text:
    Ex parte Thomas Duncan STANFORD, Jr.
    No. 16967.
    Court of Civil Appeals of Texas, 1st District, Houston.
    Oct. 6, 1977.
    Rehearing Denied Oct. 21, 1977.

      Gordon D. Gary of Houston, for appellant.
    Ray Epps of Houston, for appellee.
   COLEMAN, Chief Justice.

The petitioner has been committed to the Harris County Jail under a commitment order finding him guilty of contempt of court by reason of his failure to make child support payments and house payments required by a temporary order entered in a divorce suit. The commitment order is void and petitioner is ordered released.

On the 25th day of November, 1974 the Judge of the Juvenile Court # 1 of Harris County, Texas in Cause No. 992978, styled In The Matter Of The Marriage Of Leona Victoria Stanford and Thomas Duncan Stanford, Jr. and In The Interest of Minor Children, entered an order requiring Thomas Duncan Stanford, Jr. to pay to Leona Stanford the sum of 350.00 per month and requiring him to make house payments in the amount of $165.00 per month until further order of the court.

Petitioner contends that this order is void for the reason that at the time of the entry of said order a final decree granting him a divorce had been entered in The Commonwealth of Puerto Rico, the place of his residence. This contention will not be sustained.

The order of the Juvenile Court under consideration recites that on the 6th day of November, 1974, a hearing was held in the cause at which Leona Stanford appeared in person and by attorney and Thomas Stanford appeared in person. After this hearing the parties presented an agreement respecting temporary orders to be entered in the cause and the court after hearing evidence and the pleadings approved the agreement. Leona Stanford asserts that the foreign divorce decree is invalid and is not entitled to full faith and credit. The trial court has jurisdiction of this matter. The validity of the agreed temporary order will not be examined in this collateral proceeding.

On December 29, 1975 Leona Stanford filed a motion with the trial court asserting that Thomas Stanford had willfully disobeyed the temporary order by failing to make any “payments” to her as required by the order and by failing to make the house payments. The motion requested the court to issue notice to Thomas Stanford to appear and show cause why he should not be held in contempt for disobedience of the court’s order.

In response to this motion the court entered an order directing the clerk to issue notice to Thomas Duncan Stanford, Jr. to appear before the court on the 26th day of January, 1976 at 10:30 o’clock a. m. to show cause why he should not be held in contempt of court for willful disobedience of the court’s order by failing to make support payments as ordered. The citation was issued directed to the sheriff or constable of any county in the State of Texas directing him to serve Thomas Duncan Stanford, Jr. with a certified copy of the motion of contempt together with the judge’s order thereon to appear before the Juvenile Court # 1, Harris County, Texas, on the 26th day of January, 1976 at 10:30 a. m., “then and there to show cause in accordance with the certified copy of the order of the court hereto attached.”

On the 9th day of February, 1976 the court entered an order reciting that Leona Victoria Stanford appeared in person and by attorney and that, Thomas Duncan Stanford, Jr., “although cited as required by law, did not appear.” In this order the court found that Thomas Duncan Stanford, Jr. had not made payments as ordered and that the sum of $7,525.00 for both child support and house payments was unpaid and owing. The court then ordered that he be held in contempt of court and fixed his punishment at 10 days in the Harris County Jail, “and there to remain until said sum is paid.”

The notice which was served on the petitioner required him to show cause why he should not be held in contempt for failure to “make support payments as ordered.” It is well settled that proceedings in contempt cases should conform as nearly as practical to proceedings in criminal cases. The defendant in a contempt proceeding must be given notice of the charges against him and an opportunity to be heard. Ex parte White, 149 Tex. 155, 229 S.W.2d 1002 (1950). Due process of law demands that before a court can punish for contempt not committed in its presence, the accused must have full and complete notification of the subject matter, and the show cause order must state when, how and by what means the defendant has been guilty of the alleged contempt. Ex parte Edgerly, 441 S.W.2d 514 (Tex.1969). Deramus v. Thornton, 160 Tex. 494, 333 S.W.2d 824 (1960).

In a constructive contempt proceeding due process requires that the respondent in contempt proceedings be given adequate notice as to which acts or omissions are the basis of the contempt complaint. Ex parte Gnesoulis, 525 S.W.2d 205 (Tex.Civ.App.— Houston [14th Dist.] 1975, no writ).

The temporary order which petitioner is charged with violating requires him to pay to Leona Stanford the sum of $350.00 per month, but it does not state whether the payment is for child support, temporary alimony, or for some other purpose. The court ordered petitioner to show cause why he should not be held in contempt for failing to make the support payments as ordered. At a hearing held in petitioner’s absence, he was found in contempt for failing to make “payment as ordered”. The court found that the sum of $7,225.00 for both child support and house payments is unpaid and owing and ordered that petitioner be confined until the said sum should be paid. The record reflects, therefore, petitioner was not given proper notice and that the order entered by the court is not supported by the citation which the court found had been served on the petitioner.

The sufficiency of the service on the petitioner is also attacked in this proceeding. By affidavit petitioner’s father asserted that an officer brought the citation to his house. When the officer was told that petitioner was not at the house, the officer merely threw the citation on the porch. In his affidavit the petitioner stated that he had never been served with the citation and that he was not present at his father’s house on the date of service reflected in the officer’s return. Leona Stanford filed an affidavit with the court, but she did not state facts contradicting these statements of petitioner and his father.

Due process requires that petitioner be personally served with the show cause order or that it be established that he had knowledge of the content of such order. Ex parte Herring, 438 S.W.2d 801 (Tex. 1969). The Supreme Court of Texas has stated that it would be unconscionable to establish a precedent in contempt cases that a trial court could order the seizure and incarceration of a citizen with no notice and then deprive him of a right to relief in a habeas corpus proceeding by reciting in its judgment that the person had been “served”. Ex parte Cardwell, 416 S.W.2d 382 (Tex.1967). Article 1, Section 10 of the Constitution of the State of Texas provides that in all criminal prosecutions the accused shall have the right of being heard by himself or counsel, or both, and shall be confronted by the witnesses against him. The laws of the State of Texas do not countenance trials in absentia in an ordinary criminal prosecution.

The right to confront the witness for the prosecution is also guaranteed to an individ-

ual accused of criminal conduct by the Constitution of the United States of America. Duncan v. State of Louisiana, 391 U.S. 145, 88 S.Ct. 1444, 20 L.Ed.2d 491 (1968). However, in Myers v. United States, 264 U.S. 95, 44 S.Ct. 272, 68 L.Ed. 577 (1924), the Supreme Court held that a contempt prosecution for violation of the terms of an injunction could be held in the absence of the defendant. The Court said:

“. . . While contempt may be an offense against the law and subject to appropriate punishment, certain it is that since the foundation of our government proceedings to punish such offenses have been regarded as sui generis and not ‘criminal prosecutions’ within the Sixth Amendment or common understanding.”

This decision was followed in Blackmer v. United States, 284 U.S. 421, 52 S.Ct. 252, 76 L.Ed. 375 (1932). The rationale of this decision has been cast in doubt by a subsequent decision of the Supreme Court applying Sixth Amendment rights in contempt proceedings. Duncan v. State of Louisiana, supra. Muniz v. Hoffman, 422 U.S. 254, 95 S.Ct. 2178, 45 L.Ed.2d 319 (1975).

While the question does not appear to have been urged in the Supreme Court of Texas, the failure of the court to raise the question on its own motion indicates that proper notice and opportunity to be heard will satisfy the requirement of due process even though the person charged does not appear at the trial. Ex parte Herring, 438 S.W.2d 801 (Tex.1969). In face of these decisions we cannot hold that the order committing petitioner was void merely because he was not present at the trial. A clear showing is required that the defendant in a contempt proceeding has been given proper notice and an opportunity to be heard. The record before us supports a finding that petitioner was not given proper notice and an opportunity to be heard before he was held in contempt.

Petitioner was charged' with two acts of contempt. The trial court should have made findings as to each charge and should have fixed separately the punishment assessed for each act. Where one penalty is affixed for more than one act of contempt, and it is found that the relator could not be held in contempt for one of the acts, the whole judgment is tainted and is void, and a person held under it is illegally restrained of his liberty. Ex parte Werner, 496 S.W.2d 121 (Tex.Civ.App. — San Antonio 1973); Ex parte Turner, 478 S.W.2d 256 (Tex.Civ.App. — Houston [1st Dist.] 1972).

Petitioner is ordered discharged.


source: Caselaw Access Project

author: COLEMAN, Chief Justice.

license: Public Domain

text:
    Margaret MANDOLA, Appellant, v. Armando J. MARIOTTI, Appellee.
    No. 16921.
    Court of Civil Appeals of Texas, Houston (1st Dist.).
    Oct. 6, 1977.
    Rehearing Denied Nov. 3, 1977.

      Wm. J. Kershner, Houston, for appellant.
    Fulbright & Jaworski, and J. Graham Hill, Houston, for appellee.
   COLEMAN, Chief Justice.

This is a suit to recover damages by reason of injuries sustained in an automobile collision. The trial court entered a summary judgment for the defendant on the basis that the cause of action was barred by the two year statute of limitations. The plaintiff asserts that an issue of fact was raised by reason of representations made by a claims adjuster employed by the defendant’s insurance carrier. The judgment will be reversed and the case remanded.

On September 5, 1975 the plaintiff filed this suit, which is based on an automobile accident occurring on December 27, 1972. The defendant plead that the suit was barred by reason of Art. 5526, Vernon’s Rev.Civ.Stat.Ann., the two year statute of limitations. Plaintiff plead that defendant should be estopped from asserting the limitations defense by reason of certain representations made by The Aetna Casualty & Surety Company, the defendant’s insurance carrier.

The defendant filed a motion for summary judgment based on the statute of limitations. Accompanying this motion were the affidavits of the defendant and of Yvette De Pena, a claims adjuster for The Aetna Casualty & Surety Company. Mr. Mariotti stated that he had informed plaintiff that he was insured by The Aetna Casualty & Surety Company, but that he did not enter into any agreement concerning the payment of any claim. He asserted that he did not tell the plaintiff that he or his insurance company were waiving the right to fully defend the claim.

Ms. De Pena stated that after being informed of the accident she discussed the case with the plaintiff and paid several medical bills. She did not suggest to plaintiff that the insurance company was waiving its right to fully defend the suit or that the plaintiff need not file her suit within the time periods established by law.

The plaintiff filed an affidavit in opposition to the motion, stating that Ms. De Pena contacted her shortly after the accident and advised her that she did not need an attorney because her company would take care of all damages. Ms. De Pena assured her periodically that the company would take care of the damage and in fact did pay certain medical bills as they accrued. When a period of two years had passed from the date of the accident Ms. De Pena informed the plaintiff that the company was no longer responsible for her damage because the statute of limitations had run.

