text:
    Donald Wayne KELLEY, Appellant, v. Paula KELLEY, Appellee.
    No. 12969.
    Court of Civil Appeals of Texas, Austin.
    June 6, 1979.
    Rehearing Denied July 11, 1979.

      Geoffrey A. FitzGerald, Bowmer, Courtney, Burleson & Pemberton, Temple, for appellant.
    Eugene P. Chapline, Austin, for appellee.
   PHILLIPS, Chief Justice.

This appeal arises out of a divorce case. The dispute is over conservatorship of the parties’ three-year-old daughter.

Appellee filed a petition for divorce in Bell County in June, 1977. On November 17, 1977, after trial to the court, an order styled “Decree of Divorce” was signed by Honorable Don Busby. It granted the parties a divorce, disposed of all property, and contained temporary orders for conserva-torship and support of the child, Rebecca. All temporary orders concerning conserva-torship and support of the child were expressly made subject to “further order of this Court.” The trial court’s docket has a notation that a decision on permanent custody would not be made until a social study could be completed. The case was reset for final hearing on November 17, 1977, and then again reset for December 12, 1977.

The next action occurred in August, 1978, at which time a jury trial was held before Honorable William Black on the sole issue of custody. The jury answered that appellant should be appointed managing conservator of the child. Judge Black entered judgment non obstante veredicto in favor of appellee. On October 6, 1978, a “Final Decree of Divorce” was entered which made reference to the provisions of the “interlocutory judgment styled Decree of Divorce” entered in November, 1977. The second judgment granted a divorce which was to “relate back to November 17,1977.” The October, 1978, judgment named appel-lee managing conservator, made provision for support and access, and divided the property in the exact manner of the earlier judgment.

Appellant is now before us on a number of points, the first being whether the November, 1977, judgment was final. If it was, appellant was actually seeking a modification of the previous divorce decree. Texas Family Code Ann. § 14.08 (Supp. 1978) requires a showing that the circumstances of the child or parent have changed since entry of the decree to be modified so that retention of the present managing conservator would be injurious to the welfare of the child and that appointment of a new managing conservator would be a positive improvement for the child. No attempt was made by appellant to satisfy Section 14.08. Appellant argues that the earlier judgment was interlocutory, and Section 14.08 was therefore inapplicable. We agree.

To be final, a judgment must determine the rights of the parties and dispose of all the issues involved so no future action will be necessary in order to settle and determine the case. Wagner v. Warnasch, 156 Tex. 335, 295 S.W.2d 890 (1956). A judgment is interlocutory when it determines less than all issues as to all parties thereby leaving something to be determined and adjudicated by the court in disposing of the parties and their rights. Campbell v. Campbell, 550 S.W.2d 164 (Tex.Civ.App.1977, no writ). The court in the present case expressly left open the issue of permanent conservatorship, thus the November, 1977, judgment was interlocutory.

Appellee argues that the earlier order “was a final decree of divorce because it is against public policy and the intent of the Family Code to sever the issues of a divorce case.” Appellee points to a line of cases holding that the matter of division of property may not be severed from the cause of action for divorce. See, e. g., Adam v. Stewart, 552 S.W.2d 536 (Tex.Civ.App.1977, no writ); Reed v. Williams, 545 S.W.2d 33 (Tex.Civ.App.1976, no writ). From this ap-pellee argues that custody issues, likewise, may not be severed from the cause of action for divorce.

In our view, the November, 1977, judgment was interlocutory and the custody issue was not severed. It should be observed that no order of severance was entered. The trial court clearly intended to reserve judgment appointing the managing conservator for a later time. See Garrison v. Texas Commerce Bank, 560 S.W.2d 451 (Tex.Civ.App.1977, writ ref’d n.r.e.).

The Texas Supreme Court in Cockerham v. Cockerham, 527 S.W.2d 162 (Tex.1975), was faced with similar facts. There a trial to a jury was held settling all matters other than the marital property division. The trial court postponed its decision on the property issue but retained jurisdiction “of the property rights of such parties until finally determined at a future date.” The trial court after another trial on the limited issue entered a subsequent judgment dividing the property. The Supreme Court looked to each of the two different judgments for resolution of the point in issue in that case.

The Houston Court of Civil Appeals in Garrison v. Texas Commerce Bank, supra at 457, discussed Cockerham and stated:

“It appears the Supreme Court construed the two orders entered by the trial court as constituting a single judgment. The first order of the court was interlocutory and was made final when the judgment was rendered dividing the property of the parties. The judgment entered dividing the property referred to the judgment granting the divorce thereby impliedly incorporating its terms into the final judgment.”

In the present case, the October, 1978, order was the final judgment. We make no decision on the trial court’s authority to have the divorce “relate back to November 17,1977,” and appellee’s related public policy argument.

Appellant next attacks the trial court’s action in setting aside the jury’s finding in appellant’s favor on conservator-ship and entering judgment non obstante veredicto for appellee. Texas R.Civ.P. 301 provides that a “court may render judgment non obstante veredicto if a directed verdict would have been proper, and provided further that the court may, upon like motion and notice, disregard any Special Issue Jury Finding that has no support in the evidence.” When a court renders such judgment it is equivalent to a finding that there was no evidence to raise an issue for the jury. Rodriguez v. Higginbotham-Bailey-Logan Co., 138 Tex. 476, 160 S.W.2d 234 (1942); Colonial Savings Assoc. v. Taylor, 544 S.W.2d 116 (Tex.1976). In acting on the motion for judgment non obstante vere-dicto, all testimony must be considered in the light most favorable to the party against whom the motion is sought and every reasonable intendment deducible from the evidence is to be indulged in that party’s favor. Douglass v. Panama, Inc., 504 S.W.2d 776 (Tex.1974). A review of the evidence in the record is necessary.

Appellee introduced testimony by a social worker and a clinical psychologist, both of whom concluded that appellee should be granted custody of Rebecca. They each stated that Rebecca’s stepbrother, who lives with appellee, is a positive factor in Rebecca’s life. The psychologist testified that it would be a serious loss to Rebecca if she were separated from her mother and stepbrother. The social worker also testified that appellee’s financial situation is not very stable as her new husband changes jobs frequently. The record reflects that appellee’s husband was dishonorably discharged from the Army. The social worker expressed concern as to the chances of appellee’s marriage lasting. This is her third marriage. The record also shows that appellee has had sexual relations with many men since she was in high school. There is also testimony that appellee has been an active drug user from about that same time. A minister who knows both parties well characterized appellee as a very unstable person. Appellant is single and lives with his mother in San Marcos. He is employed and attending college. Since there was evidence to support the disregarded finding of the jury, we hold it was error for the trial court to grant the motion for judgment non obstante veredicto.

Appellee contends that the jury’s verdict was against the overwhelming weight of the evidence, in light of the testimony by the social worker and child psychologist. In reviewing factual sufficiency points of error, the court considers all of the evidence to determine whether the findings are so against the great weight and preponderance of the evidence as to be manifestly unjust. In re King's Estate, 150 Tex. 662, 244 S.W.2d 660 (Tex.1951); Calvert, “No Evidence” and “Insufficient Evidence” Points of Error, 38 Texas L.Rev. 361 (1960). The finding by the jury that appellant should be appointed managing conservator is not so against the great weight and preponderance of the evidence as to be manifestly unjust.

Appellee alleges jury misconduct. She states in her brief that the evidence of misconduct was not properly preserved in the statement of facts, and “[ajppellee therefore will not burden the Court with further discussion of this crosspoint.” Points of error are required to be supported by argument and authority, Tex.R.Civ.P. 418(e), and if not supported, the points are waived. Nolan v. Bettis, 577 S.W.2d 551 (Tex.Civ.App.1979, writ filed); Rayburn v. Giles, 182 S.W.2d 9 (Tex.Civ.App.1944, writ ref’d). The crosspoint is overruled.

Inasmuch as we hold that the jury’s finding was supported by the evidence, we reverse the judgment and remand the cause to the district court for entry of judgment appointing Donald Wayne Kelley as managing conservator and providing for such access to the child by the possessory conservator as the district court may deem proper under the record.

Reversed and Remanded With Instructions.


source: Caselaw Access Project

author: SHANNON, Justice.

license: Public Domain

text:
    V. R. HYLTON, Petitioner, v. Bob BULLOCK, Respondent.
    No. 16324.
    Court of Civil Appeals of Texas, Austin.
    June 13, 1979.
    Rehearing Denied July 11, 1979.
    V. R. Hylton, pro se.
    Mark White, Atty. Gen., Gilbert J. Ber-nal, Jr., Asst. Atty. Gen., Austin, for respondent.
   SHANNON, Justice.

Petitioner has attempted to appeal by writ of error the order of the district court of Travis County dismissing his cause of action. The Clerk of this Court has refused to file the record tendered by petitioner and, instead, has marked the record “received.” Petitioner has filed a motion requesting this Court to compel the Clerk to file the record. Respondent Bob Bullock has replied in opposition to the motion.

An examination of the transcript shows that petitioner timely tendered the record for filing as a writ of error. The same examination shows that this Court has no jurisdiction to entertain the writ, and, accordingly, the motion to compel will be overruled.

Petitioner filed suit against the respondent seeking damages. Petitioner signed the original and amended petitions and other pleadings. Likewise, petitioner signed Rule 168 interrogatories propounded to respondent.

Respondent filed a plea to the jurisdiction asserting sovereign immunity. The plea to the jurisdiction came on for hearing. Petitioner appeared at the hearing representing himself. At the hearing, petitioner made an opening statement, cross-examined respondent’s witness, called witnesses and examined them, placed his own testimony into the record, and made a closing argument.

Texas Rev.Civ.Stat.Ann. art. 2249a § 1 (1971) provides:

“No party who participates either in person or by his attorney in the actual trial of the case in the trial court shall be entitled to review by the Court of Civil Appeals through means of writ of error.”

“The actual trial [as used in art. 2249a § 1] of a case, as ordinarily understood by the legal profession, is the hearing in open court, leading up to the rendition of judgment, on the questions of law, if the case is disposed of on the questions of law, or on the questions of fact, if the final judgment is rendered on the facts. The statute was intended to cut off the right of appeal by writ of error of those who participate in the hearing in open court in the trial that leads to final judgment. It was not intended to cut off the right of those who discover that a judgment has been rendered against them after the judgment has been rendered, and who participate only to the extent of seeking a new trial.” Lawyers Lloyds of Texas v. Webb, 137 Tex. 107, 152 S.W.2d 1096 (1941).

