author: BISSETT, Justice.

text:
    FARMERS CANAL COMPANY, Appellant, v. Otto J. POTTHAST et al., Appellees.
    No. 1387.
    Court of Civil Appeals of Texas, Corpus Christi.
    Sept. 21, 1979.

      Thomas H. Lee, Dyess, Prewett, Rosenberg & Henderson, Houston, for appellant.
    Dean W. Turner, Bath & Turner, Henderson, for appellees.
   OPINION

BISSETT, Justice.

Involved in this appeal from a summary judgment is the construction of a royalty grant in a deed. The question to be determined is whether the deed conveyed to the grantee, his heirs and assigns, a royalty of Vith of Vsth of the minerals produced from the subject land, or a royalty of ¼⅛ of the fractional royalty reserved by the grantors, their heirs and assigns, in future mineral leases.

Otto J. Potthast and wife, Virginia Pot-thast, Mabel Potthast, Cynthia Potthast, Phyllis P. Alford, and Dorothy P. Massey, plaintiffs, filed this suit against Farmers Canal Company, defendant, on October 29, 1976. Plaintiffs sought a declaratory judgment to the effect that they are the owners, subject to an existing oil, gas and mineral lease, of all oil, gas and other minerals, save and except a ¼⅛ of Vsth (or a Vbnd), royalty interest, in and to all of the oil, gas and other minerals produced, saved and sold from a certain 952.10 acre tract of land, in Matagorda County, Texas; plaintiffs further asked that the cloud cast on their title to their “royalty interest” be removed, and for damages for their royalty then being held in suspense. Defendant answered with a general denial and a cross action, wherein it contended (in the cross action) that it is the owner of ¼⅛ of the royalties reserved in the existing oil, gas and mineral lease affecting the 952.10 acres, and Tith of the royalties which may be reserved by plaintiffs in future mineral leases. Thereafter, both parties moved for summary judgment. Plaintiffs’ motion was granted, and defendant’s motion was denied. The judgment decreed:

“IT IS NOW, THEREFORE, ORDERED, ADJUDGED, DECREED, DETERMINED AND DECLARED that the Plaintiffs, individually or through their predecessors in title, reserved all of the oil, gas and other minerals except 732nd nonparticipating royalty interest by that deed from Dr. A. H. Potthast, et al, to J. B. Bures, dated January 15,1945, recorded in Volume 159, Page 4-6, Deed Records of Matagorda County, Texas, conveying the above described land; that the cloud of title on Plaintiffs’ said minerals and royalties cast by Defendant herein be, and the same is hereby removed.”

The dispute between the parties, which precipitated the filing of this suit, arose out of a difference in the parties’ construction of two clauses contained in a deed, dated January 15, 1945, executed by Dr. A. H. Potthast, E. B. Potthast, and Dr. O. J. Pot-thast, joined by their respective wives, as grantors, to J. B. Bures, as grantee, whereby the surface of the said 952.10 acres and a royalty interest was conveyed to Bures.

The granting clause in the aforesaid deed reads, as follows:

“Have GRANTED, SOLD and CONVEYED, and by these presents do GRANT, SELL AND CONVEY unto the said J. B. Bures, of Matagorda County, Texas, the surface estate, together with all and singular the rights and appurtenances thereto in anywise belonging, and an undivided one-fourth (Tith) interest in and to all of the sulphur royalty, oil royalty, gas royalty, and royalty in all other minerals in that certain tract, parcel and body of land, lying and being situated in Matagorda County, State of Texas, described as follows:”

Following the land description, there is a clause which clearly reserves unto grantors the executive rights with respect to future leasing of the land for mineral exploration and development, and made the royalty conveyed by the deed a “nonparticipating” royalty. That clause, in relevant part, further provides:

“It is distinctly understood and herein stipulated and agreed . . . that Grantee shall only receive one-fourth (¼ th) of the money royalty on sulphur on the basis of One ($1.00) Dollar per long ton and one-fourth (Tith) of the one-eighth (Vsth) royalty on oil, gas and all other minerals provided for in such lease or leases; and in the event Grantors, their heirs, or assigns, in the status of the fee owners of the minerals shall operate and develop the minerals therein, Grantee, his heirs and assigns, shall own and be entitled to receive as a free royalty an undivided one-thirty-second (732nd) of all of the sulphur, oil, gas and other minerals produced, saved and sold off the premises; all future ad valorem, production and other taxes assessable or chargeable against the property and rights herein conveyed are assumed by Grantee.”

Dr. A. H. Potthast and E. B. Potthast, two of the grantors in the deed to Bures, died before this suit was filed. Plaintiffs, hereinbefore named, are the sole owners of the mineral interests reserved by the grantors in the deed to Bures.

Thereafter, on December 1, 1945, J. B. Bures conveyed to Farmers Canal Company, defendant, the land in question. The deed contained the following language which followed the land description:

“This deed is subject to Mineral Reservations set out in deed from Dr. A. H. Potthast et al to J. B. Bures, dated January 15th, 1945, and recorded in Volume 159, on pages 4 to 6, of the Deed Records of Matagorda County, Texas.”

On May 12, 1972, plaintiffs executed an oil, gas and mineral lease covering said land. The lease reserved a 76th royalty on oil and gas, 50<t per long ton on sulphur and 7ioth on all other minerals. Production of oil and gas in commercial quantities was established under said lease. The lease was a valid and subsisting lease at all times pertinent to this appeal.

There is no evidence that the land conveyed to Bures in 1945 was leased for mineral development until May 12, 1972. Defendant interprets the deed as conveying to Bures, his heirs and assigns, ¼⅛ of whatever royalty is reserved in subsequent leases covering the 952.10 acre tract. Plaintiffs interpret the deed as conveying ¼⅛ of ⅛⅛ royalty to Bures, his heirs and assigns.

It is a well settled rule that in construing a deed, it is the duty of a court to seek the intention of the parties to that deed. Terrell v. Graham, 576 S.W.2d 610 (Tex.Sup.1979). The intention of the parties, as it is expressed in the deed, is to be ascertained from a consideration of all the language which appears in the deed, and by harmonizing, if possible, those provisions which appear to be in conflict. McMahon v. Christmann, 157 Tex. 403, 303 S.W.2d 341 (1957); Cockrell v. Texas Gulf Sulphur Company, 157 Tex. 10, 299 S.W.2d 672 (1956).

It is also well settled that should there be any doubt in ascertaining the intention of the parties as their intention is expressed in the deed in its entirety, that doubt, after considering the deed from its four corners, should be resolved against the grantors, whose language it is, and the deed must be construed most favorably to the grantee, as conveying to him the largest estate permissible within the language of the deed. Garrett v. Dils Company, 157 Tex. 92, 299 S.W.2d 904 (1957); Allen v. Creighton, 131 S.W.2d 47 (Tex.Civ.App.—Beaumont 1939, writ ref’d).

Even though different parts of a deed may appear to be contradictory and inconsistent with each other, a court in construing the words in a deed so as to give effect to all parts thereof, will not strike down any part of the deed, unless there is an irreconcilable conflict where one part of the instrument effectively destroys another part thereof. Benge v. Scharbauer, 152 Tex. 447, 259 S.W.2d 166 (1953).

Another applicable rule in the construction of a deed is that one provision in a deed should not be taken alone and a presumption raised upon it at variance with the other provisions thereof. Clement v. Scott, 60 S.W.2d 258 (Tex.Civ.App.—Texarkana 1933, writ ref’d).

It is also a well recognized rule of construction that where there is a “necessary repugnance” of clauses in a conveyance, the granting clause prevails over the other provisions of the deed. Waters v. Ellis, 158 Tex. 342, 312 S.W.2d 231 (1958); Woods v. Sims, 154 Tex. 59, 273 S.W.2d 617 (1954).

In Lott v. Lott, 370 S.W.2d 463 (Tex.Sup.1963), the issue to be resolved was whether language in the habendum clause of an instrument, denominated “TENANT’S DISCLAIMER,” limited or destroyed a general grant which appeared in a clause preceding the description of the land affected. The court held that: 1) the instrument was a quitclaim deed, 2) it was effective to convey to the grantee “any interest or title” in the land owned by grantor on the date of its execution, and 3) the operative effect of the “disclaim and release” provisions (the granting clause) of the deed was not destroyed by the language contained in the habendum clause. The Court, at page 465, said:

“. . .If this recitation were held to limit the interest conveyed to ‘tenant right[s],’ the grant in the premises clause would be in major part nullified. That result would run counter to sound rules of construction that the granting clause prevails over other provisions of a deed and that a deed will be construed to confer upon the grantee the greatest estate that the terms of the instrument will permit. Waters v. Ellis, 158 Tex. 342, 312 S.W.2d 231, 234.”