The defendant asserts that the only issue on appeal is:

“Should the defendant, Armando J. Mar-iotti, be estopped from asserting his valid statute of limitations defense based solely upon alleged statements and actions of the defendant’s insurance carrier, a non-party?”

A party may be estopped from asserting a statute of limitations when he has, by misrepresentation of a material fact, induced a plaintiff to postpone filing of a suit until his claim is barred by the statute. Ladd v. Knowles, 505 S.W.2d 662 (Tex.Civ. App.—Amarillo 1974, writ ref’d n. r. e.); Lanpar Company v. Stanfield, 474 S.W.2d 753 (Tex.Civ.App.—Waco 1971, writ ref’d n. r. e.).

A party may be estopped by the acts of his agent or representative from asserting the limitations defense. Koudsi v. Mathiwos, 147 S.W.2d 585 (Tex.Civ.App.—El Paso 1940, no writ); General Insurance Company of America v. United States, 406 F.2d 442 (5th Cir. 1969). An estoppel in pais operates only on parties to the transaction and their privies. Asbeck v. Asbeck, 362 S.W.2d 891 (Tex.Civ.App.—Texarkana 1962) aff’d 369 S.W.2d 915.

There appear to be no Texas cases directly in point. Appellee cites cases which hold that a settlement by an insurance company will not be admissible as an admission against interest against the insured upon the trial of a claim in behalf of the insured arising out of the same accident. Jackson v. Clark, 351 S.W.2d 292 (Tex.Civ.App.—Amarillo 1961, writ ref’d n. r. e.); City Transportation Company of Dallas v. Vatsures, 278 S.W.2d 373 (Tex.Civ.App.—Waco 1955, writ dism’d); Wieding v. Krisch, 271 S.W.2d 458 (Tex.Civ.App.—San Antonio 1954, no writ); Hurley v. McMillan, 268 S.W.2d 229 (Tex.Civ.App.—Galveston 1954, writ ref’d n. r. e.).

These cases are not persuasive. The payment of a claim in full should be admissible as an admission of liability by the party paying the claim. Where the insurance company settles a claim without the knowledge or consent of the insured, it should not be admissible as an admission of the insured. City Transportation Company of Dallas v. Vatsures, 278 S.W.2d 373 (Tex. Civ.App.—Waco 1955, writ dism’d). Ordinarily statements made by an agent admitting liability, not part of the res gestae, are not admissible as admissions of the principal unless the making of the admission was within the agents scope of authority. 2 Tex.Jur.2d, Agency § 274. In Hurley v. McMillan, supra, the court said:

“It is manifest that an insurance company, if it admits that its insured is liable, without its insured’s knowledge or consent, is acting in its own interest, and not as the agent of the insured.”

Ordinarily the insurer is not an agent of the insured merely because it performs acts beneficial to the insured. An indemnity insurer, by contracting to defend, and by defending, does not become an agent of the insured, but rather the relationship is that of an independent contractor. However, an indemnity insurer may, by retaining full control of actions against the insured, become the agent of the insured in taking action under such a reservation of authority. Couch On Insurance 2d § 25:99.

An adjuster acting for an insurance company may be considered to be the agent of the insured so as to estop the insured from setting up a statute of limitations. Appleman, 16 Insurance Law & Practice § 8646 (1968).

In the landmark case of G. A. Stowers Furniture Co. v. American Indemnity Co., 15 S.W.2d 544 (Comm’n App.1929, holdings appr.), an indemnity insurance company was characterized as the agent of its insured. There the court said:

“. . . it, by the very terms of the contract, assumed the responsibility to act as the exclusive and absolute agent of the assured in all matters pertaining to the questions in litigation, and, as such agent, it ought to be held to that degree of care and diligence which an ordinarily prudent person would exercise in the management of his own business . .”

There are decisions from other states holding that an adjuster acting for an insurance company may be considered to be the agent of the insured so as to estop the insured in setting up the statute of limitations. Nesbitt v. Erie Coach Company, 416 Pa. 89, 204 A.2d 473 (1964); North v. Culmer, 193 So.2d 701 (Fla.Ct.App.1967); MacKeen v. Kasinskas, 333 Mass. 695, 132 N.E.2d 732 (1956); Hayes v. Gessner, 315 Mass. 366, 52 N.E.2d 968 (1944).

While these cases are not controlling, they are persuasive. The statements and actions of the adjuster in this case, if proved at trial, would support a finding that the defendant is estopped to assert the statute of limitations as a defense to the plaintiff’s action. Kuehne v. Denson, 148 Tex. 54, 219 S.W.2d 1006, 1009 (1949). The defendant has failed to sustain his burden of showing that there is no material issue of fact relating to its defense of the statute of limitations.

The judgment is reversed and the case is remanded to the trial court.


author: EVANS, Justice.

text:
    Izora HARRIS et al., Appellants, v. HARRIS COUNTY HOSPITAL DISTRICT, Appellee.
    No. 16881.
    Court of Civil Appeals of Texas, Houston (1st Dist.).
    Oct. 6, 1977.
    Rehearing Denied Nov. 10, 1977.

      Jamail & Gano, John Gano, Houston, for appellants.
    Joe Resweber, County Atty., Oliver J. Guiberteau, Asst. County Atty., Houston, for appellee.
   EVANS, Justice.

Carlos Harris sued the Harris County Hospital District, alleging severe personal injury as a result of the District’s negligence while he was hospitalized at the District’s Ben Taub General Hospital. After Harris was admitted to the psychiatric ward of the hospital for observation and treatment he escaped by knocking out two plexiglass window panes in the ward’s entrance doors. He ran to another wing of the hospital, climbed through an outside window to the roof, and fell three floors to the ground, injuring his back. The jury found Harris’ damages to be in the amount of $100,000.00, but did not find the Hospital District was negligent in failing to maintain the plexiglass windows in such condition as would prevent Harris’ escape.

Harris had the burden of establishing the negligence of the Hospital District. His four points of error raise only the questions of whether the evidence conclusively established the Hospital District’s negligence and whether the jury’s verdict is so against the great weight and preponderance of the evidence as to require that the cause be remanded for a new trial.

The negligence issue submitted by the court and the jury’s response are as follows:

“Do you find from a preponderance of the evidence that the failure of the Hospital District to maintain the plexiglass windows in the doors to the psychiatric ward in such condition as would prevent Carlos Harris from escaping the ward, was negligence?” “We do not.”

The trial court defined the term negligence as meaning a failure on the part of the Hospital District “to use that degree of care and skill ordinarily used by a hospital of the same general type in the same or a similar community in which the hospital was located at the time in question under the same or similar circumstances.”

The incident occurred on June 30, 1972. Harris, then 18 years of age, was being treated for physical ailments by a local doctor who recommended to Harris’ family that Harris be taken to Ben Taub Hospital for a mental examination. On the evening prior to Harris’ escape from the ward, he was taken by his family to the psychiatric section of the hospital’s emergency room where he was examined by an intern and given thorazine, a drug used to calm nervous or agitated persons. Harris was then examined by the staff psychiatrist on duty who, after talking with Harris and his family for some 30 to 45 minutes, noted that Harris had “disturbances in his thought processes”, and made an initial diagnosis of “acute schizophrenic reaction”. She then admitted Harris to the hospital for further observation and treatment.

The psychiatric ward at Ben Taub Hospital was located on the third floor of the hospital’s south wing. At the entrance to the ward were two panel doors, one of which was always maintained in a fixed position by two sliding metal rods. The other door was permitted to swing, but it was always kept locked and could only be opened with keys distributed to the doctors and other, hospital personnel authorized to enter the ward. Each door was about 3' wide and 7' high, and set in the upper half of each door was a rectangular unbreakable plexiglass window 18" X 28" in dimension. Each plexiglass window panel was held in the door frame by small strips of wooden molding. There were no steel bars or mesh across the plexiglass windows. The psychiatric ward at Ben Taub Hospital is the only locked, secured ward, other than the jail section on the top floor of the hospital. The ward was designed, constructed and operated so that patients who were placed in the ward were held in protective restraint, although their admission was voluntary and not the result of a court order. The purpose of the locked entrance doors was to keep the patients in the ward and unauthorized persons out.

The psychiatric ward was capable of holding twenty-seven mental patients at one time, and inside the ward were four seclusion rooms, each with a locking door, in which patients could be isolated. All windows within the ward were covered with a special steel mesh.

After Harris had been admitted to the ward he slept the remainder of the night in one of the unlocked seclusion rooms. The next day he stayed near the nurses station, but was returned to an unlocked seclusion room until lunch time. After lunch he returned to a seclusion room, where he remained until dinner time, and after dinner he again returned to the seclusion room.

Harris testified at the trial that on the first night of his hospitalization he had persuaded a small boy in the ward to get him a drink of water. This apparently caused another patient, who also wanted a drink of water, to become upset. The following day that patient grabbed Harris and beat his head against the wall. Harris testified this made him fearful for his own safety and made him feel that he had to get out of the ward. He ran to the entrance doors, doubled his fists and knocked out the plexiglass window. The plexiglass panel “flew out”. He climbed through the opening left by the pane, ran down the hall to another wing of the hospital where he knocked out an outside window pane and climbed through to the roof. Harris then ran across the roof, and thinking that he was being chased, lowered himself over the roof. He tried to pull himself back but could not hold on and fell three floors to the ground, fracturing his spine.

The nurse on duty on the night in question testified that between 8 and 9 o’clock she was sitting sideways from the ward entrance when she heard a crash and saw the plexiglass panel was out of the entrance door. She testified that the entire plexiglass panel had been knocked out and that the wooden molding which held the panel in place was splintered.

It was the duty of the hospital to provide for the care and protection of its patients, and in the exercise of this duty the hospital was required to provide such reasonable care as the patient’s known condition required. The hospital’s responsibility to its patient extended to the taking of such measures as were necessary to prevent the patient from hurting himself if the hospital knew or, in the exercise of reasonable care, should have known that the patient’s mental incapacity might lead to his own injury. Arlington Heights Sanitarium v. Deaderick, 272 S.W. 497, (Tex.Civ.App.—San Antonio 1925, no writ); Mounds Park Hospital v. Von Eye, 245 F.2d 756 (8th Cir. 1957); Annot., 70 A.L.R.2d 335 (1960).