Article 2249a § 1 denying the right to appeal by writ of error when a party appeared in the trial is mandatory, jurisdictional, and cannot be waived. Nutter v. Phares, 523 S.W.2d 292 (Tex.Civ.App.1975, writ ref’d n. r. e.); Thacker v. Thacker, 496 S.W.2d 201 (Tex.Civ.App.1973, writ dism’d).

Petitioner participated, in the fullest sense, in the hearing that led to the rendition of the final judgment dismissing his cause of action. Lawyers Lloyds of Texas v. Webb, supra. Accordingly, review by writ of error is not available to him.

The motion is overruled.


author: O’QUINN, Justice.

text:
    TEXAS ALCOHOLIC BEVERAGE COMMISSION, Appellant, v. KINGS FOUR, INC., Appellee.
    No. 12907.
    Court of Civil Appeals of Texas, Austin.
    June 13, 1979.

      John L. Hill, Atty. Gen., Max P. Flusche, Jr., Asst. Atty. Gen., Austin, for appellant.
   O’QUINN, Justice.

Kings Four, Inc., holder of a mixed beverage permit originally granted in October of 1972, applied to the Texas Alcoholic Beverage Commission for renewal of the permit in September of 1977. After an administrative hearing, the Administrator of the Commission denied the application on the ground that holders of more than fifty percent of the stock of the corporation, under transfer of shares effective in July of 1977, had not been officers of the corporation “since the original permit was issued,” within requirements of Section 28.04(d)(2) of the Alcoholic Beverage Code.

Kings Four appealed to district court in Travis County, and the trial court, after review of the proceeding record, pursuant to the Administrative Procedure Act and Section 11.67 of the Alcoholic Beverage Code, set aside the order of the Administrator and remanded the proceeding with instructions to renew the permit as requested by Kings Four.

From that judgment, the Commission has appealed and brings the single point that it was error to set aside the order “. . which was based upon a finding that more than fifty percent of the stock of Plaintiff corporation had been changed since the time the original permit was issued.”

We will overrule the point of error and affirm judgment of the trial court.

Section 28.02 of the Code fixes annual fees for mixed beverage permits at “. . $2,000 for an original permit, $1,500 for the first annual renewal, $1,000 for the second annual renewal, and $500 for each subsequent annual renewal.” When Kings Four presented its application for renewal in 1977 and tendered $500 in payment, objection was made that more than fifty percent of the stock of the corporation had changed “since the time the original permit was issued.” Section 28.04(a) of the Code was invoked which provides: “A mixed beverage permit held by a corporation may not be renewed if the commission or administrator finds that legal or beneficial ownership of over 50 percent of the stock of the corporation has changed since the time the original permit was issued.” (Emphasis added).

Kings Four countered by claiming its compliance with the exception provided by Section 28.04(d)(2), as follows:

“(d) This section does not apply to a change in corporate control:
* * * * * *
“(2) brought about when legal or beneficial ownership of over 50 percent of the stock of the corporation has been transferred to a person who possesses the qualifications required of other applicants for permits and is an officer of the corporation or has been an officer of the corporation since the original permit was issued.” (Emphasis added).

The parties are not in disagreement as to the essential and controlling facts, most of which were stipulated at the administrative hearing. In the early part of July, 1977, Laird Palmer and Thomas Goggan were elected officers of Kings Four, Inc., and shortly thereafter acquired stock of the corporation to the extent of more than sixty percent of its shares. In September or early October Kings Four applied for renewal of its permit. The Commission concedes that Palmer and Goggan possess the qualifications required of other applicants for permits. Neither Palmer nor Goggan was an officer in the corporation prior to July of 1977, but were officers at the time the application for renewal was filed.

The Attorney General, in behalf of the Commission, asserts, “From the record of the proceedings had before the administrative agency it is clear that the Administrator of the Alcoholic Beverage Commission has interpreted § 28.04(d)(2) as applying only in those situations where more than fifty percent of the corporate stock is transferred since the issuance of the original permit to an officer who was an officer of the corporation at the time of the issuance of the original permit.” The Attorney General argues that any other construction would do violence to the legislative intent “to impose the higher fee upon any corporation in which the majority of the stock has been transferred since the issuance of the original permit.” (Emphasis added).

Subparagraph (d)(2) of Section 28.04 creates an exception to paragraph (a) for the transferee of “over 50 percent of the stock of the corporation” who can meet these three requirements:

(1) “possesses the qualifications required of other applicants,”
(2) “is an officer of the corporation,”
(3) “or has been an officer of the corporation since the original permit was issued.”

It is conceded that Palmer and Goggan possess the qualifications required under (1) above. The remaining two requirements are alternative, and if either is met, the statute is satisfied. There is no dispute that Palmer and Goggan became officers of the corporation in July, prior to the application for renewal made some two months later, and were officers when renewal was sought.

By insisting on appeal that the officer must have been an officer of the corporation “at the time of issuance of the original permit,” the Commission disregards the alternate requirement of subparagraph (d)(2) that the transferee “is an officer of the corporation” at the time application for renewal is filed. Neither courts nor administrators may rewrite, revise, edit, or amend statutes; that is a function reserved for the Legislature, and courts and administrators must seek to ascertain the legislative intent, as revealed by the language used in the statute, when called upon to construe or to administer the law.

The Commission argues that “It seems clear beyond doubt that the language of § 28.04(d)(2) is ambiguous, obscure, and difficult of interpretation. In this situation the indulgence of a presumption in favor of the State is required by the authorities .” in cases cited, in which statutes were found to be ambiguous. We find no ambiguity or obscurity in the statute. The fatal fault in the Commission's application of the statute to the facts of this case lies, not in the stars guiding an administrator in pursuit of higher fees from corporations in which a majority of the stock has changed hands, but rather in failing to read and accept the plain language of the statute.

In both paragraph (a) and in the exception to that provision, found in subpara-graph (dX2), the Legislature used the same term, with respect to the period following issuance of the original permit, in almost identical words: “since the time the original permit was issued,” in paragraph (a), and “since the original permit was issued” in subparagraph (d)(2). The key word in each phrase is “since,” an adverb, in each instance modifying the verb “was issued,” which Webster defines as “In or during a part of the interval between a specific past time and the present.” Webster’s New International Dictionary of the English Language, 2d ed., unabridged.

It is obvious that in paragraph (a) the Legislature stated that the permit of a corporation may not be renewed if it is found that more than fifty percent of the stock has changed hands at any time since the permit was issued. If the Legislature had intended in subparagraph (d)(2) to use the same adverb “since” to modify the same verb “was issued” in a different manner, the final clause of the subparagraph should have been written to read, “. . .or has been an officer of the corporation ever since the original permit was issued.” Webster’s Dictionary, supra, points out that when “since” means “From a definite time until now,” it is used “usually with ever; as he has kept it ever since.”

The word “since,” as used by the Legislature in each of the two subparagraphs in effectively identical phrases, simply refers to “a part of the interval between” issuance of the original permit and the date application for renewal is filed. The interval between these two points in time applies to transfer of stock in paragraph (a) and to any period in which the transferee of a majority of the corporate shares may have been an officer of the corporation. Thus the last two clauses of subparagraph (d)(2) are construed to mean: “and is [now] an officer of the corporation or has been an officer of the corporation [during any interval] since the original permit was issued.”

To hold, as the Commission urges, that only the final clause of subparagraph (d)(2) is effective and that the clause “is an officer of the corporation” must be ignored because the final clause means the officer holding the transferred majority of stock must have been “an officer of the corporation at the time of issuance of the original permit,” that is, “ever since” the original issue, would make sheer nonsense of the statute. Confronted with the problem of construing a statute, the Supreme Court very early said, “We should not readily suppose that the legislature intended to do a thing so useless and unmeaning.” Chambers v. State, 25 Tex. 307, 312 (1860). As pointed out more recently by the Supreme Court, we should not interpret statutes “. . . so as to convict the legislature of foolish and futile action.” State v. School Trustees of Shelby County, 150 Tex. 238, 239 S.W.2d 777, 781 (1951).

The construction we place on Section 28.04 allows the corporation holding a mixed beverage permit to renew its permit, even though ownership of more than fifty percent of the corporate stock has changed since the time the original permit was issued, in situations where (1) the person to whom the stock has been transferred possesses the qualifications required of other applicants for permits, and (2) is, at the time renewal is sought, an officer of the corporation, or (3) the qualified person has been an officer of the corporation for any interval since the original permit was issued. We conclude that this construction is in full harmony with the intention of the Legislature under the plain words of the statute.

The judgment of the trial court is affirmed.

Affirmed.


author: SALAZAR, Justice.

text:
    MATADOR SALES COMPANY, INC., Appellant, v. The WELLS COMPANIES, Appellee.
    No. A2050.
    Court of Civil Appeals of Texas, Houston (14th Dist.).
    June 13, 1979.
    Rehearing Denied July 11th, 1979.

      John C. Marshall, Houston, for appellant.
    Larry Huelbig, Houston, for appellee.
    Before MILLER, PRESSLER and SALAZAR, JJ.
   SUBSTITUTE OPINION ON MOTIONS FOR REHEARING

SALAZAR, Justice.

After consideration of all parties’ motions for rehearing, we withdraw the opinion we filed on May 16, 1979, in this case and substitute this opinion for it.

Appellant-plaintiff pursues this appeal from a take-nothing summary judgment rendered against it by the trial court on its action to recover ten percent (10%) of the price of an option exercised by appellee-de-fendant. The trial court held that appellant take nothing by way of its principal cause of action and was liable for $5,460.00, a sum equal to twice the amount of usurious interest charged on the invoice in which appellant billed appellee for the ten percent (10%) due, and reasonable attorneys’ fees in the amount of $750.00.

In April, 1974, Baron H. Clements, Sr., now president of appellant, allegedly owned as an individual an oral option to purchase four compressors for the sum of $120,000.00. Appellee instead exercised the option to purchase these compressors for this price on May 3,1974, but failed to pay Mr. Clements ten percent (10%) of the option or $12,-000.00. On October 24, 1974, appellant was incorporated. Appellant then billed appel-lee for the $12,000.00 due plus interest at the rate of 1½% per month in an invoice dated August 22, 1975. Appellant proceeded to file suit to recover the $12,000.00 from appellee on November 20, 1975.