This is not a suit for rescission or reformation of the deed in question. None of the parties contend that the provisions of the deed are ambiguous.

In the instant case, should the granting clause in the deed to Bures be considered alone there would be no doubt but that the royalty interest conveyed was Vith of the royalty reserved in future leases, since the granting clause in the deed recites in unequivocal terms that the interest conveyed is “an undivided one-fourth (¼⅛) interest in and to all of the . . . royalty” in the 952.10 acres. But, following the granting clause and the description of the property appears language which provides, in effect, that if the land is leased by the grantors, their heirs and assigns, and production of minerals is obtained by their mineral lessee, that “Grantee shall only receive one-fourth (Vith) of the money royalty on sulphur on the basis of One ($1.00) Dollar per long ton and one-fourth (¼⅛) of the one-eighth (Vsth) royalty on oil, gas and all other minerals provided for in such lease or leases.”

The granting clause in the deed to Bures does not call for a one-fourth (Vith) of the one-eighth (Vsth) royalty, or a ⅛2 royalty, as plaintiffs contend. Instead, it calls for a royalty of Vith of all royalty. Such royalty would amount to a Vfond royalty only if the basic royalty in the lease under which minerals are produced provides for a Vsth royalty. Continental Oil Co. v. Doornbos, 402 S.W.2d 879, 881 (Tex.Sup.1966). The 1972 mineral lease does not reserve unto lessors (plaintiffs) a Vsth royalty. It reserves a ⅛ th royalty.

We do not agree, as asserted by plaintiffs, that the subsequent recitals in the deed to Bures change or limit the quantum of the royalty stated in the granting clause to a fractional royalty equal to Vith of Vsth royalty, or a V32nd royalty, regardless of the quantum of royalty reserved under the terms of a mineral lease. Nor do we agree that the parties to the deed intended for the language in the clause following the description of the land to have such a restrictive interpretation. Such an interpretation or construction would ignore the express terms of the granting clause. The subsequent language in the deed reciting, in substance, that the grantee shall receive only Vi th of the Vsth royalty “provided for in such lease or leases” must yield to the express language which appears in the granting clause of the deed. Allen v. Creighton, 131 S.W.2d 47 (Tex.Civ.App.—Beaumont 1939, writ ref’d).

Applying the rules of construction herein-above stated to the record presented in this appeal, we hold that the trial court erred in granting plaintiffs’ motion for summary judgment and in rendering judgment for them. We further hold that the trial court erred in denying defendant’s motion for summary judgment and in refusing to render a judgment decreeing that defendant owned an undivided Vith interest of all of the royalty reserved by the grantors in the Bures deed, their heirs and assigns, in any mineral lease or leases executed by them covering the land in question.

Defendant is entitled to a royalty of Vith of Vsth, or Vaith, of all minerals produced and sold under the 1972 mineral lease. Accordingly, the judgment of the trial court is reversed and judgment is here rendered that the deed from Dr. A. H. Potthast, et al, as grantors, to J. B. Bures, as grantee, dated January 15, 1945, with respect to royalty, conveyed to the grantee, his heirs and assigns, an undivided Vith of all royalty reserved by the grantors, their heirs and assigns, in all mineral leases thereafter executed by them covering all or any part of the subject land.

REVERSED and RENDERED.


source: Caselaw Access Project

license: Public Domain

text:
    N. M. URANIUM, INC., and United States Steel Corporation, Appellants, v. Margaret Lyne MOSER et al., Appellees.
    No. 1443.
    Court of Civil Appeals of Texas, Corpus Christi.
    Sept. 21, 1979.

      Charles G. King, Bracewell & Patterson, Houston, for appellants.
    William G. Burnett, Burnett & Burnett, Sinton, for appellees.
   OPINION

BISSETT, Justice.

Involved in this appeal is the construction of certain royalty provisions in an amendment to a uranium mining lease. Suit was instituted by N. M. Uranium, Inc., and United States Steel Corporation, hereinafter called “appellants,” against Margaret Lyne Moser, individually, and Margaret Lyne Moser and William Barnett Moser, Jr., as independent executors and testamentary trustees of the Estate of Catherine Carol Lyne, hereinafter called “appellees,” wherein all parties sought a construction of the questioned royalty provisions in the lease, as amended on April 1,1975. Prior to trial, the trial court, by a partial summary judgment, ruled that the royalty provisions in question were ambiguous as a matter of law insofar as they pertained to “in-kind” royalties. Trial was to a jury. Only one special issue was submitted to the jury, which inquired:

“Do you find from a preponderance of the evidence that the parties to the April 1, 1975, amendment mutually intended, by the in-kind provisions appearing as the last paragraph of the amendment, that the Mosers could elect to take, as their royalty on uranium produced from the lease by solution mining, one-sixteenth (½6⅛) of the uranium oxide (‘yellow cake’)?”

The jury answered: “Yes.”

Judgment was rendered which decreed that the appellants deliver to the appellees, as royalty, one-sixteenth (½6⅛) of the uranium oxide produced from the uranium ore mined from the leased premises and “stockpiled” as of June 30, 1978, and a similar fractional share, as royalty, processed from and after June 30, 1978. The judgment, which was signed on August 17, 1978, further decreed that the appellees recover from the appellants the sum of $333,780.60, together with both pre-judgment and post-judgment interest thereon. The appellants have appealed.

A mining lease was entered into on April 16, 1969, by and between the appellees, as lessor, and Atlantic-Richfield Company (Arco), as lessee, for the mining and production of uranium and other fissionable materials from certain lands owned by the lessors. The lease was amended on April 1, 1975, by an instrument denominated “Amendment of Mining Lease.” It was signed by the appellees, as lessor, and by Arco and the appellants (who had acquired an interest in the 1969 lease), as lessee. Subsequently, and prior to the date of trial, the appellants acquired all of Arco’s interest in the subject lease.

The dispute between the parties is in the construction of the royalty provisions in the lease, as amended, for uranium oxide produced from the land covered by the lease by the process known as “solution mining,” a process by which wells are drilled into the uranium ore formation and liquids are then injected through those wells into the formation to dissolve the uranium ore. The solution is then extracted from the formation through other wells and is processed in a plant nearby, resulting in the product “uranium oxide.”

There is only one real issue in dispute in this case. That issue is whether, as the appellants contend, the amount of uranium oxide the appellees can take as their royalty in kind on the first 450,000 pounds of annual production for five years from January 1, 1975, is limited to the physical equivalent of the $1.50 per pound money royalty set out in paragraph B of the “ROYALTY” section of the 1975 amendment, or whether, as the appellees contend, the concluding paragraph of the amendment gives them the right to take as their royalty a physical Vu th of all uranium oxide produced by solution mining during the said five year period.

The pertinent royalty provisions in the 1975 Amendment of Mining Lease read as follows, to-wit:

“ROYALTY
Lessor, whose royalty interest shall never bear costs of production or marketing hereby reserves as royalty sums equal to the following:
******
B For uranium bearing ores extracted by solution mining the royalty shall be (½6⅛) one-sixteenth of the sales revenue received for the uranium oxide (Us Os) attributable to the production produced and sold from the Leased Premises . However, for five (5) years from January 1, 1975, lessor’s royalty for the first 450,-000 pounds of uranium oxide produced and sold from the Leased Premises during a calendar year will not exceed $1.50 per pound. . . . ”
******
“The following shall apply to the royalties reserved in paragraphs A, B, C and D above:
******
Any provision herein to the contrary notwithstanding, Lessor, at Lessor’s expense, shall have the continuing right and option at any time and from time to time to take Lessor’s royalty in kind. Lessor may exercise such option by giving sixty (60) days’ advance written notice to Lessee.”

By letter dated January 25, 1977, the appellees notified the appellants of their election to take their royalty on uranium produced by solution mining “in kind.” They further indicated to the appellants that they regarded this royalty as not being one-sixteenth of the sales revenue received for that uranium subject to a $1.50 per ' pound limitation for the first 450,000 pounds of uranium oxide produced per year from January 1, 1975, to January 1, 1980, but one-sixteenth of all stockpiled production as well as one-sixteenth of the future production as in-kind royalty.