In determining whether the hospital exercised reasonable care in the instant case, it was appropriate for the jury to consider not only the physical custodial surroundings for mental patients at the hospital but also the peculiar mental traits of the patient. Davis v. Springfield Hospital, 204 Mo.App. 626, 218 S.W. 696 (1920). The hospital was required to guard against only those dangers which it should have anticipated from the particular circumstances at hand, and the fact alone that a patient suffered some mental incapacity would not, under every circumstance, have constituted notice to the hospital that the patient would likely harm himself unless restrained by maximum security measures. Fetzer v. Ab erdeen Clinic, 48 S.D. 308, 204 N.W. 364 (1925); Annot., 39 A.L.R. 1423 (1925); Gregory v. Robinson, 388 S.W.2d 88 (Mo. Sup.1960).

“The law in Texas that is applicable to and controls the disposition of this case is set out in the case of Bornmann v. Great Southwest General Hospital, Inc., 453 F.2d 616 (5th Circuit, 1971) as follows at page 621: ‘Simply stated, a hospital is under a duty to exercise reasonable care to safeguard the patient from any known or reasonably apprehensible danger from himself and to exercise such reasonable care for his safety as his mental and physical condition, if known, may require. Liability exists only if the suicide proximately results from the negligence of the hospital or its employees. The most important single factor in determining the liability of a hospital for failing to prevent the suicide of a patient is whether the hospital authorities in the circumstances, could reasonably have anticipated that the patient might harm himself.’ Harris Hospital v. Pope, 520 S.W.2d 813, 815 (Tex.Civ.App. — Fort Worth 1975, no writ).

In the case at bar there was testimony, in addition to that of the admitting physician, which indicated that Harris was acting irrationally and suffered some mental incapacity. One of the nurses described his condition as schizophrenic and his behavior as paranoid. She testified that he did not appear to be aware of what she was saying and that he was placed in isolation because he had become hyperactive. An orderly testified that Harris was uncommunicative and slightly catatonic and that they could tell “he was indeed a psychiatric case”. Although this testimony indicates that Harris was mentally confused and needed care and treatment, the evidence does not clearly and positively establish that the hospital knew or should have known that Harris would likely take radical steps to escape from the psychiatric ward or attempt to inflict injury upon himself.

Furthermore, there was testimony from which the jury could have concluded that Harris was not considered dangerous, either by his family or the hospital personnel, and that he had not shown any violent tendencies or manifest any intent to escape. Considering the evidence in its entirety, the jury was at liberty to decide that Harris’ known mental condition was not such as to indicate his potential for escape.

The authorities relied upon by the appellant are, for the most part, cases in which the trier of fact found that the hospital knew or should have known of the patient’s propensity to escape or do injury to himself. The jury in the case at bar did not find from the evidence that the hospital failed to exercise ordinary care in the protection of Harris’ safety, and the evidence does not conclusively establish the affirmative or that issue. Neither can this court say, from a consideration of the entire record, that the evidence so preponderates in favor of a finding of negligence on the part of the Hospital District as to require that the cause be reversed and a new trial ordered.

The judgment of the trial court is affirmed.


author: WALTER, Justice.

text:
    UNION TEXAS PETROLEUM, a Division of Allied Chemical Corp., Appellant, v. RAILROAD COMMISSION of Texas et al., Appellees.
    No. 5036.
    Court of Civil Appeals of Texas, Eastland.
    Oct. 6, 1977.
    Rehearing Denied Nov. 10, 1977.

      John L. McConn, Jr., Butler, Binion, Rice, Cook & Knapp, Houston, Scott & Douglas, Austin, David G. Beerbower, Division Counsel, Union Texas Petroleum, Houston, for appellant.
    Joyce B. Carpenter and John David Hughes, Asst. Attys. Gen., Austin, John G. Tucker, Howell Cobb and Thomas G. King, Beaumont, for appellees.
   WALTER, Justice.

Union Texas Petroleum, a division of Allied Chemical Corporation, prosecuted an appeal from the June 16, 1975 order of the Railroad Commission of Texas in Gas Utilities Docket No. 495. The order finds Union has privately negotiated industrial natural gas sales contracts at various prices and such contracts should not be modified or abrogated as to price per MMBTU “since there is no showing in this cause that the public interest would be adversely affected as required by the Court in High Plains Natural Gas Company v. Railroad Commission of Texas, 467 S.W.2d 532 (Tex.Civ.App.—Austin 1971, writ ref. n.r.e.).”

Allied Chemical Corporation is the real party in interest as appellant. Union Texas Petroleum and Winnie Pipeline System are divisions of Allied Chemical. Mobil Oil Corporation, Gulf Coast Machine & Supply Company and Houston Chemical Company intervened seeking to uphold the Commission’s order except as to its finding that Allied’s Winnie Pipeline System was a gas utility.

The trial court found that plaintiff’s Winnie Pipeline System is a public utility subject to the jurisdiction of the Railroad Commission of Texas; plaintiff’s gas is sold under contracts negotiated at prices substantially less than the current cost and the sales under such contracts are being made at a substantial loss to plaintiff, but that the public interest is not affected by such loss and does not require that plaintiff’s contracts with intervenors be modified or abrogated as to price; and, that the order of the Railroad Commission of Texas dated June 16, 1975, in Gas Utilities Docket No. 495 is just and reasonable, and supported by substantial evidence, and being further of the opinion that, plaintiff, having failed to show by clear and satisfactory evidence that such order is unjust and unreasonable as to it, such order should be in all things sustained.

Allied has appealed. It contends:
“Point of Error No. 1
The trial court erred in not holding that the Commission’s order should be set aside because the order requires appellant to sell gas to its industrial customers at less than cost.
Point of Error No. 2
The trial court erred in not holding that the Commission’s order should be set aside because the Commission erroneously held that it would not set adequate rates for a gas utility selling gas at less than cost in the absence of a showing that the nonutility assets of the gas utility are insufficient to enable it to continue in business at below cost rates.
Point of Error No. 3
The trial court erred in not holding that the Commission erred in considering assets of appellant other than those used and useful in appellant’s Winnie Pipeline System gas utility business in determining not to set adequate rates.
Point of Error No. 4
The trial court erred in not holding that the Commission erred in refusing to set adequate rates on the ground that only industrial gas sales contracts with a small number of customers are involved.
Point of Error No. 5
The trial court erred in not holding that the Commission’s order should be set aside because the order does not set out the basis for the Commission’s refusal to set adequate rates.”

Mobil’s motion to be dismissed has been granted.

Houston Chemical Company and Gulf Coast Machine and Supply Company assert a cross point the court erred in concluding Allied was a gas utility. These cross points are overruled.

Allied alleged it sold and delivered gas to industrial customers and others in the vicinity of Beaumont and Port Arthur; it transported and delivered gas for public use or service for compensation; its pipelines are laid upon, over or under public highways, roads and railroad and other public utility rights-of-way, through its Winnie Pipeline System and, therefore, it was a gas utility. Allied stipulated as follows:

. . May it please the Court, we will stipulate that the financial responsibility of Allied Chemical Corporation in its overall operation will not be — let me back up.
I really stand here before the Court and don’t know the impact of the Winnie Pipeline System’s loss on Allied Chemical. I will state to the Court that it is my understanding, based on hearsay, that these losses will not impair the financial integrity of Allied Chemical Corporation as an overall entity. I will further state that we do not make that an issue here. We do not contend, for the purposes of this case, that the financial integrity of Allied Chemical Corporation in its entirety will be seriously affected by the outcome of this lawsuit.”

Ralph Pruitt was employed by Allied in its Union Texas Petroleum division in charge of natural gas operations and testified substantially as follows:

Texas Gas Pipeline Corporation is a wholly owned subsidiary of Allied and is engaged in purchasing and selling gas in interstate commerce. Winnie Pipeline System is an intrastate system and has gathering lines and truck transmission lines in excess of three hundred miles. A portion of the Winnie System is used by Texas Gas Pipeline Corporation. Plaintiff’s Exhibit 3 includes our five major industrial contracts, and plaintiff’s Exhibit 2 under miscellaneous sales shows our other customers. The contracts of Gulf Coast Machine and Houston Chemical have expired. Gulf Coast was paying 31 cents per million BTU’s when its contract expired and Houston Chemical was paying 37 cents per million BTU’s. Allied’s contract with Mobil will not expire until January 1, 1982 and provides for a price of 18½ cents per million BTU’s. During the year 1975, the loss sustained by Winnie Pipeline System as related to the rate base was Twenty-Four Million Thirty-Four Thousand Seven Hundred and Fifty Dollars ($24,034,-750.00).
Plaintiff’s Exhibit 2 shows various miscellaneous sales. The gas sales were negotiated by our gas contract representatives. The miscellaneous sales listed in plaintiff’s Exhibit 2 are, so far as volume is concerned, considered de minimis. In our curtailment plan before the Commission, we made the the representation that “Union Texas will not enter into any new contracts for the sale of gas from the Winnie System or renew any contract expiring on the system”. I know that Union Texas operated profitably during each of the years of 1972 through 1974.
The contracts shown on plaintiff’s Exhibit 2 were not filed with the Commission until the filing of the curtailment plan. The source of funds for Winnie was generated by the profits from Winnie until it went into a loss position and since then it has been from Texas Petroleum, a division of Allied. Texas Petroleum also gets its money from Allied. They are all Allied Chemical Corporation.

V. A. McElfresh, a director and executive vice-president of the utility consulting firm of H. Zinder & Associates, engaged in consulting work for clients engaged in the production, transmission and distribution of natural gas, testified substantially as follows:

I was asked to ascertain the revenue requirements of the Winnie Pipeline System under several conditions which involve a determination of the fair value of the property. I testified before the Commission in Docket Number 495, from which this case is appealed. My testimony before the Commission covered the fair value rate base of the Winnie System, its revenues and expenses with appropriate adjustments for cost of service. I have prepared an exhibit covering the years 1973, 1974 and 1975, showing the excess of the cost of service both with and without return and related income taxes, over the revenues actually received by the company.
Based on my 1972 information, probably all of the customers were being discriminated against because they were not paying enough and Winnie was being discriminated against because it was not collecting enough. Based on my studies, all of these contracts are discriminatory. I don’t know when any of the contracts became discriminatory. When Winnie commenced delivering volumes to Firestone pursuant to a settlement agreement at no cost to Firestone, I think there was an element of discrimination there from the regulatory viewpoint of revenues equaling cost of service in an approximate amount.