Appellee answered by asserting a defect in parties in that the purported oral agreement was between Mr. Clements as an individual and appellee, not between appellant and appellee and by asserting that appellant was not entitled to sue in the capacity in which it brought the lawsuit. Appellee later filed a counterclaim charging that the interest in the August 22, 1975, invoice was usurious and sought the statutory penalties of forfeiture of the principal sum due and twice the interest charged and reasonable attorneys’ fees. Attached to its motion for summary judgment and supplemental motion for summary judgment both of which incorporated the pleadings, admissions and answers to interrogatories on file were three affidavits by employees of appellee denying any agreement to pay the interest on the August 22, 1975, invoice. Appellee set forth three grounds on which it felt entitled to summary judgment, namely: usury, defect in parties, and a statute of frauds defense alleging that the purported oral agreement the subject of the lawsuit involved a sale of goods over $500.00 and therefore was required to be in writing.

Appellant’s response to the supplemental motion for summary judgment stated that all rights incident to the option and its exercise were assigned to the corporation, appellant herein. Attached thereto was an affidavit by Baron Clements, Jr., an officer of appellant, verifying that all rights flowing from this option and its exercise were assigned to appellant since the decision was made to incorporate the business.

Appellant raises two points of error; firstly, that the trial court erred in entering judgment on the main action in that no defect in parties or lack of capacity is demonstrated as a matter of law and the statute of frauds is not shown to preclude the principal lawsuit as a matter of law and secondly, that the trial court erred in entering judgment on the cross action because usury is not demonstrated as a matter of law. After a thorough review of the record and briefs on appeal, we hold that the trial court committed fundamental error by rendering summary judgment as it did on ap-pellee’s counterclaim for usury and denying recovery by appellant on its principal action. Tex.Rev.Civ.Stat.Ann. art. 5069 — 1.03 (Vernon 1971) provides as follows:

“When no specified rate of interest is agreed upon by the parties, interest at the rate of six percent per annum shall be allowed on all written contracts ascertaining the sum payable, from and after the time when the sum is due and payable; and on all open accounts, from the first day of January after the same are made.”

There is no written contract evident in the record which is involved in this case. See T. J. Service Company v. Major Energy Company, Inc., 552 S.W.2d 598 (Tex.Civ.App.—Corpus Christi 1977, writ ref’d n. r. e.). In dispute is an alleged oral agreement to pay a commission from appellee to appellant equal to ten percent (10%) of the purchase price effective upon appellee’s purchase of four certain compressors of which the option to purchase was originally allegedly granted to appellant by the vendor. What appellant sent appellee dated August 22,1975, was a mere invoice. Therefore, we do not regard such statute applicable in this case, there being no written contract in the record ascertaining the sum payable involved here nor did appellee agree in writing to pay interest to appellant. The usury penalty provisions in Tex.Rev.Civ.Stat.Ann. art. 5069-1.06 (Vernon 1971) have no application here.

Appellee’s counterclaim for usury fails as a matter of law, appellee having failed to carry his burden of proof as to evidence of facts essential to recovery, i. e. pleading and proving a written contract, ascertaining the sum payable. See Douthit v. McLeroy, 539 S.W.2d 351 (Tex.1976). Likewise, summary judgment cannot stand in this case because a material fact issue exists as to appellant’s right to sue to recover the sum of $12,000.00 or ten percent (10%) of the purchase price based on an alleged assignment from Baron Clements, Sr. to appellant.

Appellee had maintained in its supplemental motion for summary judgment and in its brief that the affirmative defense of the statute of frauds precluded this cause of action as well. Appellee cited Tex.Bus. & Com.Code Ann. § 2.201 (Vernon 1968) as authority. We hold that Tex.Bus. & Com. Code § 2.201 (Vernon 1968) is inapplicable to the present case because the indebtedness the subject of this suit does not involve a contract for the sale of goods for the price of $500.00 or more.

Having reviewed the points of error presented by appellant and the response and authorities cited by appellee in its brief, we reverse and remand this case for a full trial on the merits.

Reversed and remanded.

PRESSLER, J., not participating.


author: J. CURTISS BROWN, Chief Justice.

text:
    Katie Bofysil MARUT et al., Appellants, v. J. Fuller COLLIER et al., Appellees.
    No. B1910.
    Court of Civil Appeals of Texas, Houston (14th Dist.).
    June 13, 1979.
    Rehearing Denied July 11th, 1979.

      Brantly Harris, Prappas, Moncure, Harris & Termini, Houston, Norman Scott Thrash, Thrash, Williams & Dozier, Alvin, for appellants.
    Preston Shirley, John Eckel, Mills, Shirley, McMicken & Eckel, Galveston, Sam Dawkins, Jr., Eastham & Meyer, Thomas H. Lee, Foreman, Dyess, Prewett, Rosenberg & Henderson, W. B. Wagner, R. W. Dye, Gail Eutsler, Houston, for appellees.
    Before J. CURTISS BROWN, C. J., and OIRE and COULSON, JJ.
   J. CURTISS BROWN, Chief Justice.

This was a suit in trespass to try title to determine the ownership of a certain three-fourths mineral interest in a tract of land referred to as Lot 25. The jury found in favor of the plaintiffs in answering special issues, but the trial judge granted the motions for judgment non obstante veredicto filed by the defendants.

The events giving rise to the current controversy began in the mid-1940’s and center around four men who were members of the Houston Division of the American Rice Growers Cooperative Association and its two wholly owned subsidiaries, the Brazos Valley Rice Company and the American Canal Company. The three companies will be referred to collectively as the Association. George Bofysil, Sr. (Bofysil) and J. A. Segelquist (Segelquist) were members of the Association and were rice farmers. A. J. Eastham (Eastham) was a member of the Association and served as its attorney. J. F. Collier (Collier) was a member of the Association and was its comptroller and general manager. The Association, a nonprofit organization, performed at that time three major tasks for its members: it acted as a leasing agent to procure farmlands; it acted as a marketing agent to sell the rice; and it aided in providing irrigation through canals. The Association did not purchase lands for farming, nor did it have the power or funds to do so. There were no restrictions on the ability of individual members or officers to buy or sell land.

In 1944 Eastham became interested in purchasing approximately 1500 acres of jointly owned real estate in Galveston County. Grace McDowell (McDowell) owned a three-quarters share, referred to as the McDowell interest, and the remaining one-quarter share, referred as the Watson interest, was owned by various other parties. Eastham approached McDowell concerning the purchase of her interest but received a negative answer. In 1945 Bofys-il, who had a surface lease on a portion of that tract, interested Segelquist, who leased another portion, in attempting to purchase Lot 25. Segelquist agreed to buy the southern portion of Lot 25 if Bofysil bought the northern half. To that end, Bofysil approached Collier to obtain the name of the owner of the property. Bofysil knew Collier would have this information because, through the Association, Collier had arranged for Bofysil and Segelquist to lease the land. At Bofysil’s request Collier wrote McDowell to ask if she would sell Lot 25. She was not willing to sell at that time, but indicated she might do so after a mineral lease expired.

Later, when disagreement arose between McDowell and the owners of the Watson interest as to the proper management of the properties, McDowell decided to sell her interest. She wrote to Collier asking if the Association would buy her interest in the entire property. Collier replied that the Association did not purchase land but that he knew of two stockholders who were also large land owners and who might be interested in buying the McDowell interest. Collier and Eastham then purchased the McDowell interest, including the minerals, for $26.00 per acre and took title in A. J. Eastham as trustee. Eastham, as trustee, and the owners of the Watson interest then sold the northern portion of Lot 25 to Bof-ysil and the southern portion to Segelquist at $35.00 and $37.50 per acre, respectively. Eastham, as trustee, and the owners of the Watson interest reserved all of the minerals, except for a l/64th non-participating royalty, which was conveyed to both Bofysil and Segelquist in their portions of Lot 25. The record title to the three-quarters mineral interest owned by Collier and Eastham remained in Eastham, as trustee, until 1971. At that time, Eastham, as trustee, conveyed the interest to Collier, who transferred one-half of that interest, or 3/sths of the minerals in Lot 25, to Eastham ⅛ wife and children. Collier later conveyed one-half of his Vsths interest, or 3/i6ths of the minerals in Lot 25, to his children.

In 1977, after mineral production had begun in the northern portion of Lot 25, Bof-ysil’s widow, Katie Marut, and son, George Bofysil, Jr., brought this action in trespass to try title to the mineral interest in the northern portion of Lot 25. The defendants were Eastham and his assigns and Collier and his assigns. Segelquist intervened as party plaintiff and the Superior Oil Company interpled certain royalty payments into the registry of the court.

The Bofysils and Segelquist, as appellants herein, contend they were entitled to judgment on the jury’s verdict in their favor. This case was tried on the theory that Collier owed fiduciary duties to both Bofysil and Segelquist; and that he breached those duties when he and Eastham concealed their ownership of Lot 25 and refused to convey the mineral interest to Bofysil and Segelquist in 1947, when the sale was closed. Because of this, and because East-ham allegedly “knew” about the agreement between Collier and Segelquist, appellants maintain they have equitable title to Lot 25 based on a constructive trust. The jury found that there was a confidential relationship between Collier and both Bofysil and Segelquist and that Eastham knew Collier had agreed to negotiate for the farmers in purchasing Lot 25 from McDowell. The jury also found that Collier and Eastham “concealed” their ownership from Bofysil and Segelquist until after the sale, and that the two farmers had “relied” on the concealment. The Easthams and the Colliers filed motions for judgment notwithstanding the verdict, which the trial court granted without specifying the reasons why the motions were granted.

In order for the appellants to havé been entitled to a constructive trust in Lot 25, there must have been a fiduciary relationship, as defined in law, between Collier and the two farmers. In their motion for judgment notwithstanding the verdict and on appeal, the appellees have asserted that there was no evidence at trial of such relationship. In determining whether there is “no evidence” to support the findings of the jury as to the existence of a confidential relationship between Collier and the farmers, we must consider only the evidence and inferences which tend to support the finding of the jury and disregard all evidence and inferences to the contrary. Garza v. Alviar, 395 S.W.2d 821 (Tex.Sup.1965); In re King’s Estate, 150 Tex. 662, 244 S.W.2d 660 (Tex.Sup.1951).