There are two royalty provisions in the lease amendment here involved. The first is found in paragraph B of the “ROYALTY” section in the amendment, where the royalty reserved is ½6⅛ of the sales revenue from production, subject to the limitation that for the first 450,000 pounds of uranium production for any year of the first five years from January 1,1975, appel-lees will be paid no more than $1.50 per pound. The second is found in the concluding paragraph of the amendment in question. It requires that the royalty so reserved be paid to appellees in kind upon their election in writing.

Both parties contend that the royalty provisions are unambiguous as a matter of law, and, therefore, it was error for the trial court to rule that an ambiguity existed. We agree.

The appellants say that when the second royalty provision is considered along with the first royalty provision, there is no conflict between the royalty provision set forth in paragraph B of the “ROYALTY” section (the first royalty provision), and the concluding paragraph of the section (the second royalty provision). They argue that the construction is simply that the appellees can take their royalty either in cash or in kind; and, if they elect to take their royalty in kind, as they did here, then their royalty is the physical equivalent of what would have been paid them in money. They argue that until January 1,1980, the royalty to be paid appellees is $1.50 per pound on the first 450,000 pounds of uranium oxide produced per year, not a physical Vwth of production.

The appellees assert that the first royalty provision in the lease, is, in effect, a fee simple realty interest in Vwth of the uranium ore in place even though created by language making the royalty payable only in money. They further assert that the second royalty provision requires that their royalty be paid to them in kind when they so elect in writing, and that this provision, upon election, entitles them to ½6⅛ of the uranium production in kind without any limitation whatsoever and without regard to sales price.

The appellants attach little significance, if any, to the introductory words “Any provision herein to the contrary notwithstanding,” which appear in the first sentence in the concluding paragraph of the royalty amendment. They argue that these words, along with the remainder of the in-kind royalty provision, can be harmonized with the language contained in paragraph B, and that the introductory words do not, as a matter of law, nullify or affect the definition of “royalty" contained in the first sentence of paragraph B or eliminate the $1.50 per pound limitation on the first 450,000 pounds production per year during the five years from and after January 1, 1975.

The appellees attach great significance to such introductory words. They argue that by using those words in the amendment it is conclusively shown that the minds of the parties met on the proposition that the second royalty provision, on its becoming applicable when appellees made an election to take their royalty in kind, should be given full effect and should not be restricted by contrary language, if any, which appears in the first royalty provision. Finally, they contend that the second royalty provision clearly expresses the intent that the lessors would be entitled, upon their election, to receive as royalty Vieth of the production, and, therefore, no ambiguity exists; or, if they be wrong, in the alternative, the jury’s answer to the issue submitted foreclosed the dispute and the trial court properly rendered judgment for them on the jury’s verdict.

In Texas, whether the language of a contract is ambiguous is a question of law for the court. City of Pinehurst v. Spooner Addition Water Co., 432 S.W.2d 515, 518 (Tex.Sup.1968); Nixon v. First State Bank of Corpus Christi, 540 S.W.2d 817, 820 (Tex.Civ.App.—Corpus Christi), writ ref’d n. r. e., 544 S.W.2d 378 (Tex.Sup.1976). If the contract in issue is unambiguous, its interpretation is part of the court’s obligation to interpret and apply the law. Myers v. Gulf Coast Minerals Management Corp., 361 S.W.2d 193 (Tex.Sup.1962).

In construing an agreement the cardinal rule of construction is to ascertain the intention of the parties as expressed in the instrument. Nixon v. First State Bank of Corpus Christi, supra, at page 820 and authorities cited therein. The agreement must therefore be construed in its entirety and each part of that agreement must be considered with every other part to determine the effect of one part on another part. Southland Royalty Company v. Pan American Petroleum Corp., 378 S.W.2d 50 (Tex.Sup.1964); Steeger v. Beard Drilling, Inc., 371 S.W.2d 684 (Tex.Sup.1963).

A written instrument is not ambiguous if it is so worded that a court may give it a certain legal meaning or interpretation. Universal C. I. T. Credit Corp. v. Daniel, 150 Tex. 513, 243 S.W.2d 154 (1951); Remington Rand Inc. v. Sugarland Industries, 137 Tex. 409, 153 S.W.2d 477 (1941); Lewis v. East Texas Finance Co., 136 Tex. 149, 146 S.W.2d 977 (1941). The Supreme Court stated in Daniel, 243 S.W.2d at page 157, that an agreement is ambiguous only:

“. . . when the application of pertinent rules of interpretation to the face of the instrument leaves it genuinely uncertain which one of two or more meanings is the proper meaning . . . [citations omitted]. In other words, if after applying established rules of interpretation to the contract it remains reasonably susceptible to more than one meaning it is ambiguous, but if only one reasonable meaning clearly emerges it is not ambiguous.”

In Woods v. Sims, 154 Tex. 59, 273 S.W.2d 617, 620-21 (1954), a case involving the construction of three mineral deeds, the Supreme Court said:

“Generally the parties to an instrument intend every clause to have some effect and in some measure to evidence their agreement, and this purpose should not be thwarted except in the plainest case of necessary repugnance. Even where different parts of the instrument appear to be contradictory and inconsistent with each other, the court will, if possible, harmonize the parts and construe the instrument in such way that all parts may stand and will not strike down any portion unless there is an irreconcilable conflict wherein one part of the instrument destroys in effect another part . [citations omitted].”

Minerals in place are part of the land, and when they are removed from the land, the corpus of the estate in the land is to that extent depleted. Consequently, anything, in whatever form, which the lessor receives from the production by the lessee of minerals from his land constitutes a remuneration for the removal of part of his land. Sheppard v. Stanolind Oil & Gas Co., 125 S.W.2d 643 (Tex.Civ.App.—Austin 1939, writ ref’d).

It is well settled in this State that a mineral royalty, reserved or granted, and however payable, whether in a fractional interest in the minerals produced from the affected land or in money measured by the value of the product, is an interest in land covered by the contract. Veal v. Thomason, 138 Tex. 341, 159 S.W.2d 472 (1942).

The expression “anything in this lease to the contrary notwithstanding,” when used in the final section of a written contract, has priority over any contrary provision of the contract directed to the same question. Gulf Oil Corporation v. Southland Royalty Company, 496 S.W.2d 547 (Tex.Sup.1973).

Applying the rules laid down in the above cases to the instant case, we hold that the lease, as amended, is not ambiguous. The introductory words “Any provision herein to the contrary notwithstanding,” which appear in the concluding paragraph in the royalty section of the amendment, is directed to the royalty reserved in paragraph B and the limitation contained therein. The second royalty provision, which conclusively entitled the appellees, upon their election in writing, to receive, in kind, ½6⅛ of the uranium oxide produced from the leased premises, is not in conflict with the first royalty provision which reserves unto appellees Vwth of the sales revenue received from the production of uranium oxide from the lands under lease. The second royalty provision when standing alone, is, however, in conflict with that part of paragraph B of the first royalty provision, which provides for a Vieth “of the sales revenue received for the uranium oxide,” when the written election is exercised. But when the second royalty provision is preceded, as here, by the words “Any provision herein to the contrary notwithstanding,” this provision has priority over the conflicting provision contained in Paragraph B. Therefore, we hold that the royalty amendment creates, as a matter of law, in the appellees a royalty fee in and to Vwth of all the uranium oxide produced by solution mining from the lands covered by the lease during the existence of the lease.

While the trial court erred in holding that the royalty provisions in the amendment were ambiguous, such error is not a ground for reversal since a correct judgment was rendered. Harvey v. Elder, 191 S.W.2d 686 (Tex.Civ.App.—San Antonio 1945, writ ref’d); Messer v. County of Refugio, 435 S.W.2d 220, 227 (Tex.Civ.App.—Corpus Christi 1968, writ ref’d n. r. e.).

Having determined that the trial court rendered a correct judgment, and even though it is not necessary that we dispose of appellants’ remaining points of error, we will consider and dispose of them.

Appellants further complain that the trial court erred in admitting extrinsic evidence to determine the intention of the parties to the 1975 amendment; that the trial court erred in rendering judgment for the appellees because: 1) there is “no evidence” that the parties to the 1975 amendment mutually intended that the ap-pellees could take a physical ½6⅛ of uranium production during the five year period commencing January 1,1975, as their royalty in kind; and 2) the jury’s verdict is contrary to the great weight and preponderance of the evidence as to the intention of Arco that the royalty on uranium produced by solution mining would be the same whether paid in cash or in kind. In disposing of those complaints, we follow the guidelines laid down in Calvert, “No Evidence” and “Insufficient Evidence,” 38 Tex. L.Rev. 359 (1960).