He was asked the following questions and he gave the following answers:

“Q Yes, sir, I understand, and you said that the fairest way to distribute it would be to have a uniform cost.
If you had that uniform cost there would be four of these that would be subsidized in effect by the rest of them, wouldn’t they, it would be the TPA plant, the Mobil (total), the Firestone, and the Texaco, all above 30.12?
A Yes, there would be only two customers whose revenue exceeded the cost of service on a uniform rate basis.
Q Who would be those two customers?
A Gulf Coast Machine and Houston Chemical.
Q They would be footing the bill, if you put it on a uniform rate basis, for the rest of them?
A In part. Overall, there would still be a deficiency of one million seven hundred and sixteen thousand dollars.
Q You don’t expect them to make up the whole thing. At least on those two Allied is making a little money on them?
A That’s correct.”

He continued to testify substantially as follows:

I have not made a study of the five contracts involved in this case and have not made a study of Allied’s contracts with Gulf Coast and Houston Chemical. Basically what I have been talking about is a rate as if it were set by a regulatory body in the beginning.
Plaintiff’s Exhibit 9 shows the fair value rate base for the Winnie System and applies to property valued at a reasonable balance between depreciated original cost and reproduction cost adjusted for age and condition. Other property in the general plant is valued on a market value basis. This exhibit is not used in its entirety in the cost of service because part of this property is used by Texas Gas Pipeline Corporation. Plaintiff’s Exhibit 10 covered the fair value rate base on December 31,1972. Plaintiff’s Exhibit 11 is a cost of service study and a revenue deficiency based on 12 months ending December 31, 1972, showing a revenue deficiency of $4,711,469.00. Plaintiff’s Exhibit 12 shows a cost of service and revenue deficiency study for the 12 months ending December 31, 1972, and is the same as Exhibit 11 except there hasn’t been the normalization to show purchases of curtailed gas and sales of curtailed gas. Plaintiff’s Exhibit 13 is similar in form and content to plaintiff’s Exhibits 11 and 12 although there were several changes which in my opinion are less favorable to plaintiff. Plaintiff’s Exhibit 14 is similar in form and content to plaintiff’s Exhibits 11,12 and 13 in that it covers the total cost of service and revenues reflected by the books. Instead of the test year, it covers the years 1973, 1974 and 1975. (Portions of column 4 of plaintiff’s Exhibit 14 were not admitted into evidence.) Plaintiff’s Exhibit 15 was prepared to show the cost of service by individual customers based on the cost of service date in plaintiff’s Exhibit 13 for the 12 months ending December 31, 1972.

While discussing plaintiff’s Exhibit 15, the witness was asked and he answered the following questions:

“Q And if you apply the cost of service at the uniform rate developed by you, you have two customers whose revenue exceeded the cost of the service to them; is that correct?
A That’s correct.
Q And those two customers were Gulf Coast Machine and Houston Chemical.
A That’s right.”

The witness continued to testify substantially as follows:

Mobil, Firestone, Texaco B. H., Amoco and Big Three Welding are the customers whose costs exceeded the revenue. The contract rates which Allied entered into with its various customers were discriminatory and that is shown on plaintiff’s Exhibit 15.

The parties stipulated authentication of copies of documents on file with the Commission was waived and it was agreed testimony of witnesses before the Commission could be offered from the transcript of the proceedings. All pertinent records and testimony before the Commission were introduced into evidence.

Allied’s annual reports for 1972, 1973, 1974 and 1975 were admitted into evidence for the limited purpose of showing the nature of Allied’s overall operations, the nature of the business and the fact that Winnie Pipeline System contracts are treated as an integral part of a larger operation and the losses are more than offset by profits from other operations and for the purpose of showing the various admissions of these matters and the wholly solvent and financially capable character of the corporation.

The 1973 report reads:

“Natural gas operations, which include domestic production and distribution (the latter including substantial sales under long-term contracts), are accounted for as a homogenous business. Accordingly, provision is not made for possible future losses on individual long-term sales contracts as long as the overall natural gas business is estimated to be profitable over the life of such contracts based on actual data as of the date of the financial statements for prices, costs, reserves and availability of purchased gas.” (Emphasis added)
The 1972 report asserts:
“Our search for large new reserves of oil and gas with which to expand Allied Chemical’s participation in the growing energy market is moving rapidly forward. In the North Sea and Indonesia, particularly, our Union Texas Petroleum Division has reported notable progress in recent months. Early in 1972 the division, in partnership with Occidental Petroleum Corporation, Getty Oil Company and Thomson Scottish Associates, acquired six tracts covering 316,000 acres in the British sector of the North Sea. Initial exploratory drilling began in midyear, and early in 1973, oil was discovered about 100 miles off the coast of Scotland. Further drilling was promptly begun to establish the commercial potential of the field, which covers 15,000 acres. The initial well flow tested approximately 9,000 barrels of high-quality, low-sulfur oil per day. Allied Chemical has a 20 percent interest in this new discovery, which has been named Piper Field. Another group, in which we hold a 25 percent interest, is developing a gas field in the southern sector of the North Sea and is negotiating with the British Gas Council for sale of this gas.
In Indonesia, a major gas reserve was discovered during 1972. The new Badak Field is in Kalimantan on part of 4.4 million acres of land in Kalimantan and South Sumatra covered by a contract that allots 65 percent of production to a government agency and 35 percent to a partnership of American companies. Allied Chemical owns a 35 percent interest, reducible under certain options of our partners to 26¼ percent, in the partners’ share of production. Following discovery of the field, a second helicopter drilling rig was moved into Kalimantan to speed up development of this significant find, and six wells were completed by year’s end. Allied Chemical also has a 30 percent working interest in a production-sharing contract that covers 900,000 acres in North Sumatra. Oil has been discovered there, and exploratory and development drilling continue. During 1972, our Union Texas Petroleum Division opened an exploration and production office in Singapore to facilitate coordination and planning for the Company’s extensive Indonesian operations.”

Allied’s report to its stockholders made the following statements: 1972 — “A reviving economy and the cumulative impact of our long-range profit improvement programs enabled Allied Chemical to achieve considerably better operating performance during 1972.”; 1973—“Allied Chemical’s profit performance improved sharply in 1973, and net income reached a record $3.45 a share.”; and, 1974—“Allied Chemical had its most successful year in 1974, achieving substantial increases in sales and profits over previous record levels. Earnings rose from $3.45 a share in 1973—a record at the time—to $5.43 a share.”.

In Lone Star Gas Company v. State of Texas, 304 U.S. 224, 58 S.Ct. 883, 82 L.Ed. 1304 (1937), the court said:

“The Commission’s order was presumptively valid, as the state court held, but it was open to attack in this action under the state statute. Appellant was entitled to present evidence to rebut the Commission’s findings of value, operating expenses, revenues and return, upon which the order rested.”

In Railroad Commission v. Shell Oil Co., 139 Tex. 66, 161 S.W.2d 1022 (1942), the court said:

. .If the matter covered by the order is one committed to the agency by the Legislature, and involves the exercise of its sound judgment and discretion in the administration of the matter so committed to it, the court will not undertake to put itself in the position of the agency, and determine the wisdom or advisability of the particular ruling or order in question, but will sustain the action of the agency so long as its conclusions are reasonably supported by substantial evidence

Prices, rates, rules and regulations and conditions of service in contracts with a gas utility are subject to change by the Commission.

Art. 6054, Tex.Rev.Civ.Stat.Ann., provides:

“All orders and agreements of any company or corporation, or any person or persons controlling such pipe lines establishing and prescribing prices, rates, rules and regulations and conditions of service, shall be subject to review, revision and regulation by the Commission on hearing after notice as provided for herein to the person, firm, corporation, partnership or joint stock association owning or controlling or operating the gas pipe line affected. Acts 1920, 36th Leg., 3rd C.S., p. 18, ch. 14 § 3.”

Allied’s position is that the refusal of the Commission to modify its expired contracts with Gulf Coast and Houston Chemical constitutes confiscation as a matter of law under the United States and Texas Constitutions.

Allied’s burden is to establish that the findings made by the Commission are not supported by substantial evidence and establish that the evidence so conclusively requires modification of the contract sales price agreement voluntarily entered into by Allied and Gulf Coast and Houston Chemical that the refusal to modify would be arbitrary and capricious. Gerst v. Cain, 388 S.W.2d 168 (Tex.1965).

In Railroad Commission v. Shell Oil Co., 139 Tex. 66, 161 S.W.2d 1022 (1942), the court said:

“. . .In Texas, in all trials contesting the validity of an order, rule or regulation of an administrative agency, the trial is not for the purpose of determining wdiether the agency actually heard sufficient evidence to support its orders, blit whether at the time such order was entered by the agency there then existed sufficient facts to justify the same. Whether the agency heard sufficient evidence is not material. In fact, the evidence heard by the agency is not per se admissible upon the trial in the district court. Whether it is admissible upon the trial in the district court must depend upon its own merits under the general rules of evidence, and without regard to whether it had theretofore been introduced before the agency .

The Commission contends the only issue involved is whether modification of the contract sales price agreements between Allied and Gulf Coast and Allied and Houston Chemical would be in the public interest as defined in High Plains Natural Gas Company v. Railroad Commission of Texas, 467 S.W.2d 532 (Tex.Civ.App.—Austin 1971, writ ref. n.r.e.).

Gulf Coast and Houston Chemical say, “It is no longer an open question in Texas that the Railroad Commission has the authority to set aside the provisions of such contracts only if there is a positive showing that such modification is required by the public interest.”

In Allied’s petition, it asks for relief under Article 6054, but it does not allege such relief would be in the public interest.

In High Plains Natural Gas Company, supra, the court said:

“. . . High Plains showed that the contract price yielded a rate of return of only 2.987. This is not only unquestionably far below a reasonable rate of return, but it is confiscatory under the standard set in the Alvin case. The Alvin case referred to is Railroad Commission v. Houston Natural Gas Corporation, 155 Tex. 502, 289 S.W.2d 559 (1956). The Alvin case is not in point here as it was a rate case wherein the rate making jurisdiction of the Commission was invoked thus compelling the Commission to set a reasonable rate under the applicable guidelines. The standard applicable there is not the same as here. The case before us is not a rate case . .

Mobil participated in the trial of this case as an intervenor. Most of the damaging testimony of appellant’s expert witness, V. A. McElfresh, was directed against Mobil’s long-term contract which had not expired. In plaintiff’s Exhibit 15, schedule number 3 showing a comparison of revenues with cost of service for 12 months ending December 31, 1972, we find Gulf Coast’s revenue in excess of cost was $2,591 and Houston Chemical’s revenue in excess of cost was $128,456, while Mobil’s total revenue was $1,753,001 and its cost of service was $2,812,386. This shows the cost of service in excess of revenue from Mobil to be $1,059,385. All issues between Mobil and Allied have been compromised and settled, Mobil has been dismissed, and all issues shown in this record between Allied and Mobil are moot.