The supreme court has repeatedly recognized that “confidential relationships may arise not only from the technical fiduciary relationships such as attorney-client, trustee-cestui que trust, partner and partner, etc. — which as a matter of law are relationships of trust and confidence — but may arise informally from ‘moral, social, domestic or purely personal’ relationships.” E. g., Thigpen v. Locke, 363 S.W.2d 247, 253 (Tex.Sup.1962). In Thigpen, the court further held that “mere subjective trust alone is not enough to transform arms-length dealing into a fiduciary relationship . . .” The same reasoning was later applied in Consolidated Gas & Equipment Co. v. Thompson, 405 S.W.2d 333 (Tex.Sup.1966). “There must be a fiduciary relationship before, and apart from, the agreement made the basis of the suit. . . . [T]he fact that one businessman trusts another, and relies upon his promise to carry out a contract, does not create a constructive trust.” Id. at 336.

In the case at bar, the relationship between Collier and the two farmers, Bof-ysil and Segelquist, does not fall within any of those categories recognized as creating a fiduciary relationship. Collier, as general manager of the association, aided members in obtaining suitable lands for leasing, and had acted in that capacity for Bofysil and Segelquist. However, as noted in Consolidated Gas, supra, at 336, “that people have had prior dealings with each other and that one party subjectively trust the other does not establish a confidential relationship.” There is no evidence to link Collier with Bofysil or Segelquist other than their relationship through the association. There is no evidence that Collier had worked together with Bofysil and Segelquist “over a long period of time” or that he had ever assisted them in purchasing other property. Rankin v. Naftalis, 557 S.W.2d 940, 945 (Tex.Sup.1977). Absent some evidence meeting the requirement of a prior fiduciary relationship under the holdings of Thigpen, Consolidated Gas, and Rankin, there is no constructive trust.

Since there was no evidence of a fiduciary relationship between Collier and Bofysil and Segelquist, we need not consider the remaining points of error and express no opinion thereon. Likewise, since there was no evidence of a confidential relationship between Eastham and the two farmers, there is no constructive trust against the Eastham interest in the property.

The trial court’s entry of judgment notwithstanding the verdict is affirmed.

Affirmed.

GIRE, J., not participating.


author: DICKENSON, Justice.

text:
    The NATIONAL BANK OF COMMERCE et al., Appellants, v. James L. MAY, M.D. et ux., Appellees.
    No. 5243.
    Court of Civil Appeals of Texas, Eastland.
    June 14, 1979.
    Rehearing Denied July 5, 1979.

      Hubert D. Johnson, Johnson & Cravens, John A. Gilliam, Jenkens & Gilchrist, Royal Brin, Jr., Strasburger & Price, Dallas, for appellants.
    Sandy M. Sandoloski and Michael W. McManus, Weinberg, Sandoloski & McMa-nus, Dallas, for appellees.
   DICKENSON, Justice.

The first question is which innocent party must bear the loss where a valid deed was fraudulently altered by changing the property description after its execution and delivery, but prior to recordation. The next question is the effect of a deed back to one of the two defrauded grantors which recited that it was “subject to” a lien which would otherwise have been invalid as to the property interest which is in dispute. The last major question is whether punitive damages can be recovered from one of the defendants when no actual damages or other relief was adjudged against that defendant.

The plaintiffs, Dr. James L. May and wife, Beulah Leona May, sued James M. Parks, their former friend and co-owner of an 8.5 acre tract of land; Home Realty Company, Inc., grantee under an altered deed to the 8.5 acre tract; The National Bank of Commerce, an innocent party which advanced money in good faith and claimed the 8.5 acre tract under a foreclosure of its deed of trust; and Southwest Land Title Co., the title company which prepared the disputed deed and attended to its recordation. The Bank filed a counterclaim to remove the cloud on its claim to full title in the property. After a trial by jury, judgment on the verdict was rendered in favor of plaintiffs as to their undivided interest in the land and against the Bank on its counterclaim. Judgment on the verdict was also rendered in favor of plaintiffs for exemplary damages against James M. Parks in the sum of $300,000 and for exemplary damages against Southwest Land Title Co. in the sum of $400,000. No actual damages were awarded. The Bank and the Title Company perfected separate appeals. Parks did not appeal, and the judgment as to him is final. We affirm the judgment of James L. May and Beulah Leona May against the Bank for their interest in the land. We reverse the judgment against Southwest Land Title Co., severing and remanding that cause.

The verdict of the jury can be summarized as follows:

SPECIAL ISSUE NO. 1
On or about January 13, 1971, James M. Parks mislead Dr. James L. May and wife, Beulah Leona May, as to the necessity for the execution of a deed to Home Realty Company, Inc. covering an undivided 93,615/350,000 (26.75%) interest in 8.5 acres of land.
SPECIAL ISSUE NO. 2
Dr. James L. May and wife, Beulah Leona May, did not intend to deed all of their right, title and interest (73.25%) in said 8.5 acres of land to Home Realty Company, Inc.
SPECIAL ISSUE NO. 3
The deed dated January 13, 1971, from Dr. James L. May and wife, Beulah Leona May, and James M. Parks to Home Realty Company, Inc. was altered after Dr. and Mrs. May signed it, and prior to being filed for record, without their consent or knowledge.
SPECIAL ISSUE NO. 4
James M. Parks altered the deed dated January 13, 1971, after Dr. and Mrs. May signed it and before it was filed of record.
SPECIAL ISSUE NO. 5
James M. Parks altered said deed with the help of Buck Farish (a vice-president of Southwest Land Title Co.) and an employee of Southwest Land Title Co.
SPECIAL ISSUE NO. 6
James M. Parks acted with malice at the time he defrauded plaintiffs.
SPECIAL ISSUE NO. 7
$300,000 should be awarded against James M. Parks as exemplary damages.
SPECIAL ISSUE NO. 8
Southwest Land Title Co. acted with malice at the time it defrauded plaintiffs.
SPECIAL ISSUE NO. 9
$400,000 should be awarded against Southwest Land Title Co. as exemplary damages.
SPECIAL ISSUE NO. 10
The fair market value of the undivided 256,385/350,000 (73.25%) interest in the 8.5 acre tract, as of January 3, 1971, was $275,000.
SPECIAL ISSUE NO. 11
There was such unity of interest and ownership between Home Realty, Inc. and James M. Parks that there was no distinction between them.

BACKGROUND

James L. May is a medical doctor. James M. Parks was a real estate developer. They served together on a bank’s board of directors, and they became friends. Dr. and Mrs. May owned 8.5 acres of land, and they agreed to exchange an undivided 93,615/350,000 (26.75%) interest in this tract of land for a 39.5% interest in a real estate partnership which owned apartment units. Dr. and Mrs. May executed a deed in favor of Parks on October 1,1970, which was on a printed form and which had a taped-on attachment showing the metes and bounds description of the property.

Dr. May testified that in November or December of 1970, Parks asked them to agree to let him borrow $100,000 on his 26.75% interest in the 8.5 acre tract for six to eight months to take care of another project of his, one in which they had no interest. As an accommodation to him, on March 1, 1971, they signed a second deed, along with Parks, for the same 26.75% interest in the 8.5 acre tract which had previously been conveyed to Parks. The second deed showed Home Realty Co., Inc. as grantee. Parks was the owner of Home Realty, a corporation which had been organized to borrow money at interest rates higher than 10% per annum. The second deed also had a taped-on attachment for the property description. Dr. May testified that he and his wife read the deed before, signing it and that it only conveyed the 26.75% interest which belonged to Parks. Parks claimed the Fifth Amendment and refused to testify. James LeRoy Lewis, a questioned document examiner, testified that he believed the taped-on attachment had been removed and altered by cutting off the portion which restricted the conveyance to the 26.75% interest. When the altered attachment was taped back to the deed, it appeared to convey all of the undivided interest of Dr. and Mrs. May as well as the interest of Parks.

Buck Farish testified that he was a vice-president of Southwest Land Title Company, that he gave instructions for the preparation of the deed, that it covered the full interest, and that it was not altered. The jury did not believe him.

The Bank extended credit to Home Realty Co., Inc. and secured a note dated April 9, 1974, for the sum of $400,000 plus interest. This note was in renewal and extension of prior notes from Home Realty dated November 13, 1972, and August 28, 1973. It should be noted that all of the loans were subsequent to the alteration of the deed and that record title to the entire 8.5 acres was in Home Realty when the Bank made the loans. The note was secured by a Deed of Trust which purported to cover 100% of the ownership of the 8.5 acre tract. A title binder was issued in favor of the Bank because the recorded instruments indicated that Home Realty was the sole owner of the land. The Deed of Trust was foreclosed on July 1, 1975, and the Bank became the apparent record owner of the property.

After the Bank secured its lien on the property, but prior to the foreclosure, Dr. May learned that Home Realty owned the apparent record title to 100% of the 8.5 acre tract and that it had subjected all of its apparent interest to a lien in favor of the Bank.

At Dr. May’s insistence, a Warranty Deed was executed under date of August 12, 1974, by Home Realty Co., Inc. through James M. Parks, President, to James L. May (not naming Mrs. May) describing the 256,385/350,000 (73.25%) undivided interest which belonged to Dr. and Mrs. May and which stated:

further consideration that the Grantee herein takes the hereinafter described property SUBJECT TO, but in no wise assuming, the unpaid balance owing on that one certain promissory note payable to the order of NATIONAL BANK OF COMMERCE OF DALLAS, which said note is further secured by Deed of Trust.

Dr. May also insisted that Parks secure a release of the Bank’s lien as to the 73.25% interest, but that was never done.

THE BANK’S APPEAL

National Bank of Commerce argues six points of error. The first point claims that the trial court erred in “reforming” the altered deed and in partially setting aside the foreclosure so as to adversely affect the rights of the Bank which was an innocent party and bona fide lender. We disagree.

While the record is clear that the Bank was innocent of any wrongdoing, this fact is not material to our decision of the case. It would be a significant factor if plaintiffs were asserting an equitable right to reform or set aside a voidable instrument; however, the plaintiffs here were seeking a declaration that the altered deed was void, not merely voidable, as to the additional property rights purportedly conveyed by the alteration. Plaintiffs cite Nabors v. Nabors, 230 S.W. 1109 (Tex.Civ.App.—El Paso 1921, writ ref’d), and Stockton v. Lake Tanglewood & Skybolt, Inc., 441 S.W.2d 575 (Tex.Civ.App.—Amarillo 1969, no writ), for the proposition that the material alteration of the deed, after its execution and delivery but prior to recordation, is of no effect and that the deed is effective as originally written, even as to a purchaser in good faith.

Stockton v. Lake Tanglewood & Skybolt, Inc., supra, states that:

The rule regarding alterations of conveyances, as we understand it, is that a material alteration after the execution and delivery of said instrument is of no effect and the instrument stands as originally drawn.