The primary term of the original lease was for six years and would have terminated on April 15, 1975, absent production or an extension of its primary term. Sometime in late 1973, or early 1974, an Arco representative contacted the appellees with regard to amending the lease. Serious discussions were commenced in August, 1974. Arco was represented by Mr. Glen Davis and Mr. Bill Morton, attorneys, and the appellees were represented by Mr. Paul Smith and Ted Lee, attorneys. Arco was primarily concerned with securing an amendment which would extend the time beyond April 15, 1975 for the commencement of solution mining operations on the leased premises. The appellees were primarily concerned with royalty provisions which would protect them against an increase in price of uranium oxide to their detriment and against improvident sales contracts (executed by Arco) to their detriment.

The appellees first insisted that the amendment contain a “favored nations” provision, that is, a clause which would provide that if anyone within the State of Texas was able to sell uranium oxide at a higher price than that sold by the lessee (Arco) under the 1969 lease, then the lessors would be paid the same price for their royalty share of the uranium produced by Arco from the leased lands as paid to others. Arco rejected the inclusion of such a provision in the proposed amendment, but did agree that the léase should be amended to clearly show what the royalty fractional interest should be. It was then agreed that such interest would be ⅛6⅛ for uranium oxide produced by solution mining.

Thereafter, the negotiators for Arco and the appellees met on several occasions. Several amendments were proposed and rejected. A meeting of Arco’s management committee, which was held on December 9, 1974, decided to offer the appellees three royalty alternatives, and that in the event of refusal of any of them, “an attempt would be made to reach agreement on a straight royalty up to a one-sixteenth.” Apparently these royalty alternatives were rejected by the appellees. At a meeting on March 14,1975, the negotiators discussed an in-kind royalty provision. With respect thereto, Mr. Davis testified:

“A Well, I recall Paul Smith saying that he felt that his client needed protection against the possibility that Atlantic Richfield, or the operating group, would sell their uranium to a sister company at a fictitiously low price and calculate the royalty at that artificially low price.
He said, ‘What protection could Mr. Moser have against that possibility?’ And my response to that, as I recall, was that we could provide for him to take his royalty in kind.”

After the March 14 meeting, Arco prepared another draft of the amendment. It did not, however, include either a favored nations clause or an in-kind provision with respect to royalty. Mr. Smith then telephoned Mr. Morton and dictated an “in kind royalty provision” which he. stated must be included in the lease. Mr. Morton then talked to Mr. Davis concerning Mr. Smith’s demand. At the trial, Mr. Morton stated:

“I called Glen Davis and I talked with him about it. And my recollection is that he said he didn’t see — we both felt that the liklihood of Mr. Moser taking the royalty in kind was pretty low. But, if it ever happened, we could work out something.
So, we felt that the stage that things were at in April there, that it was okay. It was no use haggling over something like that, so we would go ahead and take it — that provision.”

Whereupon, Mr. Morton telephoned Mr. Smith and told him that the dictated “in kind royalty provision” was “all right.” That provision appears as the concluding paragraph in the royalty section of the amendment (the second royalty provision), hereinbefore quoted. The amendment, when finally executed by all parties, extended the term of the 1969 lease. As a consequence, the lease was valid when production of uranium oxide by solution mining was established sometime after April 15, 1975.

There is no question but that the jury finding with respect to the appellees is supported by direct evidence of probative value. While there is no direct evidence that Arco intended the “in kind royalty provision” in the lease to have the same meaning attributed to it by the jury, the record does show that during the time of serious negotiations the royalty under consideration was referred to as a fractional Vi6th royalty. Mr. Davis suggested a ½6⅛ in-kind royalty in lieu of a favored nations clause which he, in effect, said would afford the appellees their desired protection. Mr. Morton was of the impression that the royalty amendment, in substance, did provide for a Vi6th royalty in kind; and the appellants rendered 16/i6ths of the uranium for ad valorem taxation to the proper taxing authorities. Those facts, together with permissible inferences and deductions, constitute a sufficient legal basis which supports the jury’s answer to the issue submitted. There is ample evidence to support the jury’s finding, and the answer to the single issue submitted to the jury is not against the great weight and preponderance of the evidence so as to be manifestly wrong and unjust. It was not reversible error to introduce extrinsic evidence to determine the intention of the parties by the inclusion of the last paragraph in the royalty section of the amendment to the 1969 mining lease.

The trial court’s charge to the jury included the following instruction:

“In connection with the foregoing special issue you are instructed that you may take into consideration the facts and circumstances surrounding the making of the April 1, 1975, lease amendment, as well as any acts done mutually by the parties in the performance of the amendment; and that a party to a contract will be held to have intended that the words used in that contract have a meaning, if any, which he knew, or should have known, the other party to that contract supposed the words to mean.”

Appellants complain of that instruction. They argue that it was reversible error to so instruct the jury because subjective undisclosed thoughts and beliefs of the parties are not to be considered in ascertaining the intentions of the parties to a contract.

The appellees rely upon San Jacinto Oil Company v. Ft. Worth Light & Power Company, 41 Tex.Civ.App. 293, 93 S.W. 173, 176 (1906, writ ref’d), wherein it was said:

“[a]nd a party will be held to that meaning which he knew the other party to the contract supposed the words to bear

The appellants contend that the rule announced in San Jacinto was rejected in Jackson v. Richards, 157 S.W.2d 982 (Tex.Civ.App.—El Paso 1941, writ ref’d). We do not agree. The Court, in Jackson, cited San Jacinto and other cases for the proposition: “a party will be bound by that meaning which he knew the other party to the contract supposed the words to bear. The Court, in Jackson, at page 984, said:

“We have read the cases cited. The rule, we think, was properly applied under the facts in those cases . . . ”

Jackson did not reject or overrule the rule announced in San Jacinto, even though it did recognize that the rule was “of limited application.” The facts in this case make the rule applicable. Here, it is clearly shown by sufficient evidence of probative value that Arco’s lawyers and negotiators, at the times in question, knew that appel-lees’ lawyers and negotiators intended the “in-kind royalty provision” in the amendment to have the same meaning attributed to it by the jury. The instruction was proper if the trial court was correct in holding that the in-kind provision is ambiguous. On the other hand, if the royalty provisions were not ambiguous, as we have held, the case should not have been submitted to the jury; therefore, the giving of the instruction was harmless error.

Moreover, even if the instruction complained of by the appellants is an incorrect statement of the law, as asserted by them, then the consideration of its probable effect on the minds of the jury in the light of the charge as a whole can lead only to the conclusion that the charge, when viewed in its entirety, was favorable to the appellants. This is true because the charge concluded with the instruction:

“You are also instructed that, under the law, any doubt as to the meaning of the ‘in kind’ paragraph concluding Exhibit A to the 1975 Amendment is to be resolved most strongly against the Mosers and in favor of N M Uranium, Inc. and United States Steel Corporation.”

See Texas Employers Ins. Ass’n. v. McKay, 146 Tex. 569, 210 S.W.2d 147 (1948); Crittenden v. Dominguez, 315 S.W.2d 45 (Tex.Civ.App.—Dallas 1958, no writ). The appellants have failed to demonstrate that any harm resulted from the instruction under attack.

The appellants further contend that the admission into evidence of their tax renditions for the years 1977 and 1978 constituted reversible error as they “had nothing to do with the issue of the intention of the parties to the 1975 Amendment of Mining Lease.” They argue that such evidence was highly prejudicial. We disagree. The renditions show that the interest in the uranium claimed by the appellants as their property amounted to 15/isths of all the uranium in, on and under the lands covered by the mining lease. By so rendering their property, the amount of interest in the uranium remaining is ½6⅛. Together, the appellants and the appellees owned ail of the uranium ore underlying the leased premises. An inference properly drawn from the tax renditions in question is that the appellants intended to render for taxation only the property that they owned, which, in this case is a 15/«ths interest. A further inference is that they did not claim to be the owner of the remaining Visth interest. It was not reversible error to introduce the tax rendition into evidence.

We have carefully considered all of appellants’ points of error. They are all overruled.