In High Plains Natural Gas Company, supra, the court said:

“Thus it becomes apparent that Appellant has neither alleged in its pleadings nor offered substantial evidence to indicate that the contract rate should be set aside in the public interest. While the evidence may indicate a bad bargain or a rate less than the Commission, were it to have jurisdiction, could lawfully set the public interest test as stated in Sierra simply had not been met.”

We have considered only the evidence relating to the contract between Allied and Gulf Coast and Allied and Houston Chemical. We find that Allied has not discharged its burden of establishing the findings of the Commission are not supported by substantial evidence. It has failed to plead and establish by substantial evidence the abrogation of these contracts is in the public interest.

We find no merit in appellant’s point the court erred in not holding the Commission’s order should be set aside because the order does not set out the basis for its refusal to set adequate rates. Allied contends Section 16(b) of Article 6252-13a, V.A.C.S., the Administrative Procedure and Texas Register Act, requires the Commission to make findings of fact and conclusions of law. Said Section 16(b) is as follows:

“(b) A final decision must include findings of fact and conclusions of law, separately stated. Findings of fact, if set forth in statutory language, must be accompanied by a concise and explicit statement of the underlying facts supporting the findings. If, in accordance with agency rules, a party submitted proposed findings of fact, the decision shall include a ruling on each proposed finding. Parties shall be notified either personally or by mail of any decision or order. On written request, a copy of the decision or order shall be delivered or mailed to any party and to his attorney of record.”

The order of the Commission is dated June 16, 1975, and the Administrative Procedure Act did not become effective until January 1, 1976.

We have considered all of appellant’s points and find no merit in them. They are overruled.

The judgment is affirmed.


author: SHANNON, Justice.

text:
    STATE BAR of Texas et al., Appellants, v. Glen Elmer VAN SLYKE, III, et al., Appellees.
    No. 12573.
    Court of Civil Appeals of Texas, Austin.
    Oct. 12, 1977.
    Rehearing Denied Nov. 9, 1977.

      Wayne H. Paris, Asst. Gen. Counsel, State Bar of Texas, Austin, for appellants.
    Arthur Mitchell, Mitchell, George & Belt, Austin, for appellee Van Slyke.
    John L. Hill, Atty. Gen., David M. Kendall, Jr., Asst. Atty. Gen., Austin, for appel-lee Board of Law Examiners.
   SHANNON, Justice.

This is an appeal from a declaratory judgment of the district court of Travis County. That judgment declared that Glen Elmer Van Slyke, III, was not precluded from being licensed to practice law by reason of a prior felony conviction. Because the judgment was an advisory opinion, we will vacate the judgment.

The following facts led to the filing of the declaratory judgment action. Van Slyke was convicted by the district court of Harris County of violation of Tex. Penal Code Ann. art. 152 (1918). Punishment was assessed by the court at eight years, probated. Article 152, now repealed, proscribed mutilating, defacing, defiling, tramping upon or casting contempt upon the flag of , the United States. The testimony was that Van Slyke had employed the United States flag in masturbating in a public place at Rice University on May 1,1970. The judgment of the district court was affirmed by the Court of Criminal Appeals in 1973. 489 S.W.2d 590.

Later, Van Slyke filed his declaration of intention to study law.

After Van Slyke completed a portion of the probated sentence, the district court of Harris County on April 1, 1975, entered an order permitting Van Slyke to withdraw his plea of guilty, dismissing the indictment against him, and setting aside the judgment of conviction against him, all pursuant to Tex.Code Crim.Proc.Ann. art. 42.12 § 7 (1966).

Van Slyke applied for permission to take the bar examination. The Fourth District Committee on Admissions, upon supplementary investigation, reported that Van Slyke was not of good moral character and that he was barred by the provisions of Tex.Rev. Civ.Stat.Ann. art. 311 from admission to the bar. Article 311 provides that no person convicted of a felony shall receive a license as an attorney. Pursuant to the rules governing admission to the bar, Van Slyke was then accorded a public hearing by the State Board of Law Examiners.

After hearing, the Board voted unanimously that Van Slyke possessed the requisite good moral character and fitness under the rules governing admission to the State Bar of Texas unless Tex.Rev.Civ.Stat.Ann. art. 311 precluded the Board from “certifying his eligibility.”

The Board then determined to file a declaratory judgment in the district court of Travis County. In its petition the Board named Van Slyke and the State Bar of Texas as defendants. Later, the Standards of Admissions Committee District Four and the Executive Director of the State Bar of Texas filed a petition in intervention in the cause.

The Board’s petition provides, in part, as follows:

“The Board of Law Examiners would show that it has held extensive hearings looking into the character of Defendant Van Slyke and believes that he is of such moral character and of such capacity in attainment that it would be proper for him to be permitted to take the State Bar examination and if he passes it to be licensed as an attorney. The State Bar of Texas, on the other hand, acting through its District 4 Committee on the Standards of Admission contends that Defendant Van Slyke does not possess good moral character and fitness for admission and urges that his prior conviction for commission of a felony is an absolute bar to his licensing pursuant to article 311.
“Plaintiff would show that an actual controversy exists in that it is not clear whether the provisions of section 7 of article 42.12 do or do not have the effect that Defendant Van Slyke no longer stands convicted of a felony. Justice requires that such question be resolved and it is for that purpose that this action is filed.”

In their petition intervenors pleaded, among other things:

“Interveners further allege that this is a proper matter for Declaratory Relief under Article 2524-1, V.T.C.S., in that it involves an actual, real, bona fide, and justiciable controversy at this time in that the Plaintiff BOARD OF LAW EXAMINERS has not made and is precluded from making a final determination of this matter due to Article 311, V.T.C.S. The exact interloeatory [sic] conditional decision of the Board at this point has been:
‘The Board voted unanimously that the applicant, Glen Elmer Van Slyke, III, possesses present moral character and fitness under the Rules Governing Admission to the Bar of Texas unless the provisions of Art. 811 R.C.S.T. would preclude the Board of Law Examiners from certifying his eligibility.’
“Thus there has been and can be no final determination of this matter until this Honorable Court interprets the effect of Article 311, V.T.C.S. as sought in Plaintiff’s Original Petition for Declaratory Relief.”

The reasons for the vacation of the court’s judgment follow. Although after hearing the Board was of the opinion that Van Slyke was of such moral character and such capacity in attainment that it would be proper for him to be permitted to take the State Bar Examination and if he passed it to be licensed as an attorney, the Board neither granted nor denied Van Slyke the right to take the bar examination. Instead, the Board passed on to the district court the law question of whether Van Slyke’s prior felony conviction was a bar to his being licensed pursuant to art. 311.

The purpose of the filing of the declaratory judgment was to obtain, before the entry of the Board’s order, the advice of the district court as to whether art. 311 inhibited Van Slyke from taking the bar. After receiving the court’s judgment, the Board would grant or deny, in consonance with the court’s advice, Van Slyke the right to take the bar examination.

Article V § 8 of the Texas Constitution does not empower the courts to render advisory opinions. United Services Life Insurance Company v. Delaney, 396 S.W.2d 855 (Tex.1965); Firemen’s Ins. Co. of Newark, New Jersey v. Burch, 442 S.W.2d 331 (Tex.1968). As is apparent, we view the judgment to be an advisory opinion.

The judgment of the district court is vacated.


text:
    Alvin Daniel HEIN, Appellant, v. HARRIS COUNTY, Texas, Appellee.
    No. 16925.
    Court of Civil Appeals of Texas, Houston (1st Dist.).
    Oct. 13, 1977.
    Rehearing Denied Nov. 10, 1977.
    Kronzer, Abraham & Watkins, M. Dale Friend, James E. (Jed) Robinson, Houston, for appellant.
    Joe Resweber, County Atty., Anthony D. Sheppard, Asst. County Atty., Houston, for appellee.
   COLEMAN, Chief Justice.

This is an action for damages for personal injuries brought under the Texas Tort Claims Act, Tex.Rev.Civ.Stat.Ann. art. 6252-19. When the plaintiff rested the trial court withdrew the case from the jury and entered a judgment for the defendant. The question to be determined is whether the plaintiff plead, and produced evidence to support, a cause of action arising under the Texas Tort Claims Act. The judgment is affirmed.

The plaintiff was employed by Harris County in the Sign Shop. The Sign Shop had the responsibility of repairing, maintaining and installing all types of street, highway and traffic control signs. On the day of his accident and the day before, plaintiff was working with Marvin Carlton, another county employee. They were installing delineator signs in a rural area of Harris County. On the day prior to the accident, plaintiff and Carlton had encountered numerous snakes in the area. Carlton obtained a pistol and took it to the job site the day of the accident. During the morning’s work Carlton shot and killed several snakes. After they had finished their work, they went to a house in the area which belonged to a friend of Carlton’s for the purpose of calling back to the camp to receive further instructions as was custom-dry.

After calling the camp they discussed snakes they had killed with Carlton’s friend. As they were preparing to leave to return to camp, the plaintiff went to the back of the pickup truck to straighten out some tools. Carlton went to the truck and obtained the pistol to show it to his friend. While he was attempting to remove the clip, he banged the gun on the palm of his hand several times. The pistol accidentally discharged and the bullet struck the plaintiff in the right temple, penetrating completely through the eye socket and destroying the eyeball.

The plaintiff alleges four alternative grounds of negligence which proximately caused his injury: (1) the negligence of the employee Carlton resulting in the accidental discharging of the weapon; (2) the negligence of supervisory personnel of the county in failing to provide their employees with adequate equipment to protect themselves against snakes or other dangerous animals or conditions; (3) the negligence of the county supervisory personnel in failing to properly instruct their employees in the methods of self protection; and (4) the negligence of the county supervisory personnel in failing to adequately supervise their employees in the performance of their duties. Evidence was introduced to support each of these grounds of alleged negligence.

The plaintiff contends that allegations in his petition, and the evidence offered in support thereof, bring the case within the rationale of Lowe v. Texas Tech University, 540 S.W.2d 297 (Tex.1976). In order to maintain his suit against the defense of governmental immunity it was necessary for the plaintiff to allege and prove a cause of action within Section 3 of the Texas Tort Claims Act. In Lowe, the Supreme Court paraphrased that portion of Section 3 pertinent as follows:

“Each unit of government in the state shall be liable for money damages for death or personal injuries so caused (i.e., when proximately caused by the negligence or wrongful act or omission of any officer or employee acting within the scope of his employment or office) from some condition or some use of tangible property under circumstances where there would be private liability.”

