texas, Inc. v. Shivers, 557 S.W.2d 77, 78 (Tex. 1977).

      . A person who attempts to define “flying mare” by combining the definitions of “flying” and “mare” would seek to find a flying mare somewhere in the sky (probably with Pegasus lurking nearby), rather than in a wrestling ring. A person relying on this method of definition would be astounded when told that a “backseat driver” often sits in the front seat and does no driving at all.