AFFIRMED.


author: COUNTISS, Justice.

text:
    Mike ORTIZ and Olivia Ortiz, Appellants, v. GREAT SOUTHERN FIRE & CASUALTY INSURANCE CO., Appellee.
    No. 9010.
    Court of Civil Appeals of Texas, Amarillo.
    Sept. 24, 1979.
    Rehearing Denied Oct. 17, 1979.

      Brown & Brown, Russell D. Daves, Lubbock, for appellants.
    Bill A. Davis, Lubbock, for appellee.
   COUNTISS, Justice.

Mike and Olivia Ortiz appeal a judgment granting Great Southern Fire & Casualty Insurance Company, intervenor and subro-gee for money paid for repairs pursuant to a fire insurance policy, recovery from a settlement fund negotiated by the insurer and the insureds with the defendants. We affirm the trial court’s judgment.

Mike and Olivia Ortiz owned and occupied a dwelling insured for $8,500 with Great Southern Fire & Casualty Insurance Company against loss by fire. The policy insured only the dwelling and did not provide for indemnification to Mr. and Mrs. Ortiz for loss to their personalty. On December 10, 1976, a fire erupted which did considerable damage to the Ortiz home and its contents. Mr. and Mrs. Ortiz then sued Ernest A. Ekberg and Stacy-Mason, Inc. for their loss alleging that the fire was caused by carpet padding negligently placed over a floor furnace, causing damage of at least $4,000.00 to their real property and at least $11,614.00 to their personal property.

Subsequently, Great Southern Fire & Casualty Insurance Company filed its Petition of Intervention claiming that it was subrogated to Mr. and Mrs. Ortiz’s claim against defendants Ekberg and Stacy-Mason, Inc. in the amount of $4,000.00 which it had paid to the Ortizes for repairs to the insured dwelling. The Ortizes filed an answer denying Great Southern’s right of sub-rogation as to the $4,000.00 payment for repairs. All parties to the suit then entered into a settlement agreement and release of all claims against the defendants. The settlement agreement stated that:

WHEREAS, the Plaintiff has alleged Four Thousand and No/100 ($4,000.00) Dollars in damage to Plaintiff’s real property, and Eleven Thousand Six Hundred Fourteen and No/100 ($11,614.00) Dollars in damage to Plaintiff’s personal property, which amount could well have been proved by the Plaintiff. .
That for and in consideration of the sum of Ten Thousand and No/100 ($10,-000.00) Dollars, paid into the hands of the District Clerk of Hockley County by the insurers of Defendants, Ernest A. Ekberg and Stacy-Mason, Inc., the receipt of which is hereby acknowledged, the Plaintiff and Intervenor do hereby release Defendants, Ernest A. Ekberg and Stacy-Mason, Inc., ... of and from any and all actions, causes of action, claims, demands, damages, expenses, loss of compensation, and liability of any nature growing out of the above described occurrence, . . . and further agree that said cause shall be dismissed with prejudice at cost of each said Defendant.

Thereafter, Mr. and Mrs. Ortiz filed their Second Amended Original Petition on November 30, 1977, in which they alleged defendant’s negligence damaged their real property in the amount of at least $4,200.00 and their personal property in the amount of at least $27,305.50. Great Southern then moved for summary judgment on its claim for subrogation in the amount of $4,000.00. The Ortizes also filed a motion for summary judgment claiming the entire $10,000.00 which had been deposited in the registry of the court.

The trial court granted Great Southern’s motion for summary judgment, denied the Ortizes’ motion, awarded Great Southern $4,000.00 out of the proceeds on deposit in the registry of the court, and disbursed the remaining $6,000.00 to the Ortizes.

In this court, Mike and Olivia Ortiz attack the judgment of the trial court on two points of error. They contend, first, that the trial court erroneously granted Great Southern’s motion for summary judgment because a genuine issue of a material fact existed, and second, that the court erred in denying their motion for summary judgment because the evidence established as a matter of law that Great Southern was not entitled to subrogation.

Our analysis of the case requires the resolution of three questions: First, does Great Southern have any right of subrogation under the facts of this case; second, if so, must the Ortizes recover from the alleged tortfeasor the entire amount of damage they suffered to both the insured and uninsured property before Great Southern’s sub-rogation rights permit it to be reimbursed from the settlement fund negotiated by the parties; and third, is there a material disputed fact question concerning the amount of damage suffered by Mr. and Mrs. Ortiz?

There is substantial disagreement between the parties over the existence of a contractual right of subrogation under the policy in question. It is not, however, necessary for us to resolve this controversy beéause Great Southern was entitled to equitable subrogation under the facts of this case, irrespective of any contractual right of subrogation.

Mr. and Mrs. Ortiz admitted, and it is undisputed, that Great Southern’s policy covering the house was in force on the date of the loss, and that Great Southern paid $4,000.00 to the Ortizes in accordance with the policy terms as a result of the loss. Upon payment of a loss under a policy, the insurer acquires the right to be subrogated pro tanto to any cause of action the insured may háve against any third person whose act caused the loss. Magnolia Pipe Line Co. v. Security Union Ins. Co., 37 S.W.2d 1062, 1063 (Tex.Civ.App.—Beaumont 1931, no writ). This right of subrogation may arise without any express stipulation to that effect in the policy based upon the principal of equity. Magnolia, supra, at 1063; Fort Worth & Denver Ry. Co. v. Ferguson, 261 S.W.2d 874, 879 (Tex.Civ.App.—Fort Worth 1953), writ dism’d). The doctrine of subro-gation is given a liberal interpretation and is broad enough to include every instance in which the insurer, not acting voluntarily but under a contract of indemnity, pays a debt for which another is primarily liable and which in equity and good conscience should have been discharged. Galbraith-Foxworth Lumber Co. v. Long, 5 S.W.2d 162, 167 (Tex.Civ.App.—Dallas 1928, writ ref’d); McBroome-Bennett Plumbing, Inc. v. Villa France, Inc., 515 S.W.2d 32, 37 (Tex.Civ.App.—Dallas 1974, writ ref’d n. r. e.). The right of subrogation is granted to the insurer because the insured would otherwise receive a double recovery, which the law refuses to sanction. Publix Theatres Corporation v. Powell, 123 Tex. 304, 71 S.W.2d 237, 241 (1934).

We hold, therefore, that upon payment under the policy of the $4,000.00 loss suffered by Mr. and Mrs. Ortiz, Great Southern acquired an equitable right of subrogation in that amount against the parties who allegedly caused the loss.

Having decided that Great Southern had an equitable right of subrogation against the defendant, the second question presented is whether that right permits it to be reimbursed from the settlement fund negotiated by the parties. A lump sum settlement of $10,000.00 was negotiated and placed in the registry of the trial court with no allocation of the funds to any particular item of damage. The Ortizes’ live pleadings at the time of settlement alleged “at least” $4,000.00 damage to their realty (insured) and “at least” $11,614.00 damage to their personalty (uninsured). The Ortizes argue that Great Southern is not entitled to reimbursement from the settlement fund because they did not recover the total amount of damage they incurred, and therefore, all of the fund should be allocated to them. In essence, they contend that the insurance company can receive reimbursement only to the extent that the settlement fund and the amount recovered from Great Southern exceeds the total amount of damage they suffered to both their insured and uninsured property.

We have not found a case we regard as authoritative on the unique question thus presented. We are convinced, however, that the resolution of the question by the trial court was correct. When the settlement was negotiated by the parties, the Ortizes had full knowledge of Great Southern’s subrogation rights and its claim for $4,000.00 of the amount recovered from the defendants. There is no indication of any retreat from this position, and logic dictates that Great Southern surrendered whatever independent rights of recovery it may have had against the defendants in the apparent belief that it would be reimbursed from the settlement fund. The Ortizs’ argument would require the court to arbitrarily designate the entire $10,000.00 as recovery for an uninsured loss when the parties did not do so in the settlement agreement. Mr. and Mrs. Ortiz were seeking “at least” $4,000.00 as compensation for damage to their realty at the time of settlement, and they recovered in excess of that amount. We also note that the settlement agreement they signed reiterates a maximum claim of $4,000.00 damage to the realty. We hold, therefore, that under the facts of this case the insurer is entitled to reimbursement out of the settlement fund in an amount equal to its payment to the insured.