The Supreme Court then held that the waiver of immunity is invoked by allegations that Texas Tech through its authorized personnel was negligent in affirmatively furnishing equipment, uniforms and pads which were defective. The court also held that the plaintiff’s allegations of a negligent failure to furnish them proper protective items of personal property, to be used as a part of the uniform furnished him, brings his case within the statute of waiver of immunity arising from some condition or some use of personal property. In a concurring opinion in which Justices McGee and Doughty joined, Chief Justice Greenhill called attention to the difficulty inherent in attempting to interpret and apply the language of Section 3 of the Tort Claims Act. He concluded that the Legislature did not intend a broad general waiver of governmental immunity but rather a limited waiver of immunity confined to cases involving an injury proximately caused by some condition or use of property which is owned or furnished by the State. He stated:

“The statutory language “condition or use” of property implies that such property was furnished, was in bad or defective condition or was wrongly used.”

He further stated that carried to its logical conclusion, the majority opinion might be construed to find a waiver of immunity because the injury grew out of the nonuse of a nondefective knee brace which was furnished; i.e., some condition or use [non-use] of personal property. As we read the opinion both the majority and the concurring justices construed the words “from some condition or some use of tangible property” found in Section 3 to contemplate at a minimum that the personal property involved be furnished by the governmental agency. In Lowe a uniform was furnished, but it failed to include proper protective equipment.

The court in Lowe cited McGuire v. Over-ton Memorial Hospital, 514 S.W .2d 79 (Tex. Civ.App.—Tyler), writ ref’d n.r.e. by percuriam, 518 S.W.2d 528 (Tex.1975); Mokry v. University of Texas Health Science Center at Dallas, 529 S.W.2d 802 (Tex.Civ.App.—Dallas 1975, writ ref’d n.r.e.). In McGuire the court held that the allegation that the hospital was negligent in providing a bed without bedrails stated a cause of action within the Texas Tort Claims Act and in Mokry the court found no error in the decision of the Court of Civil Appeals holding that allegations that the Health Science Center was negligent in failing to provide for use certain items of laboratory equipment, together with the failure to properly use the facilities that were employed, stated a cause of action arising from some condition or use of tangible property.

The first question that arises is whether the injuries to the plaintiff were caused by the negligence of an employee acting within the scope of his employment. The evidence establishes that Carlton’s negligent conduct occurred at a time when he was merely showing the pistol to a friend. He had completed the business which brought him to his friend’s house and had delayed his departure for that purpose. The rule is that when a servant turns aside, no matter how short the time, from the prosecution of the master’s work to engage in an affair wholly his own, he ceases to act for the master, and the responsibility for his actions in pursuing his own business or pleasure is upon him alone. Texas & P. By. Co. v. Hagenloh, 151 Tex. 191, 247 S.W.2d 236 (1952). The action of Carlton in attempting to remove the clip from the pistol for the purpose of showing it to a friend was something wholly disconnected from his employment and not for the benefit of his employer. When he turned aside from the prosecution of his duties for the county, although for only a short time, he ceased to act for the county and the responsibility of any act done by him during that time rested upon him alone. Robert R. Walker, Inc. v. Burgdorf, 150 Tex. 603, 244 S.W.2d 506 (1951); Rodgers v. Tobias, 225 S.W. 804 (Tex.Civ.App.—Galveston 1920, writ ref’d); Bradford v. Fort Worth Transit Company, 450 S.W. 919 (Tex.Civ.App.—Fort Worth 1970, writ ref’d n.r.e.); Mitchell v. Ellis, 374 S.W.2d 333 (Tex.Civ.App.—Fort Worth 1963, writ ref d).

At the time Carlton negligently caused injury to the plaintiff he was not acting within the scope of his employment with Harris County. The plaintiff has failed to prove the facts required to establish a waiver of governmental immunity by reason of Section 3 of the Texas Tort Claims Act.

The plaintiff presents points of error asserting that there was sufficient evidence to require submission of issues to the jury inquiring as to whether the negligence of county supervisory employees, (1) in failing to provide adequate protective equipment, (2) in failing to adequately instruct their employees in methods of dealing with dangerous animals, particularly snakes, or (3) in failing to adequately supervise their employees in performance of their duties, were proximate causes of the injuries to the plaintiff. It is plaintiff’s contention that a reasonable person in the position of Harris County exercising ordinary care, would have foreseen that each of these failures might have resulted in an event similar to the one which occurred. He also argues that negligent conduct is a cause in fact if it is a substantial factor in bringing about harm. He argues that it is at least a reasonable inference that had the county provided protective equipment, or had it adequately instructed its employees in methods of dealing with dangerous snakes, or had it adequately supervised the employees in the performance of their duties, the employee would not have brought a gun to the job site.

We conclude that these allegations of negligence on the part of supervisory employees do not constitute allegations of negligence arising from some condition or use of tangible property. Gonzales v. Lubbock State School, 487 S.W.2d 815 (Tex.Civ. App. — Amarillo 1972, no writ). We do not think that the Legislature intended that there be a waiver of governmental immunity in all cases where some item of personal property is either used or not used. The injury must be proximately caused either by the negligence of an employee acting within the scope of his employment in that employee’s use of tangible property, or under circumstances where an employee or agent furnished tangible property the use of which caused the personal injury. Lowe v. Texas Tech University, supra. There is no evidence that the supervisory employees were negligent in using the pistol or were negligent in furnishing the pistol to an employee. The fact that the supervisory employees were negligent in creating or permitting the existence of conditions which might have influenced Carlton in securing a pistol for his protection did not establish that the supervisory employees had a sufficient relationship to the condition or use of the pistol as to bring the action within the exemption provided by Section 3 of the Texas Tort Claims Act. To infer that but for the negligence of the supervisors plaintiff would not have been shot would be pure speculation. Texas & Pacific Railway Co. v. McCleery, 418 S.W.2d 494 (Tex.1967).

The judgment is affirmed.


author: MURRAY, Justice.

text:
    BOWERS STEEL, INC., Appellant, v. Thomas V. DeBROOKE, Appellee.
    No. 15852.
    Court of Civil Appeals of Texas, San Antonio.
    Oct. 19, 1977.

      Alfred L. Shepperd, Sawtelle, Goode, Davidson & Troilo, Arthur C. Troilo, Jr., John A. Heller, San Antonio, for appellant.
    Craig L. Austin, San Antonio, for appel-lee.
   MURRAY, Justice.

This is an appeal from a judgment entered by the trial court in favor of appellee, Thomas V. DeBrooke, against appellant, Bowers Steel, Inc. Appellee brought suit against appellant, a small “finished-steel” importing and sales corporation, for breach of an oral contract of employment.

The case was submitted to a jury on special issues and the jury found against appellant on every issue, as follows: (1) that appellant corporation agreed to hire appellee as an officer and to compensate him with 20 percent of the stock of the corporation, a salary of $30,000.00 per year, and the use of a company automobile; (2) that the fair market value of 20 percent of the stock of appellant corporation as of the time of appellee’s termination with the corporation was $20,000.00; (3) that the market value of 20 percent of the stock of appellant corporation as of the time of ap-pellee’s employment was $24,444.00; (4) that appellant corporation had “expressly or impliedly” represented to appellee, subsequent to his employment, that he would be given 20 percent of the stock of the corporation as compensation for his employment; (5) that appellee relied upon the representations of the corporation in continuing his employment with the corporation; (6) that appellant corporation affirmed and ratified the agreement of its president to employ appellee as an officer and to compensate him with 20 percent of the stock, a salary of $30,000.00 a year, and the use of a company automobile; and (7) that appellee did not waive any agreement to receive 20 percent of the stock of appellant corporation by his letter of November 24, 1975. Based upon such answers, the trial court entered judgment for appellee against appellant for $20,000.00 on December 23, 1976. Appellant duly filed its appeal as prescribed by the Rules of Civil Procedure.

There are substantially only three questions presented on this appeal. They are: (1) there is no enforceable contract because it is not definite in its terms, violates the Statute of Frauds, Tex.Bus. & Comm.Code Ann. §§ 8.319 and 26.01 (1968), was merged into a later written instrument, and as a matter of law, appellee waived his cause of action; (2) the market value of the stock at the time of appellee’s termination is not the proper measure of damages and not supported by the evidence; and (3) Boyd King was not authorized to promise 20 percent of the stock on behalf of the corporation, and such promise is not supported by the evidence.

In disposing of a “no evidence” point we are required to follow the well established rule to consider only the evidence and inferences tending to support the jury’s answer. Garza v. Alviar, 395 S.W.2d 821 (Tex.1965). We are required to review all of the evidence in disposing of a “factually insufficient evidence” point. In re King’s Estate, 150 Tex. 662, 244 S.W.2d 660 (1951).

The testimony of a party tó a suit raises an issue of fact. A court of civil appeals cannot substitute its judgment for that of trier of fact. Ryan v. Morgan Spear Associates, Inc., 546 S.W.2d 678 (Tex.Civ. App.—Corpus Christi 1977, writ ref’d n. r. e.).

The jury having answered the issues adversely to appellant’s contention, we have no power to set their findings aside if they are based on sufficient evidence. It depends, therefore, upon the evidence introduced in the case as to whether the proof warrants the findings.

Considering the record before us as a whole, we are of the opinion that our decision in this ease does not depend on the question whether King was authorized to offer 20 percent of the stock. We agree with appellee’s argument that the corporation ratified the agreement of King to pay appellee 20 percent of the stock. The principle is well established that the directors or stockholders may ratify any act or contract of any other body or agency of the corporations which they might have authorized in the first instance. Rogers-Hill & Co. v. San Antonio Hotel Co., 23 S.W.2d 329 (Tex. Comm’n App.1930, jdgmt. adopted).

The stock of the appellant has always been owned by its officers and directors, with Mr. Robert L. Bowers being the largest stockholder.

In April of 1973, Mr. Bowers was president of appellant. Bowers entered into a contract with Boyd King whereby King was to become president of the corporation. King was to receive 18 percent of the corporation’s stock, a salary of $35,000.00 a year, and the use and expenses of an automobile. King became president of the corporation and served in that capacity until December 1974. At the time of his termination, King’s stock was repurchased for $22,-000.00.

In January or February of 1974, King approached the appellee about working for a three-month period for the corporation as a consultant. The relationship went well and King and DeBrooke began conversing about hiring DeBrooke permanently as vice president. King informed DeBrooke of the circumstances under which he, King, had been hired, making it clear to DeBrooke that King had received a salary of $35,-000.00 and corporate stock.