4 Am.Jur.2d, Alteration of Instruments § 33 reads in part as follows:

The general rule is that the subsequent alteration of an instrument under and by virtue of which the title to property has become vested in the grantee therein does not invalidate the instrument insofar as it operates as a conveyance, and therefore does not in any way affect the title of such grantee to the property so conveyed or affect the interpretation of the deed as to the quantum of the estate conveyed. This rule is based upon the theory that an estate which may exist witiiout a deed is not destroyed by the unauthorized material alteration or even the fraudulent cancellation and destruction of the deed conveying it, by the holder thereof or his agent. Such alteration does not divest the original grantee of the title, or revest such title in the grantor, although done by mutual consent and with a view to that object, though, in the latter case, it would seem that the grantee is afterward estopped from asserting title under the deed; nor will the unauthorized alteration of a deed by the grantee so as to make it describe land not conveyed thereby entitle the grantor, by a suit in equity, to set aside his deed and be reinvested with the title conveyed. If, after execution, a conveyance of land is altered by the grantee or with his privity so as to make it describe land not granted thereby, the vested title to the land as originally described in the deed is not divested; but of course the deed does not operate to transfer title to the land included in the deed by alteration, even as to a purchaser in good faith without notice of the altera tion. Accordingly, the grantor may not sue to recover damages for the land included by the alteration, since title to such land has not been lost; but an action may be brought to remove the cloud on the title to the land not covered by the deed as originally executed. (Emphasis added)

See also, 3A C.J.S. Alteration of Instruments § 19.

We also note the early case of Bowser v. Cole, 74 Tex. 222, 11 S.W. 1131 (1889), where the mortgagee sought to recover on a mortgage which had been altered after its execution and delivery but prior to recordation. No attempt was made to recover on it as originally executed, and the court held that the material alteration made the instrument void.

Bank’s second point claims that plaintiffs’ lawsuit was barred by the four-year statute of limitations. We disagree. Article 5529, Tex.Rev.Civ.Stat.Ann. (1958) is not applicable because plaintiffs were not seeking the equitable remedies of reformation or cancellation. Plaintiffs sought a declaration that the altered deed was void as to the property interest which was added by the alteration. See Hardeman v. Mitchell, 444 S.W.2d 651 (Tex.Civ.App.—Tyler 1969, no writ).

Bank’s third point claims that the undisputed evidence shows that the altered deed conveyed all of plaintiffs’ interest in the 8.5 acre tract to the Bank’s predecessor in title. We disagree. There was evidence, and it was sufficient, to support the jury’s findings that the disputed deed was altered after its execution and prior to recordation. The cases cited by Bank on this point are not applicable. The altered deed only conveyed the undivided 93,615/350,000 (26.75%) interest owned by James' M. Parks. It did not convey the undivided interest owned by Dr. and Mrs. May.

Bank’s fourth point claims that the trial court erred in setting aside the Bank’s deed of trust because Dr. and Mrs. May recognized and ratified it. We disagree. Bank relies upon the cases of J. P. Wooten Motor Co. v. First Bank of Swenson, 281 S.W. 196 (Tex.Comm.App.—1926, jdgmt adopted) and McMullan v. San Antonio Joint Stock Land Bank, 78 S.W.2d 669 (Tex.Civ.App.—Eastland 1934, writ ref’d) which recognize the rule that:

If the purchaser takes the property “subject” to the lien, then he agrees that the lien is valid and cannot dispute it thereafter. (emphasis added)

Those cases are not applicable because Dr. and Mrs. May were not “purchasers.” There was merely a reconveyance of record title to the interest which they already owned.

Humble Oil & Refining Co. v. Clark, 126 Tex. 262, 87 S.W.2d 471 (1935, opinion adopted) and Kunkel v. Kunkel, 515 S.W.2d 941 (Tex.Civ.App.—Amarillo 1974, writ ref’d n. r. e.) make it clear that a void instrument can be made valid by adoption, ratification or confirmation. Kunkel also points out:

Ratification may be said to be the adoption or confirmation by a person, with knowledge of all material facts, of a prior act which did not then legally bind him and which he had the right to repudiate, but which, by the ratification, is given retroactive effect as if originally performed by him. See Brock v. Jones, 16 Tex. 461 (1856). (emphasis added)

The record in this case does not establish as a matter of law that Dr. May had “knowledge of all material facts” when he accepted the reconveyance. Tex.R.Civ.P. 279 provides that: . all independent grounds of recovery or of defense not conclusively established under the evidence and upon which no issue is given or requested shall be deemed as waived . . .

Moreover, the case of Graham v. Oakes, 32 S.W.2d 916 (Tex.Civ.App.—Waco 1930, writ ref’d) states that:

Though the property is conveyed subject to a specific mortgage, if the amount thereof has not been deducted from the purchase price, the grantee may attack the validity of such incumbrance.

The record is clear that Dr. May knew that Home Realty had secured record title to the full 100% interest in the 8.5 acre tract and that Home Realty had executed a note and deed of trust covering the full 100% interest in favor of The National Bank of Commerce; however, the record is also clear that Dr. May did not have knowledge of “all material facts” when the “subject to” deed was executed and recorded.

Bank’s fifth point is that the trial court erred in reforming the altered deed because there was no evidence to support reformation or cancellation. This point is overruled. Dr. and Mrs. May sought a declaration that the deed was void as to the alteration. Their cause of action was not for reformation or cancellation of a voidable deed. See the discussion of Bank’s first point of error.

Bank’s sixth point is that the trial court erred in awarding judgment against the Bank for the land and at the same time entering judgment against James M. Parks “for $300,000 necessarily based on damages for loss of title.” We disagree because the judgment against Parks was not for loss of title. That judgment was based upon the jury’s assessment of punitive damages, not upon compensatory damages for los. of title.

THE TITLE COMPANY’S APPEAL

Southwest Land Title Co. has briefed five points of error. The first point claims that the trial court erred in entering judgment for exemplary damages against the Title Company in the absence of judgment for any actual damages. We also note that no award of any kind was made against the Title Company except for the award of exemplary damages. This point of error is sustained.

We recognize the rule that exemplary damages can be awarded in connection with equitable relief which is awarded against a willful, malicious or fraudulent wrongdoer. International Bankers Life Insurance Company v. Holloway, 368 S.W.2d 567 (Tex.1963). In this case, Dr. and Mrs. May sought a declaration that the disputed deed was void (not merely voidable, which would have required the equitable relief of reformation or cancellation) as to the 73.25% interest in the property which was added by the alteration of the property description. It should also be noted that no actual damages of any kind were recovered.

The case of Hughes v. Belman, 200 S.W.2d 431 (Tex.Civ.App.—Austin 1947, writ ref’d n. r. e.) concerns the situation where the plaintiffs recovered actual, but no exemplary, damages against one defendant and exemplary, but no actual, damages against the other defendant. The court said:

We do not believe that the rule denying the recovery of exemplary damages, in the absence of recovery of actual damages, should be extended so as to permit the recovery of actual damages against one defendant and exemplary damages against another defendant. The recovery of exemplary damages is not allowed as a matter of right or as compensation but only as an incident to and enhancement of the actual damages.

See also Cherry v. Turner, 560 S.W.2d 794 (Tex.Civ.App.—Austin 1978, writ ref’d n. r. e.); Crawford Chevrolet, Inc. v. Rowland, 525 S.W.2d 242 (Tex.Civ.App.—Amarillo 1975, writ ref’d n. r. e.); Annotation, Actual Damages as a Necessary Predicate of Punitive or Exemplary Damages, 17 A.L.R.2d 527 (1951).

Teas v. Republic National Bank of Dallas, 460 S.W.2d 233 (Tex.Civ.App.—Dallas 1970, writ ref’d n. r. e.) states the rule as follows:

While our Supreme Court in International Bankers Life Ins. Co. v. Holloway, 368 S.W.2d 567 (Tex.Sup.1963), has held that a litigant may recover exemplary damages in actions for equitable relief, it is also true that there must be some actual loss or injury to support the recovery of such damages. It has been the law of this state for many years that exemplary damages cannot stand alone, unsupported by proof of actual loss or injury. Fort Worth Elevators Co. v. Russell, 123 Tex. 128, 70 S.W.2d 397 (1934); 17 Tex.Jur.2d Damages, § 177, pp. 243-244.

See also Adam v. Harris, 564 S.W.2d 152 (Tex.Civ.App.—Houston (14th Dist.) 1978, writ ref’d n. r. e.).

Bibby v. Preston, 555 S.W.2d 898 (Tex.Civ.App.—Tyler 1977, no writ) was a suit to remove a cloud from title and for actual and exemplary damages. The court stated:

There is no question but that exemplary damages may be awarded in a suit to remove cloud on title. Reaugh v. McCollum Exploration Co., 139 Tex. 485, 163 S.W.2d 620, 622 (Tex.1942). However, without proof of actual damages, there can be no award for exemplary damages. Phillips v. Wertz, 546 S.W.2d 902 (Tex.Civ.App.—Dallas 1977, writ ref’d n. r. e.). Therefore, that portion of the judgment awarding actual and exemplary damages is reversed and remanded for full development of evidence on damages.

Tex.R.Civ.P. 434 provides in part that: “. . .a separate trial on unliquidated damages alone shall not be ordered if liability issues are contested. . . .” Our ruling on the Title Company’s first point of error disposes of that appeal, and we will not discuss the other points.

CONCLUSION

James M. Parks did not appeal, and the judgment is final as to him. We affirm the judgment in favor of James L. May and Mrs. Beulah Leona May for their undivided 256,385/350,000 (73.25%) interest in the 8.5 acre tract. We affirm that portion of the judgment which awarded The National Bank of Commerce the undivided 93,615/350,000 (26.75%) interest in the 8.5 acre tract which had been owned by Home Realty Co., Inc. prior to the foreclosure. The judgment against Southwest Land Title Co. is reversed, and that cause is severed and remanded.


text:
    UNITED STATES FIRE INSURANCE COMPANY, Appellant, v. Harold MATCHOOLIAN, Appellee.
    No. B2121.
    Court of Civil Appeals of Texas, Houston (14th Dist.).
    June 20, 1979.
    Rehearing Denied July 11, 1979.
    Osborne J. Dykes, III, M. W. Kruse, Jr., Houston, for appellant.
    George W. Lederer, Jr., Houston, for ap-pellee.
    Before BROWN, C. J., and COULSON and MILLER, JJ.
   J. CURTISS BROWN, Chief Justice.