Mr. and Mrs. Ortiz rely on Propeck v. Farmers Mutual Insurance Association of Grayson County, 65 S.W.2d 390 (Tex.Civ.App.—Dallas 1933, no writ); Camden Fire Ins. Ass’n v. Missouri, K. & T. Ry. Co. of Texas, 175 S.W. 816 (Tex.Civ.App.—Dallas 1915, no writ); and State Farm Mutual Automobile Co. v. Elkins, 451 S.W.2d 528 (Tex.Civ.App.—Tyler 1970, no writ) to support their contentions. These cases, however, do not address the issue before this court. In Propeck and Camden, the damage incurred was solely to insured property, and these cases enunciate the well-settled rule that the insurer is entitled to subrogation and reimbursement only to the extent that the amount received by the insured from his insurer and the tortfeasor exceeds the damages to the insured property. The arguments advanced by Mr. and Mrs. Ortiz would require this court to unduly expand this rule so that an insurer would be entitled to reimbursement only to the extent that the amount recovered by the insured from his insurer and the tortfeasor exceeds the damages to both insured and uninsured property. This we decline to do.

State Farm Mutual Automobile Co. v. Elkins, supra, although involving both insured and uninsured losses, is in accord with and lends support to the result we reach in this case. In State Farm, the insurer had reimbursed its insured in the sum of $1,509.67 for damage to his auto. The insured then recovered judgment for personal injuries and $2,700.00 for damage to his auto from the tortfeasor. In the trial of the subrogation issue, there was uncontra-dieted evidence that after the $1,509.67 paid by State Farm had been expended, an additional $1,400.00 was needed to repair the car. State Farm was allowed to recover the entire $1,509.67 it had paid, even though $2,909.67 the $1,509.67 paid plus the additional $1,400.00) was needed to repair the car. Thus, in this case, the insurer was fully reimbursed even though the damages to the insured property were greater than the amount recovered from the tortfeasor, and after State Farm’s reimbursement, $209.67 greater than the total amount of his recovery from his insurer and the tort-feasor. We do not go that far in our decision in this case, but we are satisfied that Great Southern is entitled to complete reimbursement under our facts for the reasons stated above. Our holding dictates that the Ortizs’ point of error which states that Great Southern is not entitled to subrogation in any amount as to the $10,000.00 is overruled.

Our disposition of the second question renders the Ortizs’ point of error concerning a material disputed fact question as to the amount of their damages moot. Irrespective of the total amount of damages suffered, it is undisputed that they received money in excess of the amount sought for damage to the insured realty at the time of settlement. It is that amount which is the pivotal figure. The Ortizes amended their pleadings after settlement to allege a higher damage figure for the realty, but pleadings do not raise a fact question. Hidalgo v. Surety Savings and Loan Association, 462 S.W.2d 540, 545 (Tex.1971). Additionally, the amended figure is still less than the amount recovered.

There is also some deposition testimony by Mr. Ortiz that there was unre-paired damage to the realty, but there is no evidence of the amount of that additional damage. Moreover, it is undisputed that Mr. and Mrs. Ortiz have made no further claims under their policy, even though the policy limits have not been fully expended. Thus, the evidence does not raise a material fact question.

Accordingly, the judgment of the trial court is affirmed.

      . We do not hold that Great Southern did not have a contractual right of subrogation. We simply do not reach that question.

      . There is summary judgment evidence that the Ortizes suffered total damages to both insured and uninsured property in excess of $14,000.00.

      . See Tyrrell Rice M. Co. v. McFaddin-Wiess-Kyle Land Co., 32 S.W.2d 393, 395 (Tex.Civ.App.—Beaumont 1930, no writ).


author: YANCE, Judge.

text:
    Sherman Clyde COOPER, Appellant, v. BOARD OF EDUCATION OF SOMERSET INDEPENDENT SCHOOL DISTRICT, Somerset, Kentucky, and Charles E. Harris, Individually and as Superintendent of Somerset Schools, Hobert Withers, Jr., William T. Cain, J. Glenn Combs, DMD, Robert Neikirk and James Richard Jones, Individually and as members of the Board of Education of the Somerset Independent School District of Somerset, Kentucky, Appellees.
    Court of Appeals of Kentucky.
    Sept. 21, 1979.
    Arthur L. Brooks, Lexington, for appellant.
    John G. Prather, Jr., Somerset, for appel-lees.
    Before HOGGE, LESTER and VANCE, JJ.
   YANCE, Judge.

The question is whether the transfer of an assistant school principal to the position of guidance counselor, which will result in loss of incremental pay for supervising teachers and which will result in his being paid on a 10¼ month rather than a 12 month basis, constitutes a “demotion” of an administrator pursuant to K.R.S. 161.765 or a reduction in pay requiring only the procedures outlined in K.R.S. 161.760. The trial court held there was no demotion.

It is undisputed that appellant had tenure as an administrator. Both assistant principals and guidance counselors are designated in the statute as administrative positions. Thé transfer of appellant was a transfer from one administrative position to another.

Prior to the school year 1973-74 appellant was employed as a guidance counselor. He worked and was paid on a 12 month basis. During the 1973-74 school year the principal of the Hopkins school suffered a disabling illness, and the position of assistant principal was created. Appellant was appointed as assistant principal. He was paid on a 12 month basis and, in addition, received an increment of $50.00 for each teacher supervised by him.

The principal retired before the beginning of the 1975-76 school year, and a new principal was hired. With an able bodied principal on hand there ceased to be a need for an assistant principal, and that position was abolished. Appellant was transferred back to the position of guidance counselor. During the time appellant served as assistant principal, the summer program of guidance counseling was discontinued. Upon his return to that position he worked only 10¼ months rather than 12, and he no longer supervised teachers. His salary continued undiminished until April 1977, when he was notified that beginning in 1978 his pay would be reduced from 12 to 10¼ months because he was no longer working the full 12 months, and that his increment for supervising teachers would be terminated because he no longer supervised any teachers. None of the statutory requirements for demoting an administrator contained in K.R.S. 161.765 were complied with.

K.R.S. 161.765, enacted in 1974, has opened a fertile new area of controversy in the teacher-tenure law, a law so ingeniously drawn that it has already become a major source of litigation in our courts.

The language of K.R.S. 161.765 would seem to indicate that it was intended to apply to disciplinary actions against tenured school administrators for it refers to giving complete and specific grounds upon which the proposed demotion is based including dates, names, places and circumstances; provides for a hearing of the grounds which may be in private at the request of the administrator; and provides that the board, upon hearing the evidence and argument of counsel, shall decide the issue. An appeal is provided in the same manner as in case of a termination of a teacher’s contract for cause. In K.R.S. 161.720(9) the General Assembly has specifically defined “demotion” as follows:

The terms “demote” or “demotion” for the purpose of KRS 161.765 shall mean a reduction in rank from one position on the school district salary schedule to a different position on that schedule for which a lower salary is paid. The terms shall not include lateral transfers to positions of similar rank and pay or minor alterations in pay increments required by the salary schedule.

Under this definition it is obviously a demotion when an administrator is moved from one position on the district salary schedule to a different position for which a lower salary is paid. A difficulty arises because in practice, at least in the school district under consideration, most administrators are not paid on the basis that one position outranks the other, but upon the basis of the number of years of teaching experience and the number of credit hours of advanced education. Thus a guidance counselor and an assistant principal with the same years of experience and educational qualifications would be paid the same basic salary. Whatever differences in earnings that do exist are brought about by increments which are paid for extra work and by differences in the total number of months worked.

The statute expressly provides that a lateral transfer to a position of similar rank and pay or minor alterations in pay increments required by the salary schedule shall not constitute a “demotion”. Conversely, it appears that major alterations in pay increments resulting from such a transfer would constitute a demotion.

Here the reduction in appellant’s earnings as a result of the transfer will be $4,571.00, approximately 25%, and we have no hesitation in classifying this a major, as opposed to a minor, reduction in earnings.

Under K.R.S. 161.760 the salaries of teachers may be reduced when there has been a correspondent reduction in responsibilities and when proper notice has been given. The school board took the position that appellant was not demoted but that his salary was simply reduced because his duties had been reduced. We attach no significance to the fact that appellant was transferred from one position to another in 1975 and the reduction in pay was not ordered until 1977. K.R.S. 161.765, if it is applicable, cannot be evaded by the expedient of a lateral transfer to a position of less responsibility in one year followed by a reduction in pay in a succeeding year when the duties of the new position at the time of the transfer were so significantly less as to have justified a major reduction in pay at the time of transfer.

We point out that appellant’s duties were reduced by the transfer to the new position, not thereafter. He was simply transferred to a position of less responsibility, which would command substantially less pay, and even though the transfer was not accompanied by an immediate major reduction in pay (and thus was not a demotion as defined), it nevertheless became a demotion when the pay was reduced in a subsequent year.