Appellee accepted an offer by the then president of appellant corporation, Mr. Boyd King, to begin work with the corporation on June 15, 1974 based upon certain oral representations made by Mr. King. The employment of the appellee as vice president of the corporation was later ratified and confirmed by the Board of Directors on July 19, 1974, which ratification is documented in the minutes of the Board of Directors which were signed by appellee. The minutes prescribed the terms of appel-lee’s contract of employment to be a salary of $2,500.00 per month and the use of a company automobile. There is reference in the minutes to a recommendation by the Board of Directors that:

[SJome plan be established whereby Mr. DeBrooke would be entitled to acquire an equity participation in the corporation. The Board requested that the President, in conjunction with the corporation’s attorneys and accountants, develop such a plan and present such a plan at a future Board Meeting.

Subsequently, both the attorney and the certified public accountant for the corporation made written propositions whereby De-Brooke was to acquire 20 percent of the corporate stock.

In December of 1974, King left the corporation and Bowers once again became president. DeBrooke was terminated as vice president of the corporation on November 24, 1975. At that time, DeBrooke demanded that he receive the 20 percent of the corporate stock to which he was entitled.

Appellee worked for the appellant from July 1,1974 until November 24,1975. During part of this time, from July 1975 to November 1975, the only stockholders were King and Bowers.

Appellee testified that during this time he had many meetings with Bowers and was assured by Bowers that he had nothing to worry about, that his stock would be forthcoming, and that Bowers would make it happen. Appellee testified that King told him that if he went to work for appellant he would receive 20 percent of the stock.

While it is no doubt true that the general powers of the president of a corporation would not ordinarily include the right to offer 20 percent of the stock of the corporation as an inducement for someone to enter into an employment contract, it does not follow that such right.could not be conferred upon him by the directors or stockholders. Ennis Business Forms, Inc. v. Todd, 523 S.W.2d 83 (Tex.Civ.App.—Waco 1975, no writ); Nelms v. A&A Liquor Stores, Inc., 445 S.W.2d 256 (Tex.Civ.App.—Eastland 1969, writ ref’d n. r. e.).

The evidence in this case is voluminous, and no useful purpose could be sub-served by quoting it to any great extent. We hold that there is evidence from which the jury would be authorized to find that King offered appellee 20 percent of the stock, that the corporation’s directors and stockholders knew of the promise, and that the corporation acquiesced therein and did nothing to repudiate the promise until it decided to terminate appellee. Almar-York Co. v. Fort Worth National Bank, 374 S.W.2d 940 (Tex.Civ.App.—Fort Worth 1964, writ ref’d n. r. e.).

Appellant contends that the promise of 20 percent of the stock was merged with the subsequent written minutes of the Board of Directors quoted above. We disagree. The general rule is that when parties have concluded a valid integrated agreement with respect to a particular subject matter, the enforcement of inconsistent, prior, or contemporaneous agreements is precluded. On the other hand, the rule does not preclude enforcement of prior agreements which are collateral to an integrated agreement and which are not inconsistent with and do not vary or contradict the express or implied terms or obligations thereof. Hubacek v. Ennis State Bank, 159 Tex. 166, 317 S.W.2d 30 (1958). The recommendation of the Board of Directors to the attorneys and accountants to develop a plan whereby appellee would acquire an equity in the corporation is not inconsistent with the prior oral promise and is in fact a proper and normal way to carry out such oral promise.

In Special Issue No. 2 the jury found that the fair market value of 20 percent of the stock of Bowers Steel, Inc., as of the time of appellee’s termination, is $20,000.00.

Bowers Steel, Inc. is a closed corporation; its stock is not listed on the exchange and there is no public market existing. The best evidence of established value of the stock are four arms-length stock transactions entered into between the corporate principals. Stock purchases ranged from $22,000.00 for 18 percent in December 1974, to $30,000.00 for 25 percent in December 1975; averaging $1,500.00 for one percent of stock. The jury awarded appellee $1,000.00 for one percent of the stock which is beneath the average of the four transactions.

In Braman v. Central Hanover Bank & Trust Co., 138 N.J.Eq. 165, 47 A.2d 10 (Ct. Ch.N.J.1946), suit was instituted by a beneficiary of a testamentary trust challenging a sale of stock by the trustee, alleging the sales price was inadequate and unconscionable. The stock of this corporation was very closely held. It was not listed on the stock exchange, and it had no public market. The court held that “The test of market value” of closed corporation common stock, not listed on exchange and having no public market, “is what a willing purchaser” thereof “would pay to a willing seller who was not acting under compulsion.”

See also Fielding v. Allen, 99 F.Supp. 137 (D.N.Y.1951); Crockett v. Smith, 485 S.W.2d 321 (Tex.Civ.App.—Tyler 1972, writ ref’d n. r. e.)

Where corporate stock has no established market value, evidence of the book value of the stock is relevant, although entitled to little weight, and far from conclusive. Bendalin v. Delgado, 406 S.W.2d 897 (Tex.1966); Barsan v. Pioneer Savings & Loan Co., 163 Ohio St. 424, 127 N.E.2d 614 (1955).

The proper measure of damages is the fair market value of the stock as of the time of appellee’s termination, and from all the evidence considered there is sufficient evidence to support the jury’s findings.

The appellant relies on the provisions of § 8.319 of the Tex.Bus. & Comm.Code Ann., entitled “Statute of Frauds.” In pertinent part, this section of the Code states:

A contract for the sale of securities is not enforceable by way of action or defense unless
(1) there is some writing signed by the party against whom enforcement is sought or by his authorized agent or broker sufficient to indicate that a contract has been made for sale of a stated quantity of described securities at a defined or stated price; or
(2) delivery of the security has been accepted or payment has been made but the contract is enforceable under this provision only to the extent of such delivery or payment; .

The courts of Texas have not yet considered the question of whether or not an oral contract of employment for which the consideration is to be corporate stock is prohibited by § 8.319.

It is noted that appellant treats the oral contract as requiring future payment by appellee for the stock, while appellee claims that he is entitled to the stock as consideration for this accepting employment with appellant. This question was determined by the jury adversely to appellant and, therefore, we hold that the prohibition of § 8.319 does not apply. By the terms of § 8.319(2), the prohibition does not apply where payment has been made. Baldassarre v. Singer, 444 Pa. 100, 282 A.2d 262 (1971).

In Baldassarre, supra, the court stated at page 264:

By its own terms, § 8-319 only applies to ‘a contract for the sale of securities.’ We are not convinced that this section is applicable to the transaction in question. Although ‘sale of securities’ is nowhere defined, § 2-106 defines ‘sale’ as: ‘A “sale” consists in the passing of title from the seller to the buyer for a price.’ There is no ‘price’ for stock transferred pursuant to an employment contract. The only consideration is the employment itself. If appellants are correct that an employment contract is a sale for purposes of § 8-319, the Uniform Commercial Code’s statute of frauds on securities, then the two chemists, by leaving their previous employment and working for Rare Metals, have made ‘payment’ for the stock, and thus are entitled to enforce their oral contract under the terms of § 8-319(b). However, we do not believe that such an awkward use of language is necessary. We believe it much more reasonable to state that the contract in question is simply not a contract of sale.

Appellant cites the following cases as authority for the proposition that an oral employment contract dealing with the transfer of stock is within the terms of § 8.319 and is therefore unenforceable. Mildfelt v. Lair, 221 Kan. 557, 561 P.2d 805 (1977); Scarpinato v. National Patent Development Corp., 75 Misc.2d 94, 347 N.Y.2d 623 (Sup.Ct.1973); Crockett v. Smith, supra; Quinn v. Beverages of West Virginia, Inc., 224 S.E.2d 894 (W.Va.1976).

In each of the above cases the oral promise was an option to purchase in the future for a price. It is interesting to note that in Quinn, supra, there was an oral promise of 4,688 shares promised and an option to sell additional shares for a price in the future. The court held that only the option to sell additional shares in the future was prohibited by § 8.319.

All other points raised by appellant have been considered by the Court and are overruled.

The judgment of the trial court is affirmed.


text:
    TRINITY UNIVERSAL INSURANCE COMPANY, Appellant, v. Jessie James VARNADO, Appellee.
    No. 12643.
    Court of Civil Appeals of Texas, Austin.
    Oct. 19, 1977.
    Rehearing Denied Nov. 9, 1977.

      Scott R. Kidd, Brown, Maroney, Rose, Baker & Barber, Austin, for appellant.
    John R. Duren, Duren & Thompson, Copperas Cove, for appellee.
   SHANNON, Justice.

This is an appeal from the judgment of the district court of Lampasas County overruling the plea of privilege of Trinity Universal Insurance Company. The appeal pertains to Tex.Rev.Civ.Stat.Ann. art. 1995, § 23 (1964). We will reverse the judgment.

Appellee, Jessie James Varnado, filed suit for $1,342.73 in the district court of Lampa-sas County against appellant Trinity Universal Insurance Company. Appellee’s suit was grounded upon a family automobile insurance policy written by appellant for appellee. Appellee alleged that his pickup truck, an insured vehicle under the terms of the policy, was damaged by fire, and that appellant refused to pay him under the contract of insurance.

Appellant filed a plea of privilege to be sued in Dallas County. Appellee filed his controverting plea, asserting venue in Lam-pasas County by reason of Tex.Rev.Civ. Stat.Ann. art. 1995, § 23.

The applicable sections of § 23 of Art. 1995 provide as follow:

“23. Corporations and associations.— Suits against a private corporation . may be brought ... in the county in which the plaintiff resided at the time the cause of action or part thereof arose, provided such corporation . . . has an agency or representative in such county; or, if the corporation . . had no agency or representative in the county in which the plaintiff resided at the time the cause of action or part thereof arose, then suit may be brought in the county nearest that in which plaintiff resided at said time in which the corporation . then had an agency or representative.

To prevail upon either of the provisions of § 23, quoted above, one must prove a cause of action. In case of a suit on a contract, the plaintiff, to establish a cause of action, must show at least a right and a breach by the defendant of the corresponding duty. Employers Casualty Company v. Clark, 491 S.W.2d 661 (Tex.1973); Victoria Bank & Trust Co. v. Monteith, 138 Tex. 216, 158 S.W.2d 63 (1941); Bartex, Inc. v. Austin Paving Co., 502 S.W.2d 569 (Tex.Civ.App. 1973, writ ref’d n. r. e.).

Appellee did prove the contract of insurance and his compliance therewith, but appellee failed to prove appellant refused to pay the claim. To prove a “cause of action,” appellee had to establish the contract and its breach. Employers Casualty Co. v. Clark, supra.