Harold Matchoolian (appellee) sued the United States Fire Insurance Company (appellant) to recover for damages to his building under the terms of an insurance policy issued by that company. After trial to a jury, appellee was awarded the damages sought. Appellant appeals from the trial court’s refusal to grant judgment notwithstanding the verdict.

Appellee, the owner of a building which sustained considerable damage during a wind and rain storm, filed suit on an insurance policy which provided as follows:

This company shall not be liable for loss . caused by rain whether driven by wind or not, unless the wind or hail shall first make an opening in the walls or roof of the described building, and shall then be liable only for loss to the interior of the building, or the insured property therein, caused immediately by rain entering the building through such openings .

In his petition appellee stated that

a tremendous thunderstorm with high velocity winds and heavy rainfall hit the Houston area in general and Plaintiff’s property at 3201 Milam in particular. The high winds dislodged portions of the roofing materials, some of which subsequently became lodged in the roof’s drain, thereby causing water to accumulate and a portion of the roof ... to collapse. .

Appellee’s witness, William Krieg, the contractor who repaired the damaged roof, gave as his expert opinion “excess weight of the water” as the cause of the collapse. His opinion was that wind had blown tar paper loose from the roof and that when the loose tar paper lodged in the roof drain, excess water collected on the roof. A meteorologist testified to high winds, up to 46 miles per hour, and heavy rain, 1.7 inches in a twenty minute span, in the general area.

The insurance company pled the specific exclusion of loss by rain set out above. This pleaded exclusion raised the issue of coverage. Travelers Indemnity Co. v. McKillip, 469 S.W.2d 160, 162 (Tex.Sup.1971); Sherman v. Provident American Insurance Co., 421 S.W.2d 652 (Tex.Sup.1967). In McKillip the insured sought to recover under a windstorm policy on the contention that a windstorm weakened the structure of his building, which subsequently collapsed under the weight of accumulated snow. The court rejected the “dominant or efficient cause test” applied by the court of civil appeals and held that under the policy, when the insurer pled an exclusion, the burden was placed on the insured to establish either that the loss was not caused to any extent by the excluded peril; or to segregate the loss caused by windstorm, the covered peril, from the loss caused by the excluded peril, snow, and to secure a jury finding on the amount of damage caused by the windstorm. “This construction of the exclusionary clause is well settled in Texas.” McKillip, supra; Coyle v. Palatine Insurance Co., 222 S.W. 973 (Tex.Com.App.1920, holding approved with opinion). See also, Hardware Dealers Mut. Insurance Co. v. Berglund, 393 S.W.2d 309 (Tex.Sup.1962). In the case before this court, appellee did not attempt to segregate the damage caused by wind from the damage caused by the rain. Having taken this course, it was his obligation' to prove that the pleaded exclusion, rain, was not a proximate cause of the collapse of the building. In special issue two the burden was correctly placed on appellee to obtain the finding that rain was not a proximate cause of the loss. In response to that special issue, the jury found that rain was not a proximate cause, as properly defined by the trial court to be a “cause which in a natural and continuous sequence unbroken by any new and intervening cause produces a loss and without which the loss would not have occurred.” Appellant urges that rain was established as a matter of law to have been a proximate cause of the loss. Even when we accept appellee’s theory that, by tearing the tar paper loose, wind was a proximate cause of the loss — that the loss would have not occurred but for the wind — we think the evidence shows conclusively as a matter of law that rain was a proximate cause of the loss. Paulson v. Fire Insurance Exchange, 393 S.W.2d 316, 318 (Tex.Sup.1965). It is undisputed that the weight of the accumulated rain water resulted in the collapse— that the loss would not have occurred but for the heavy rain. Under the undisputed evidence rain and wind were presented as concurrent causes; and, since no attempt was made to determine the amount of loss caused solely by the wind, appellee did not meet the burden of proof imposed by McKillip, supra. We therefore reverse the judgment of the trial court and render judgment that appellee take nothing.

Reversed and rendered.

Judgment reversed and rendered.

      . Under this test, the insured could recover for losses caused by an excluded peril if the covered peril was found to have been the “dominant or efficient" cause of the loss. Fidelity Southern Fire Insurance Co. v. Crow, 390 S.W.2d 788 (Tex.Civ.App.—Waco 1965, writ ref'd n. r. e.).


author: JAMES, Justice.

text:
    Craig B. MAY, Appellant, v. MISSOURI-KANSAS-TEXAS RAILROAD COMPANY, Appellee.
    No. 6064.
    Court of Civil Appeals of Texas, Waco.
    June 21, 1979.
    Rehearing Denied July 5, 1979.

      James R. Warncke, San Antonio, for appellant.
    Louis S. Muldrow and Larry O. Brady, Ñaman, Howell, Smith, Lee & Muldrow, P. C., Waco, for appellee.
   OPINION

JAMES, Justice.

This is a railroad crossing accident case between Plaintiff’s motor vehicle and a flatcar of Defendant’s freight train parked on the crossing. After jury verdict a judgment was entered that Plaintiff take nothing, from which Plaintiff appeals. We reverse and remand for a new trial on the merits.

Plaintiff-Appellant Craig B. May brought this suit against Defendant-Appellee Missouri-Kansas-Texas Railroad Company for personal injuries and damages arising out of the auto-train collision hereinabove mentioned. At or about 1:40 AM in the early morning hours of June 13, 1976, Defendant’s northbound freight train, consisting of 39 cars, stopped at a red block signal in or near Temple, Texas. Defendant’s train stopped at the block signal (where the MK — T tracks cross the Santa Fe Ry. Co. tracks) and remained stopped until the operatives would receive express permission to proceed across the Santa Fe tracks. At the time of the accident in question, Defendant’s engine was about 2000 feet north of the Taylor Road crossing, said crossing being the place where this accident occurred. At said time about 10 cars of Defendant’s train were standing south of the crossing, with an unloaded flatcar sitting astraddle of the Taylor Road crossing. The evidence is conflicting concerning the length of time the freight train had been blocking the crossing before the accident occurred, as more particularly hereinafter discussed; however, be that as it may, immediately prior to the accident, Plaintiff May was driving his motor vehicle in an easterly direction in the 600 block of Taylor Road and thereupon ran into the Defendant’s flatcar parked upon said crossing. There were no street lights, automatic signal devices, flares, flagmen or any other warning devices located at this crossing, except an unlighted crossbuck sign evidencing a railroad crossing. In other words, the Taylor Road crossing was shown to be an uncontrolled grade crossing. Taylor Road slopes gradually downward on either side respectively for a considerable distance as this crossing is approached, with this difference: as one looks east toward the crossing, the roadway as stated slopes gradually downward for a considerable distance until it gets to a point 64 feet west of the railroad tracks, at which point the road starts an upward slope to the crossing, so that virtually at no point would an approaching automobile headed east as was Plaintiff May, have its headlights beamed perpendicular to a train occupying the crossing. On the other hand, as one looks west toward the crossing, the roadway slopes gradually downward for a considerable distance all the way to the crossing. As one looked east on Taylor Road toward and beyond the crossing, as was Plaintiff May on this occasion, the background was dark because such view is into a rural area; whereas, as one looked west on Taylor Road toward and beyond the crossing, the background lights from the City of Temple existed. From the record it appears that the Taylor Road crossing is on the eastern outskirts of the City of Temple, Texas.

Trial was had to a jury which found, or failed to find as hereinafter indicated, in response to the following numbered special issues, as follows:

(1) The jury failed to find that the railroad crossing in question was extra-hazardous as a nighttime crossing.

(2) No answer was made, nor was an answer required to Special Issue No. 2, wherein the jury was asked if the Defendant Railroad Co. knew or through the exercise of ordinary care should have known that the crossing was extra-hazardous as a nighttime crossing.

(3) The jury failed to find that on the occasion in question the Defendant was negligent in failing to use a flare, lantern, light, automatic signal light, or any other means to warn approaching motorists of the presence of the flatcar in question upon the crossing.

(4) Special Issue No. 4 was a proximate cause issue conditioned upon an affirmative finding in answer to Special Issue No. 3, to which (No. 4) no answer was given or required.

(5) The jury failed to find that the Defendant’s failure to use any means to warn approaching motorists of the presence of the flatcar on the crossing in question was gross negligence.

(6) The jury found that Plaintiff May failed to keep a proper lookout, which was, in answer to Special Issue No. 7, a proximate cause of the collision in question;

(8) That Plaintiff May failed to make application of his brakes in a manner that a reasonable prudent person would have made, which was (No. 9) a proximate cause of the collision in question;

(10) That Plaintiff May drove his vehicle at a greater rate of speed than a reasonable prudent person would have driven, which was (No. 11) a proximate cause of the collision;

(12) That Plaintiff May was driving his vehicle while under the influence of an intoxicating beverage, which (No. 13) was negligence, and (No. 14) a proximate cause of the collision.

(15) The jury further found that the Defendant’s flatcar was plainly visible before Plaintiff May reached a point 15 feet from the nearest rail of the track on which the train was situated; that (No. 16) May failed to stop his vehicle within 50 feet, but not less than 15 feet, from the nearest rail of the track on which Defendant’s train was situated; that (No. 17) such failure was negligence, and (No. 18) a proximate cause of the collision in question.

(19) The jury did not reach the comparative negligence issue.

(20) The jury found Plaintiff May’s damages to be $13,000.00.

(21) The jury did not answer the exemplary damage issue, and no answer was necessary as it was submitted conditionally upon an affirmative answer to Special Issue No. 5 hereinabove.

Pursuant to and in harmony with the jury verdict, the trial court entered judgment that Plaintiff May take nothing, from which he appeals.

Plaintiff-Appellant asserts twenty points of error. We will discuss only those points of error which we believe are reversible in nature and which in our opinion require a remand for retrial on the merits, plus additional points of error which we hope may be helpful in a retrial of the case.

Plaintiff-Appellant complains that the trial court excluded evidence concerning six accidents that had occurred at this same crossing; four of which occurred prior to May’s accident, and two of which occurred subsequent to May’s collision.