It does not follow, however, that every reduction in pay constitutes a demotion. If appellant had remained assistant principal, but because of decreasing enrollment fewer teachers were required at his school, the board under K.R.S. 161.760 could reduce his earnings because of the lessened responsibility and this would not constitute a demotion. Likewise there would not necessarily be a demotion if, after his transfer to the position of guidance counselor, conditions arose which mandated the elimination of the summer program and his salary was reduced because he didn’t work as long as before.

However, when the transfer, as here, is to a position which carries less responsibility at the time and results in substantially less pay, it is a demotion, and the procedures set forth in K.R.S. 161.765 are required.

We are not unsympathetic with the contention of appellees that appellant should not be paid for months he does not work, nor should he be paid for supervising teachers he does not supervise. Nevertheless, the procedures required are creatures of the legislature, and if change is desirable it should come from the legislature, not as the result of judicial fiat.

The judgment is reversed for entry of a new judgment in conformity with this opinion.

All concur.


author: COOPER, Judge.

text:
    Teresa Ladd RITTENBERRY, Appellant, v. Ricky Howard RITTENBERRY, Appellee. Teresa Ladd (Rittenberry) HAWKINS, Appellant, v. Ricky Howard RITTENBERRY, Appellee.
    Court of Appeals of Kentucky.
    Sept. 21, 1979.

      John W. Combs, Stephen E. Underwood, Hopkinsville, for appellant.
    Thomas L. Osborne, Osborne, Deatherage & Fletcher, Hopkinsville, for appellee.
    Before COOPER, LESTER and VANCE, JJ.
   COOPER, Judge.

These two domestic relation cases were consolidated because the same parties were involved and common issues were presented. This is an appeal from a judgment and order dissolving the marriage of the parties in the original complaint and granting custody of the infant child to the intervening petitioners.

Three issues are before this Court: (1) Whether the trial court erred in permitting Jackie and Gay Nell Rittenberry to intervene in this action, (2) whether the trial court erred in failing to award custody of Rebecca Lynn Rittenberry to her mother, the appellant, and (3) whether the trial court erred in refusing to allow the mother to visit her daughter.

The appellant, Teresa Ladd (Rittenberry) Hawkins, and the appellee, Ricky Howard Rittenberry, formerly husband and wife, are the parents of Rebecca Lynn Rittenber-ry, (Becky), the main subject in this litigation. These proceedings are the result of a stormy marriage. Teresa and Ricky shared the custody of Becky until Ricky filed a motion seeking custody. It appears from the record that without notice, hearing, or the taking of proof, the trial court awarded temporary custody to Ricky. Within a few days of this order the Grand Jury of Christian County indicted Ricky on a number of criminal charges. He later pled guilty to three (3) counts of soliciting murder and was sentenced to fifteen (15) years on each count to run concurrently.

The trial court immediately, and without notice or hearing, entered an order granting temporary custody of Becky to Jackie and Gay Nell Rittenberry, the intervening petitioners, who were the brother and sister-in-law of Ricky. These designated custodians then filed a petition to intervene which was granted without a hearing.

On August 30, 1978, the court entered its findings of fact, conclusions of law, and final judgment granting custody of Becky to the intervening petitioners, Jackie, and Gay Nell Rittenberry. The court’s final decree made no mention of visitation. In October of 1978, a hearing was held upon appellant’s motion to amend, alter or vacate the judgment, or in the alternative to establish appellant’s visitation rights. These motions were overruled and denied by the trial court. In response thereto, a motion was made on October 19, 1978, pursuant to CR 52.04, requiring the trial court to make specific findings of fact as to its failure to provide rights of visitation for appellant with Becky. In a hearing upon this motion on December 14, 1978, the trial court entered an order submitted by counsel for Ricky, Jackie, and Gay Nell, denying the appellant any rights of visitation.

It has come to this Court’s attention that counsel for appellee prepared and submitted all findings of facts, conclusions of law, and orders in this case. In the case of Brunson v. Brunson, Ky.App., 569 S.W.2d 173 (1978), this Court said the following at p. 175:

The practice by some trial courts of delegating the task of preparing findings of fact to the “winning attorney” has been universally disapproved.

See also, Callahan v. Callahan, Ky.App., 579 S.W.2d 385 (1979). It appears this practice may have been abused in this case.

Three issues were considered by this Court; however, due to the facts of this case we believe it necessary to discuss only the one having reference to child custody.

We doubt if the appellant has ever had her day in court. It seems that all major decisions were made without notice to her or her counsel. The learned trial judge seems to base his opinion on sexual misconduct of the appellant. It is a well-established rule in this Commonwealth that the sexual misconduct must affect the relationship between the child and parent. In the case of Moore v. Moore, Ky., 577 S.W.2d 613 (1979), the Supreme Court of Kentucky recently stated at p. 614, in part, as follows:

The only conclusion to be drawn from KRS 403.270(2) when read with the note of the commissioners is that there must be proof that the sexual misconduct affects the relationship of the parent to the child; otherwise, the evidence of such misconduct is irrelevant and should not be admitted into evidence.

As a matter of law, the facts in this case are not sufficient to deny a natural mother the custody of her child in favor of a non-parent.

The judgment is reversed with directions to enter a new judgment in this case granting permanent custody of Rebecca Lynn Rittenberry to the appellant, Teresa Ladd (Rittenberry) Hawkins.

All concur.


author: HAYES, Judge.

text:
    KENTUCKY COMMISSION ON HUMAN RIGHTS and Ethel Clay, Appellants, v. Nelson BARBOUR, Appellee.
    Court of Appeals of Kentucky.
    Sept. 21, 1979.

      Galen A. Martin, Thomas A. Ebendorf, Samuel H. DeShazer, Kentucky Commission on Human Rights, Louisville, for appellants.
    William E. Johnson, Johnson, Judy & Gaines, Frankfort, for appellee.
    Before HAYES, LESTER and WHITE, JJ.
   HAYES, Judge.

In this appeal from the Franklin Circuit Court, we are faced with the difficult and sensitive task of reviewing the constitutionality of KRS 344.230(3)(h). That statute authorizes the Kentucky Human Rights Commission to award monetary damages for embarrassment and humiliation suffered as a result of unlawful discrimination. The power to make such an award is one of the enumerated forms of “affirmative action” which the Commission may take based on findings of fact and conclusions of law that such relief was warranted.

The Board, pursuant to a complaint filed by Ethel Clay, held a full public hearing according to the procedures set out in KRS Chapter 344 and 104 Kentucky Administrative Regulations § 1:020. It awarded $750.00 to Ms. Clay for embarrassment and humiliation pursuant to its findings that she had experienced housing discrimination on the basis of race at the hands of the appellee Nelson Barbour. The Board did not explain why that particular sum was deemed appropriate. There was no finding that she had suffered more tangible monetary losses because of appellee’s unlawful action.

The decision was appealed to the Franklin Circuit Court, which voided the award on the basis that the statute authorizing it was unconstitutional for “ . . . vagueness, overly-broad delegation of Legislative authority, and usurpation of judicial authority. . . .” The rest of the Commission’s findings and orders were undisturbed.

The specific fault found with the provision was that it contains no “standards or guidelines” for the exercise of the discretion conferred upon the Commission. The trial court’s Opinion and Order noted that no monetary ceiling is specified for damages awarded to compensate for embarrassment and humiliation. The court below believed that neither the provision that the award must be based upon the Commission’s findings, nor the statutory provision for review in circuit court of Commission findings, cures the legislative failure to limit recovery for embarrassment and humiliation.