The judgment is reversed and the cause is remanded to the district court with instructions to transfer the cause to one of the district courts of Dallas County.


author: PEDEN, Justice.

text:
    S. M. BONEY et al., Appellants, v. Elbert HARRIS, Appellee.
    No. 16927.
    Court of Civil Appeals of Texas, Houston (1st Dist.).
    Oct. 20, 1977.
    Jimmie F. Y. Lee, Houston, for appellant S. M. Boney.
    Philip M. Shafer, Houston, for appellant Hannah Chow.
    Lucas & Hudson, Anson D. Phipps, Houston, for appellee.
   PEDEN, Justice.

Elbert Harris, as administrator of the estate of Grace V. Gale with will annexed, was granted a summary judgment in his suit to remove a cloud from the title of certain property that appellant S. M. Boney had sold to the decedent. The trial court found that appellant Boney had filed a claim against the estate, that it was rejected by the administrator, and that Boney’s failure to file suit within 90 days thereafter, pursuant to § 313 of the Texas Probate Code, barred the claim. Appellant alleges error in the court’s 1) presumed finding that the claim was properly authenticated, 2) deeming admitted certain admissions requested by appellee, 3) failure to allow a trial on appellants’ defensive pleading of fraud, and 4) granting summary judgment on appellee’s motion that failed to specify the grounds on which it was based. We reverse and remand.

The decedent, Grace V. Gale, purchased a house and some lots from S. M. Boney in 1969 and executed a vendor’s lien note and a deed of trust in favor of Mr. Boney in the principal amount of $12,500. She died in May of 1973, and on January 9,1976, Boney purportedly filed a $6,349.95 claim against her estate for the balance allegedly due on the note and 10% attorney’s fees.

Appellants are Mr. Boney and Hannah Chow, trustee in the deed of trust. In points of error one through five, they argue that the summary judgment was improper because of a fatal defect in the affidavit Boney filed in support of his claim. It read:

“S. M. Boney ... on his oath states that he is the owner of such claim, that the same is just, and that all legal offsets, payments and credits through September 8, 1975 which were known to the affiant have been allowed.” (emphasis added).

It is provided in § 301 of the Texas Probate Code that:

“. . .no personal representative of a decedent’s estate . . . shall allow . a claim for money against such estate, unless such claim be supported by an affidavit that the claim is just and that all legal offsets, payments, and credits known to the affiant have been allowed.”

Boney’s affidavit was filed four months after September 8, 1975, so it did not comply with the statutory requirements in that it made no representation concerning any offsets, payments or credits during that four-month period.

The landmark case of Walters v. Prestidge, 30 Tex. 66 (1867) held that an affidavit supporting a claim against an estate must be authenticated with the exact language of the statute or words conveying the same meaning.

“Without entering upon a philological discussion, in order to arrive at the meaning of the terms ‘offsets, payments, and credits,’ it is very clear from the terms themselves, considered with reference to the purpose and policy of the law, that they were intended to comprehend every claim for money, of whatever character, existing in favor of the testator or intestate, against the holder of the claim, and every right or equity which, if allowed, would reduce the amount of the claim presented, to the end that the balance remaining, after deducting these allowances, should represent what is due from the estate to the holder of the claim, after an honest and fair statement of all pecuniary matters between the parties. 30 Tex. at 72.

The affidavit in Walters v. Prestidge stated that “the account ... is correct and just, after allowing all proper credits, to the best of his knowledge and belief.” 30 Tex. at 67. The Supreme Court held that the affidavit was insufficient to support the claim, that the administrator was unable to allow or reject it, and that the holder could not sue on it. 30 Tex. at 72. See also Small v. Small, 434 S.W.2d 940 (Tex.Civ.App. 1968, writ ref., n. r. e.); Tex. Probate Code § 301. The rejection of a claim not verified as required by law did not set in motion the 90-day statute of limitations. Hooks v. Martin, 229 S.W. 592 (Tex.Civ.App. 1921, no writ). A claimant may sue for the establishment of his claim only after rejection of it by the personal representative and only if the claim was legally presented. § 314, Texas Probate Code. 18 Tex.Jur.2d 504, § 645.

We hold that the affidavit in our ease was not in substantial compliance with § 301 and thus did not activate the 90-day statute of limitations provided in § 313 of the Texas Probate Code. We believe the appellants’ pleading and affidavits asserting that the 90-day limitations period could not run against a void claim presented an issue that should have barred the granting of the summary judgment.

The second question raised by appellants, in points of error six through fourteen, is whether the trial court should have deemed that they had admitted certain requests.

Appellants argue that the following questions involved matters of law and were not requests for admissions of facts as authorized by Rule 169 of the Texas Rules of Civil Procedure:

“Request 1. That S. M. Boney filed a claim on January 9, 1976, against the Estate of Grace V. Gale in this cause number, in the sum of SIX THOUSAND THREE HUNDRED FORTY-NINE AND 95/100 DOLLARS ($6,349.95)”
“Request 2. That S. M. Boney did not file a lawsuit to establish the claim described in Request No. 1 within 90 days after February 8, 1976."
“Request 3. That S. M. Boney has never filed a lawsuit to establish the claim described in Request No. 1”
“Request 4. That the sum claimed by S. M. Boney to be due from the Estate of Grace Y. Gale, was for money claimed by Mr. Boney to be due and owing on a real estate note and Deed of Trust lien signed by Mrs. Gale on April 30,1969, and applying to the following listed real property:
All of Lots Four (4) and Five (5) and the East one-half (V2) of Lot Three (3), in Block Six (6) of Lincoln Park Addition, being a part of HOLMAN No. 87, in Harris County, Texas.”

We consider that the effect of appellants’ response to Request 1 was to say that what was filed on January 9, 1976 did not amount, in law,> to a valid claim. As we have indicated, we believe they were correct, and we do not agree that the first request should have been deemed admitted.

We also sustain the appellants’ thirty-first point of error, that the trial court erred in granting summary judgment for the appellee because his motion for summary judgment did not state the specific grounds it was based on. It merely asserted that the defendants’ answer was “insufficient in law to constitute a defense to Plaintiff’s cause of action; that as shown by the pleadings, together with depositions, admissions and affidavits, if any, on file herein, there is no genuine issue as to any material fact between the parties herein, and by reason thereof the Plaintiff is entitled to a judgment against both Defendants . as a matter of law as prayed for by Plaintiff.”

Paragraph (c) of Rule 166-A, Texas Rules of Civil Procedure, was amended in 1971. It now contains this requirement: “The motion for summary judgment shall state the specific grounds therefor.”

The motion in our case does not state any specific grounds upon which it is based, so it does not comply with Rule 166-A(c) as amended. Moody v. Temple National Bank, 545 S.W.2d 289 (Tex.Civ.App. 1977, no writ). See also Mallory v. Dorothy Prinzhom Real Estate, 535 S.W.2d 371 (Tex.Civ.App. 1976, no writ) and Avinger v. Campbell, 499 S.W.2d 698 (Tex.Civ.App. 1973, writ ref. n. r. e., 505 S.W.2d 788).

We do not reach the appellants’ other points of error.

Reversed and remanded.


author: RALEIGH BROWN, Justice.

text:
    BEACON NATIONAL INSURANCE COMPANY, Appellant, v. Jeffa Nell FENWICK, Appellee.
    No. 5062.
    Court of Civil Appeals of Texas, Eastland.
    Oct. 20, 1977.
    Rehearing Denied Nov. 10, 1977.
    Joe E. Shaddock, Wichita Falls, for appellant.
    Nelson Abilene> for appellee.
   RALEIGH BROWN, Justice.

This is a venue case. Jeffa Nell Fenwick sued Beacon National Insurance Company in Taylor County seeking recovery for injuries allegedly received as a result of an accident which occurred in Knox County, Texas. Fenwick’s suit was based on the uninsured motorist provisions, and particularly the hit-and-run provisions, of an insurance policy issued by Beacon to Fenwick. The plea of privilege to be sued in Wichita County filed by Beacon was overruled after Fenwick controverted the plea and sought to retain venue in Taylor County under Subdivision 23 of Article 1995, V.A.C.S. Beacon appeals. We reverse and render.

In her petition, Fenwick alleged that from a side road an unidentified automobile suddenly pulled into the path of her vehicle. She overturned her vehicle in avoiding a collision with the unidentified automobile. The alleged hit-and-run driver drove away before being identified. Fenwick agreed she avoided any physical contact with the unidentified automobile.

To maintain venue in Taylor County under Subdivision 23, Fenwick had to establish not only her residence in Taylor County but also a cause of action by proving at least a right and a breach by Beacon of a corresponding duty. It was necessary for Fenwick to prove among other things that the unidentified vehicle was an uninsured automobile within the meaning of the insurance policy. Employers Casualty Company v. Clark, 491 S.W.2d 661 (Tex.1973); Mobile County Mutual Insurance Company v. Maldonado, 506 S.W.2d 639 (Tex.Civ.App.—San Antonio 1973, no writ).

We hold Fenwick failed to satisfy this requirement. The insurance policy provides that an “ ‘uninsured motor vehicle’ includes a trailer of any type and means:

(b) a hit-and-run automobile;
‘hit-and-run automobile’ means an automobile which causes bodily injury to an insured arising out of physical contact of such automobile with the insured or with an automobile which the insured is occupying at the time of the accident, provided: (a) there cannot be ascertained the identity of either the operator or the owner of such ‘hit-and-run automobile’; (b) the insured or someone on his behalf shall have reported the accident within 24 hours to a police, peace or judicial officer or to the Commissioner of Motor Vehicles, and shall have filed with the company within 30 days thereafter a statement under oath that the insured or his legal representative has a cause or causes of action arising out of such accident for damages against a person or persons whose identity is unascertainable, and setting forth the facts in support thereof; and (c) at the company’s request, the insured or his legal representative makes available for inspection the automobile which the insured was occupying at the time of the accident.” (Emphasis ours)

The court in Phelps v. Twin City Fire Insurance Company, 476 S.W.2d 419 (Tex. Civ.App.—Beaumont 1972, writ ref. n.r.e.) considering a like provision said:

“The hit and run sections of this policy were approved by the State Board of Insurance (Texas Standard Provisions for Automobile Policy 1966). We are unable to say that these contravene public policy. In fact, this is an extension of the uninsured motorist protection and allows one to prevail when it is impossible to prove whether a hit and run automobile is or is not insured.
Since plaintiff brought this claim under this section of the policy, it was her burden to bring herself under its protection, including the requirement of physical contact between the two vehicles . . ”

By her admission, Fenwick failed to discharge her burden of bringing herself under the protection of the policy. She, therefore, failed to prove the venue facts. We disagree with Fenwick that “indirect contact” satisfies this requirement.

The judgment of the trial court is reversed and rendered that the cause be transferred to Wichita County.