It seems to be well-settled law that evidence of prior accidents or near accidents is proper in determining whether the crossing is unusually dangerous or extra-hazardous as a nighttime crossing at the time of the accident, and in determining whether the Railroad Company knew, or in the exercise of ordinary care should have known, of the alleged unusually dangerous or hazardous conditions surrounding the crossing at the time of the accident. Missouri, K. & T. RR. Co. v. Long (Austin, Tex.Civ.App.1929) 23 S.W.2d 401, 403, writ refused. For testimony of prior accidents to be made admissible, our Supreme Court has placed the burden on the plaintiff to “show that the earlier accidents occurred under reasonably similar but not necessarily identical circumstances.” Missouri Pacific Railroad Co. v. Cooper (Tex.1978) 563 S.W.2d 233 at page 236. Also see Karr v. Panhandle & Santa Fe Ry. Co. (1953) 153 Tex. 25, 262 S.W.2d 925, 928, 929; Missouri-Kansas-Texas Railroad Co. of Texas v. McFerrin (Austin, Tex.Civ.App.1955) 279 S.W.2d 410, 418, reversed on other grounds by our Supreme Court in 156 Tex. 69, 291 S.W.2d 931; Reynolds & Huff v. White (Tyler, Tex.Civ.App.1964) 378 S.W.2d 923, 930, 931, no writ; Texas & N. O. R. Co. v. Davis (Beaumont, Tex.Civ.App.1948) 210 S.W.2d 195, 205, 206, NRE; Missouri Pacific RR. Co. v. Thomas (Beaumont, Tex.Civ. App.1979) 579 S.W.2d 46, application for writ of error filed in Supreme Court on May 8, 1979, presently pending.

In the case at bar we believe the plaintiff laid the proper predicate by his offer of evidence to show the reasonable similarity of the six accidents to the instant accident, to the end that the evidence concerning such other accidents were rendered admissible and should have been admitted into evidence. The Plaintiff-Appellant’s basic contention is that the crossing in question was extra-hazardous at night, because said crossing was in a depression in the land wherein the approaches from each side by way of Taylor Road descended down to the crossing as hereinabove described, so that approaching motorists’ headlights from either east or west would not pick up a railway car on the crossing in time to safely avoid an accident. Therefore, the circumstances that would render the other tendered accidents reasonably similar to that incurred by Plaintiff May would be that such other accidents occurred at night at the same crossing, since all approaching motorists, from either direction, would be approaching the crossing on a descending slope.

The first prior accident offered by Plaintiff-Appellant was that by Louis Peoples, a taxi driver, who testified that he had an accident at this same crossing in August 1973. Peoples approached the crossing from the east travelling in a westerly direction, about 1:30 AM to 2:00 AM at night. The train was sitting still, and Peoples hit a gondola car which was sitting on the crossing. Peoples had his headlights on bright, and was not able to see the train in time to avoid colliding with it. He said he thought he was 15 or 20 yards from the train when he first saw the train before he hit it, and that he could not see any of the city lights beyond the crossing. He was travelling 30 to 35 miles per hour when he applied his brakes in an effort to avoid hitting the train.

Mrs. Acencion Rodriguez had an accident at the Taylor Road crossing about 8 PM on December 1, 1975. She testified that it was very dark that night, that she was travel-ling west with her headlights on as she approached the crossing at a speed of about 25 miles per hour, that she looked both ways as she approached the crossing and was struck at the rear portion of her car by the train as she got on the crossing, that she was hurt and went to the hospital, and the railroad company settled with her. She said although she looked both ways as she approached the crossing that she never did see the train coming.

James Duncan Larsen testified that he had an accident at this same crossing during the nighttime hours on July 5, 1973; that he and another man with him had “had a few beers” before the accident; that he had his headlights on low beam, and was travelling about 30 miles per hour; that he was travelling west; that he first saw the train stopped on the track when he was about 50 feet from it; that he did not see the train in time to stop his car although he was looking straight down the road; that he struck a “rust colored hopper car” standing still on the crossing.

Benning Roe testified that he ran into a parked train at this crossing at about 2:00 AM November 13, 1977; that he was travelling east about 30 miles per hour and hit a parked train; that he had his headlights on dim, and was looking straight ahead but did not see the train until he was about 10 feet from it; that he hit his brakes but could not stop in time and hit a brown colored boxcar that was standing still on the crossing; that he had had “some beer to drink” that evening at a birthday party; that he was charged with driving while intoxicated and pleaded guilty thereto. Ap-pellee asserts that this case is not reasonably similar to the case at bar and therefore inadmissible because Mr. Roe had been drinking prior to the accident; however, we believe the fact of Roe’s having been drinking goes to the weight rather than to the admissibility of this testimony. Also Appel-lee attacked the evidence concerning this accident because it occurred after the accident in the case at bar; however, it has been held that reasonably similar accidents occurring subsequent to the subject case are admissible to show the extra-hazardous nature of the crossing. See St. Louis, South western Ry. Co. v. Duffy (Dallas, Tex.Civ.App.1957) 308 S.W.2d 202, 222, NRE. Moreover, we believe that reasonably similar accidents to the case at bar and occurring subsequently thereto are also admissible as bearing upon the issue of defendant’s gross negligence and exemplary damages.

Van Alan Irvin testified that he had a collision at this crossing with a parked train at night on December 4, 1976; that he was travelling east; that he was going about 30 miles per hour and did not see the parked train until he was about 65 feet from it; that he had his lights on dim; that he was looking straight down the road, but could not stop in time to avoid hitting the parked train; that he had had “something to drink” that night and was charged originally with driving while intoxicated but that such charge was thereafter reduced to intoxication in a public place.

The trial court excluded Plaintiff’s Exhibit No. 28, same being a certified copy of an accident report, which accident report is shown to be a part of the official records of the Texas Department of Public Safety and is certified by the Custodian of Motor Vehicle Accident Records of said Department. The accident report is shown to have been prepared by a city policeman of the City of Temple, Texas. Plaintiff-Appellant offered all of said report except the investigating officer’s opinions under the authority of Article 3731a, Sections 1 and 3, Vernon’s Texas Civil Statutes. Said Plaintiff’s Exhibit No. 28 showed that Ray Sherman Wilkins had a collision with a moving train at the Taylor Road crossing at 1:00 AM on the night of March 4, 1972; that Wilkins was driving a 1963 Pontiac going east on Taylor Road and did not see the train and hit it and his car was dragged about 150 feet south of the crossing; the weather was clear and the night was dark. We are of the opinion and hold that this exhibit showing this accident was admissible under Article 3731a, V.T.C.S. We further believe and hold that this accident is reasonably similar to the one in the case at bar. It is common knowledge that a moving train at night would be easier to see than a train standing still parked on the crossing.

We believe the trial court’s exclusion from evidence of the six accidents herein-above described constituted reversible error. Plaintiff-Appellant offered evidence of other accidents at this crossing which in our opinion was not sufficient or complete enough to show reasonable similarity of such other accidents to the accident in the case at bar. We will therefore not unnecessarily lengthen this opinion by discussing such other accidents.

Plaintiff-Appellant May further complains of the trial court’s refusal to permit him (Appellant) to file a trial amendment and submit special issues concerning Plaintiff-Appellant’s contention that the Defendant’s train violated Article 6701d-5, V.T. C.S., by wilfully obstructing the Taylor Road crossing for more than 5 minutes. We sustain this contention. At the close of Plaintiff’s testimony, and prior to Defendant putting on its testimony, Plaintiff tendered a trial amendment alleging that Defendant had violated Article 6701d — 5 by wilfully obstructing the crossing for more than 5 minutes immediately prior to the May accident, and that such violation was negligence per se and a proximate cause of the accident in question. Plaintiff asserted that he did not learn of evidence to this effect until just before the trial began. The trial court refused to permit Plaintiff to file the trial amendment. Then Plaintiff timely requested the submission of special issues inquiring if Defendant did wilfully obstruct the crossing more than 5 minutes, and whether this was a proximate cause of the accident. The trial court refused to submit these issues to the jury.

There was conflicting evidence on this point concerning how long the train had been parked on the crossing before Plaintiff May hit it. Mr. Womack, the Defendant’s engineer of the train in question, testified that “as close as I can determine, it was three or four minutes.” This was in sharp contrast with the testimony of Doris Nell Allcorn, who lived about a half block from the Taylor Road crossing. She said she was awake watching television at the time this particular train went by the crossing, and she also heard the wreck when Mr. May’s car collided with the train, and that “the train had been by about 15 or 20 minutes when the wreck occurred.”

Since the evidence raised a sharply disputed fact issue concerning the length of time the train had blocked the crossing, we are of the opinion and hold that the trial court abused its discretion in refusing to permit Appellant to file the trial amendment, and in refusing to submit the requested special issues concerning this matter to the jury. See Missouri-Kansas-Texas R. Co. v. McLain (1939) 133 Tex. 484, 126 S.W.2d 474; St. Louis, B. & M. Ry. Co. v. Brack (San Antonio, Tex.Civ.App.1936) 102 S.W.2d 261, 267, 268, no writ. See pp. 267 and 268 of Brack concerning the proximate cause aspects of blocking the crossing in violation of this statute. A jury finding to the effect that this statute has been violated constitutes negligence per se. Hall v. A. T. & S. F. Ry. Co. (5th Circuit 1974) 504 F.2d 380, 384; Louisiana & Arkansas Ry. Co. v. Hughes (5th Circuit 1967) 374 F.2d 106, 107.

Plaintiff-Appellant complains that he was not permitted to file a trial amendment nor to get submitted to the jury special issues concerning his contention that the Defendant-Appellee’s train failed to blow its whistle prior to the collision in question. Appellant asserts the Appellee violated a duty imposed by Article 6559h-11, V.T.C.S. We do not agree. Art. 6559h-11 has no application to a train which is already stopped at the time of the collision. There is no duty on the Defendant-Appellee Railroad to blow a whistle to warn that the crossing is already blocked. Reid v. Texas & New Orleans R. Co. (Galveston, Tex.Civ.App.1952) 254 S.W.2d 164, 167, NRE; M-K-T R. Co. v. Wagner (Waco, Tex.Civ.App. 1966) 400 S.W.2d 357, 361, NRE; Southern Pacific Transportation Co. v. Peralez (Corpus Christi, Tex.Civ.App.1976) 546 S.W.2d 88, 93, NRE. The trial court properly refused to permit the filing of this trial amendment and to submit these requested special issues.

Since we are of the opinion that this case should be retried, we respectfully point out that Plaintiff-Appellant complains of the trial court’s submission to the jury of Special Issues 15 through 18, over Plaintiff-Appellant’s objection, inquiring whether or not the train was plainly visible to the Plaintiff before he reached a point 15 feet from the track, and if he failed to stop his vehicle within 50 feet but not less than 15 feet from such track, and whether such was negligence and a proximate cause of the accident, because (Appellant says) same constituted a submission under Article 6701d, Section 86, V.T.C.S., which statute (Appellant contends) is not applicable to the accident in question, because this train was not approaching the crossing. We sustain this contention.