We first note that the necessity for standards or guidelines accompanying legislative delegations was expressly rejected by the former Kentucky Court of Appeals in Butler v. United Cerebral Palsy of Northern Kentucky, Inc., Ky., 352 S.W.2d 203 (1961). That opinion placed Kentucky in the forefront of states adopting the “safeguards” test proposed by Professor Kenneth Culp Davis. Butler quoted Davis’ Administrative Law Treatise at some length on the reasons for the adoption of a “safeguards” standard and the policies to be followed in applying that standard:

The typical opinion of a state court on a delegation problem is quite unfortunate both in what it says and what it fails to say. It says that (1) legislative power may not be delegated, (2) that “filling up the details” is not an exercise of legislative power, (3) that legislative power is not delegated if the Legislature has laid down a standard to guide the exercise of the power, and (4) that presence or absence of vague verbalisms like “public interest” or “just and reasonable” make all the difference between valid legislation and unlawful delegation.
The typical state court opinion on delegation fails to say anything about (1) the reasons for the legislative choice to make the particular delegation, (2) the practical consequences of allowing the Legislature to do what it is trying to do, (3) the usual lack of practical advantage in compelling the Legislature to dress up the statute with vague verbiage that the judges call standards, (4) the questions whether in the circumstances good government calls for a headlong choice of policy by the legislative body or whether it requires the working out of policy by case-to-case adjudication conducted by those who have the advantage of knowing the facts of particular cases, (5) the need for protection against unfairness, arbitrariness, and favoritism, (6) the importance of procedural safeguards, or opportunity for a judicial check, and in some circumstances of a proper legislative or even administrative supervision or check, or (7) the need for providing help to the Legislature in its search for practical and efficient ways of accomplishing legislative objectives The notion that a standard would be required started out rationally; the belief was that the legislative body ought to state an “intelligible principle” and that the administrative authority would merely “fill in the details”. . The difficulty is that it is often affirmatively desirable for the legislative body to avoid either an intelligible principle or a clear delineation of the general policy, for the simple reason that many questions of basic policy may better be worked out by an agency than by a legislative body.

A helpful distillation of the essence of Butler and subsequent cases appears in Legitimizing the Administrative State: The Judicial Development of the Nondelegation Doctrine in Kentucky, Edward H. Ziegler, Jr., 4 Northern Kentucky Law Review 87 at 118 (1977). Mr. Ziegler lists five standards against which a delegation should be reviewed under the “safeguards” test:

(1) whether provisions exist in the delegating statute sufficient to determine that the powers delegated are confined to a specific area of authority or are at least within an ascertainable scope of authority; (2) whether the delegation is to a newly created agency or to a long established agency with a record of experience and expertise in the field; (3) whether significant decisions will be left to the untrammelled discretion of the agency or if the agency is required to establish criteria for its decisions by issuing regulations; (4) whether agency decisions affecting the rights of individuals are inherently reviewable by the courts in Kentucky; and (5) whether the delegation is necessary in light of the practical needs of effective government.

Application of those factors to the problem before us is helpful but does not point absolutely to a conclusion: we find that factors (1) and (4) are resolved favorably to the statute while (2) and (3) must be resolved against it. The result reached under test (5) is, of course, a highly subjective matter. However, neither our research nor that of the parties has disclosed another statute in any jurisdiction within the United States which authorizes damages for embarrassment and humiliation without placing a dollar limit on those damages. Any argument that a provision allowing such damages without statutory limitation is “necessary in light of the practical needs of effective government,” has obviously not taken the legislatures of our nation by storm.

We have no wish to invalidate this constitutionally marginal statute if such a course can be avoided. We cannot effect a direct cure of the statute’s probable deficiency in that it is not our function to impose a dollar limit of our own devising.

However, we do not need to reach the constitutionality of the statute at this time because we feel that the findings of the Commission do not justify the award in this case.

We do feel that it is within our province to require the strictest compliance with the provision that affirmative action must be in accordance with the Commission’s findings of fact. We require that that compliance be evidenced by detailed written findings in support of any award of damages for embarrassment and humiliation. No such findings have been made by the Commission in this case. We hope and believe that the requirement will provide and demonstrate a safeguard against un-trammelled agency discretion.

Thus, where the Commission finds that humiliation and embarrassment have resulted from unlawful discrimination, we require that it set out with considerable particularity the nature and degree of the injury suffered. Elements which we believe would be appropriate to discuss are: (1) the number of persons exposed to the defendant’s conduct; (2) the number of encounters during which the claimant was exposed to behavior inducing embarrassment or humiliation; (3) whether the actions of the defendant caused humiliating public exposure; (4) any evidence of severe emotional damage; and (5) the presence or absence of aggravating factors such as abusive language.

We remand this case to the Franklin Circuit Court with instructions that it be remanded to the Kentucky Commission on Human Rights for further findings in accordance with this opinion.

All concur.

      . 352 S.W.2d at 207, citing 1 Treatise, supra note 134, at 148-49.


author: HOGGE, Judge.

text:
    Calvin H. BLACKABY and Patty A. Blackaby, Appellants, v. Anna D. BARNES, widow, Darlene Studle and Ronald Studle, her husband, Karen Kay Barnes, single, Unborn Children and Unknown Heirs of Anna D. Barnes and James Byrdwell, their guardian-ad-litem, Appellees.
    Court of Appeals of Kentucky.
    Sept. 28, 1979.

      Ronald E. Johnson, Louisville, for appellants.
    William H. Hays, Sr., James H. Byrdwell, Shelbyville, for appellees.
    Before WINTERSHEIMER, HOGGE and REYNOLDS, JJ.
   HOGGE, Judge.

Calvin and Patty Blackaby appeal from a judgment of the Shelby Circuit Court declaring a contract for the sale of real estate to the Blackabys void and unenforceable. The property in question is a farm which was willed to Anna D. Barnes for life with remainder to her children. Mrs. Barnes and her only living children, Darlene Studle and Karen Kay Barnes, and Darlene’s husband, Ronald, executed a bond for deed with intention of conveying the property to the Blackabys. The Barnes family also filed this action, asking that the sale be approved. The circuit court decided that where a contingent interest in unborn children exists, real estate may not be conveyed by private sale.

The sole issue before us is whether, under KRS 389.040, parties in being may sell real estate by private sale where a contingent interest in unborn children exists. Relevant portions of KRS 389.040 read as follows:

(1) Remainder and contingent interest in real estate may be sold upon petition of any person having a present or vested interest, all persons in being having any interest in such estate being made parties to the action. If the court shall be satisfied that the interest of all concerned would be subserved by such sale, it shall adjudge accordingly; which judgment and sale thereunder shall invest the purchaser with all title of the present and future contingent claimants to the said real estate.
(2) The proceedings in the case provided for in subsection (1) of this section shall be the same in all respects, as far as necessary, as those provided for in KRS 389.010 ....
(3) The proceeds of sale shall be by the court reinvested in the same kind of property, to be conveyed and held in the same manner, subject to like limitation, trust, and conditions, as the property which was sold: Provided, however, That the court shall cause all just claims for taxes, or other lawful assessments for public improvements upon the property, to be first paid, and only the balance of the proceeds be invested; or, upon a sale of a part of such property, the proceeds may be invested in suitable improvements upon the remaining land, under the direction of the court; or it shall be lawful for the court to cause the proceeds to be reinvested as provided in section 2, article v., of this chapter.

It is quite clear that under the provision which preceded KRS 389.040, § 491a of the Civil Code, a private sale was not permissible. Vittitow v. Keene, 265 Ky. 66, 95 S.W.2d 1083 (1936); Trimble v. Trimble, Ky., 262 S.W.2d 381 (1953). In 1970, that portion of the statute was enacted, which directs that the proceedings in the case shall be “the same in all respects, as far as necessary, as those provided for in KRS 389.010.”

Notwithstanding the provision of KRS 389.040(2), this court is constrained to follow Vittitow, supra, and hold that a private sale of contingent interests is still not permissible, in the absence of express authority from the legislature. The language of KRS 389.040(1) “. . it shall adjudge accordingly; which judgment and sale thereunder shall invest . . . .” (emphasis added) clearly shows the legislature intended such a sale to be a judicial one following a hearing and a judgment of the court. It follows that subsection (2) must have been intended to refer to those provisions of KRS 389.010 as they pertained to a judicial sale “as far as necessary.” Had it been intended that it applied to a private sale, the enactment would have expressly stated so. As pointed out by the appellee, to hold otherwise, would result in an absurd conclusion that subsection (1) required a judicial sale and then impliedly repealed that requirement by subsection (2).

This holding is further supported by the difference in investment of the proceeds procedures provided for in KRS 389.010 and KRS 389.040. In the former, the proceeds may be paid to the guardian under certain conditions, whereas under the latter the proceeds of the sale are reinvested and held under the direction and control of the court in a predetermined manner.

The legislature, by this enactment, has very logically applied a different standard for the sale of a contingent interest in realty of an undetermined class as opposed to a sale of an interest in realty, already vested in persons in being. In the latter case, persons under a disability with a vested interest are also afforded the further protection of a legal guardian under a faithful performance bond. We hold that KRS 389.040 does not authorize a private sale of contingent interests in realty.

The judgment of the lower court is affirmed.

All concur.