Article 6701d, Section 86 does not apply to the case at bar. Here we have a train stopped and standing on the highway at the time of the collision. Article 6701d, Section 86 applies to an approaching train, as opposed to a stopped or stationary train. Missouri-Kansas-Texas Railroad Co. v. McFerrin (1956) 156 Tex. 69, 291 S.W.2d 931, 935; Texas & New Orleans Railroad Co. v. Pettit (Beaumont, Tex.Civ.App.1956) 290 S.W.2d 730, 752, NRE; Swonke v. Hildebrandt Engineering Co. (Waco, Tex.Civ.App.1965) 389 S.W.2d 355, 357, NRE.

Finally, Plaintiff-Appellant asserts the trial court erred in admitting into evidence the report of the blood alcohol test, same being page 332 of Defendant’s Exhibit 22, for the reason that a chain of custody was not established to show that the blood sample analyzed was taken from Plaintiff-Appellant. We sustain this contention.

Defendant’s Exhibit No. 22 is 440 pages in length, and consists of the medical records of Plaintiff-Appellant May in Scott and White Hospital. Said exhibit was admitted as a business record of said Hospital. At the time Defendant offered this exhibit into evidence, and before the trial court admitted it, Plaintiff-Appellant objected to page 332 thereof, same purporting to be the alcohol content report of a blood sample from Plaintiff-Appellant taken from him in the emergency room about 3 AM about 1½ hours after the accident. The report shows “266 mg %” alcohol in Plaintiff’s blood. Thomas Kerzee, a biochemist at Scott and White, testified that he analyzed the blood specimen which revealed this percentage of alcohol; that he made this test in the laboratory about 30 hours after the blood sample was purportedly taken. Kerzee had no independent recollection of conducting this test. There is no showing on the form as to who took the blood sample, and nobody knows who did take it from the Plaintiff, if such occurred. Customary procedure at Scott and White was shown to be that after a blood specimen is taken, it is put in a refrigerator in the laboratory, which is not kept locked, and there is no security surrounding the keeping of the specimen, which was analyzed some 30 hours after it was purportedly taken from Plaintiff. We believe the admission of this blood alcohol test under this state of the record was error.

For the reasons hereinabove set out, we hereby reverse and remand the cause for retrial.

REVERSED AND REMANDED.


author: LESTER, Judge.

text:
    Carroll LADT, Individually and as President of Terrific and Amazing Corporation and Terrific and Amazing Corporation, Appellants, v. Joseph ARNOLD, Appellee.
    Court of Appeals of Kentucky.
    May 11, 1979.
    Rehearing Denied July 13, 1979.
    Charles W. Curry, R. Burl McCoy, Shuf-fett, Kenton, Curry & Karem, Lexington, for appellants.
    Joseph L. Arnold, Nunn, Odear & Arnold, Lexington, for appellee.
    Before .COOPER, LESTER and WIL-HOIT, JJ.
   LESTER, Judge.

Appellants sought to dispose of a liquor license, claiming ownership thereof, and they appeal from the issuance of a permanent mandatory injunction requiring them to convey any interest they may have in the permit to appellee. Under existing statutes, we are confronted with a case of first impression.

In 1972, appellee’s wife, Norma Arnold, and her brother, Douglas Bradley, owned the premises known as 137 West Vine Street, Lexington, which had been remodeled for the purpose of leasing as a restaurant and cocktail lounge. Not having a liquor-by-the-drink license to accomplish the purpose, Joseph Arnold purchased such a permit from the estate of Henry C, Bryant, and by written agreement, the license was issued to a corporate tenant, Fig Tree, Inc. This lessee failed in the business so the permit covering the Vine Street premises was next transferred to Number One Water Street, Ltd. which also was a failure. The third tenant was Oliver’s II, a limited partnership which met the same business fate as its predecessors. One of the parties to Oliver’s II was appellant, Carroll Ladt, who was involved in Terrific and Amazing Corporation, which followed the partnership as tenant and operator of the restaurant and cafe operation.

Each occupant of the business property had a real estate lease and “Liquor Lease Agreement”, and under the terms of the latter, each tenant recognized that, in spite of the fact that each of them was to apply for and obtain in their respective name an alcoholic beverage license, the appellee was the “true, lawful and ‘in fact’ owner of a Retail Liquor-By-The-Drink Liquor License (LD-449) privilege as is currently issued for the premises at 137 West Vine Street, Lexington, Kentucky, . . . Other pertinent portions of appellants’ lease provided:

4. That First Party agrees to allow Second Party to make immediate application to the proper licensing authorities for transfer of the license to its name but all parties agree that same is for purpose of statutory compliance only and is of no evidence or consequence as to true ownership, which shall remain vested in the First Party. First Party agrees to execute any documents necessary to effect application with said licensing authorities.
5. That during times material herein, Second Party will bear the expense of applications and/or renewals thereof and shall hold First Party harmless therefrom.
6. That said Second Party will do nothing to jeopardize this “license privilege” and will at all times comply with all applicable statutes and ordinances to maintain same in “good standing”.
7. That this Liquor License privilege may not be moved, sold or assigned without the prior written consent of the First Party.
8. That upon termination of the business operations of the Second Party at 137 West Vine Street, Lexington, Kentucky, Second Party agrees to execute all documents necessary to re-convey same to its true owner, First Party.

When Terrific and Amazing was unsuccessful in the business, it refused to comply with paragraph eight of the liquor lease and Arnold brought this action.

We should note that appellee never had the permit in his name nor did he have more than a potential dower interest in what appears to be one half of the restaurant premises. We further note that the agreement referred to above was drafted by appellants’ attorney.

In the trial court, appellants’ defense was that Arnold was in violation of KRS 243.660 in that his actions were an attempt to pledge or hypothecate a license in contravention of public policy. After defining those terms, the Fayette Circuit Court rejected the plea and in so doing, determined that at the time of the execution of the lease, the appellants admitted that Arnold was the true owner of the permit; that upon termination of the business they would reconvey the license; and that they offered no evidence of ownership or right to transfer it to a third party. Significantly, the court also found:

The Court further does not attempt to determine the relationship between the plaintiff and the licensing agent of the state because that issue is not before the Court.

In other words, the Fayette Circuit Court limited the issues to the rights and liabilities as between the parties and refrained from reaching any conclusions as to appel-lee’s standing with the Alcoholic Beverage Control Board. We assume the same posture.

It has long been the rule in this jurisdiction that a liquor license is but a temporary permit not involving a property right as between the issuing authority and the licensee, Keller v. Kentucky Alcoholic Beverage Control Board, 279 Ky. 272, 130 S.W.2d 821 (1939), but Kentucky Courts, without condemning the practice, have recognized that such licenses are bought and sold. Lang v. Jones, Ky., 433 S.W.2d 888 (1968). Moreover, to some extent, they are tacitly regarded as a terminable asset of an estate. KRS 243.640(1).

In this jurisdiction, we find no authority defining the relationship between one claiming to “own” a license and a third party (excluding the state), so we must turn to the legal texts. At 45 Am.Jur.2d Intoxicating Liquors § 117 at p. 569, we observe that:

It has been said that a liquor license is a legal interest in the nature of an economic asset, created and protected by statute, and, because it has monetary value and is transferable, it possesses the qualities of property.

and 48 C.J.S. Intoxicating Liquors § 109 a, at 227, 228 advises:

Furthermore a liquor license or permit is not in itself property or a right of property, in the ordinary meaning of those terms, and there is no market value attributable to it. However, it may have aspects or the quality of property. It is of value to the holder, and usually has some money value, sometimes great money value.

Even where a statute has provided that no person shall be deemed to have a property right in any permit issued thereunder, one federal court has held that once the use or permit was granted, irrespective of what the legislature may declare about the permit itself, and except for the omnipresent and unlimited power of the state to revoke or modify the terms of the permit in the interest of the public welfare, the use of such permit, if not the permit itself, is property within the meaning of the due process clause of the Federal Constitution. Midwest Beverage Co. v. Gates, 61 F.Supp. 688 (N.D.Ind.1945). We mention the foregoing not so much to point out constitutional matters but rather for its value from the property aspect.

Appellee’s property right is easily discernible, for he, his wife and her brother have a parcel of real estate remodeled, to the extent of some $80,000, for the purpose of leasing as a restaurant and cafe business. It goes without saying that a retail liquor-by-the-drink license is a basic essential to such an enterprise, and this being the case, Arnold has a valuable asset or property right in the permit. Through the medium of the lease agreement, he can assure himself that if one tenant fails in the business premises, he can guarantee the next lessee not only a place in which to conduct the operation, but also the requisite permits attendant thereon. As between one claiming ownership or a property right in a permit and third persons, excluding the issuing authority, we agree with the reasoning of the New Mexico and Pennsylvania courts that such a property right does exist. Nelson v. Naranjo, 74 N.M. 502, 395 P.2d 228 (1964); State ex rel. Clinton Realty Co. v. Scarborough, 78 N.M. 132, 429 P.2d 330 (1967); Pennsylvania Liquor Control Board v. Leonardziak, 210 Pa.Super. 511, 233 A.2d 606 (1967); Redevelopment Authority of City of Philadelphia v. Lieberman, 461 Pa. 208, 336 A.2d 249 (1975).

Having determined that appellee had a property right in the drink permit from the third party standpoint, we perceive no reason why it could not be the proper subject of a “lease agreement” even though such issues have not been brought to the attention of Kentucky courts. Nevertheless, the basic idea is not an unknown device:

Assuming a valid assignment of a liquor license to the lessee of premises, it has been held that the lessor may enforce a lessee’s covenant not to move the license from the leased premises, or to reassign to the lessor the license issued to the leased premises, upon the termination of the lease. Similarly, a covenant in a lease that upon transfer of a liquor license for the leased premises it should first be offered to the lessor, is enforceable, and binding upon the lessee holding over after expiration of the lease. 45 Am.Jur.2d Intoxicating Liquors § 180 at p. 613 citing Montana and Florida decisions.

The circuit court properly disposed of appellants’ “pleading” or “hypothecating” a license argument raised under KRS 243.660, in that the statute had no application under the circumstances of this case.

The judgment is affirmed.

All concur.