author: REYNOLDS, Justice.

text:
    ESTEVE COTTON COMPANY, Appellant, v. Millard HANCOCK, Appellee.
    No. 8648.
    Court of Civil Appeals of Texas, Amarillo.
    June 14, 1976.
    Rehearing Denied July 12, 1976.

      Grady, Johnson, Smith & Blakeley, Thomas A. Blakeley, Jr., Dallas, for appellant.
    La Font, Tunnell, Formby, La Font & Hamilton, Bill La Font, Plainview, for ap-pellee.
   REYNOLDS, Justice.

The assignee of a cotton contract sought to recover from a cotton grower the extra cost of cotton purchased on the open market to cover cotton allegedly contracted to be sold, but not delivered, by the grower. A take-nothing judgment was rendered upon the jury’s failure to find that the contracting parties mutually intended that the contract price specified for the highest specified micronaire quality cotton should apply to the higher micronaire quality cotton actually produced by the grower. Recovery was not established as a matter of law, and the jury’s response to the vital factual inquiry is not so against the great weight and preponderance of the evidence as to be clearly wrong and unjust. Affirmed.

Millard Hancock has been a grower of upland cotton for approximately twenty-five years and active in management of the City Gin for some fifteen years in the Abernathy, Hale County, Texas, area. Clarence Young, a resident of nearby Lubbock, has engaged in the cotton business for about thirty-six years. Hancock and Young have known each other since 1951 and for ten or fifteen years prior to 1973, Young had bought most of the cotton produced by Hancock. For a few days in 1973, Young worked as a commission agent for Gant Cooley Cotton Co., Inc., buying cotton to be produced by four growers. One of the growers was Hancock. On 10 April 1973, Young, as buyer, and Hancock, as seller, signed a typed contract furnished to and completed in handwriting by Young. Except for the inked-in “73-74” and the entries to be noted, the contract has this typed language:

Seller hereby agrees to sell and deliver, and does hereby sell, assign, and convey to Buyer the entire production of lint cotton for the 1973-74 cotton harvesting season from the following listed acreage in_County, Texas, excluding any cotton that has been harvested and ricked as of the date of execution of this contract:

The farm identifications, the acreage and the estimated production were entered by Young from information Hancock furnished. Reproduced verbatim, paragraph (4)of the contract, which Young completed in his handwriting from a contract in Gant Cooley’s office to provide for the computation of the price of the cotton is:

(4) The price shall be related to the official USDA government loan value as determined by the original USDA official government class as follows:

The typed form contains two paragraphs (5), reading:

(5) Buyer shall be under no obligation to accept and pay for cotton classed B.G. (below grade) as determined by the original USDA official government class,
or

Neither paragraph was stricken and the second of the two was not completed. In the sixth paragraph, it was provided that:

(6) . . . Seller also warrants and represents that he is either the owner of the land on which the cotton is produced, or that he has authority from the owner of the land to enter into this contract for the sale of each and every bale of cotton to be produced on the above described acreage .

The final paragraph of the contract reads, in part:

(7)Seller and Buyer, with Gant Cooley Cotton Co., Inc. acting as agent for Buyer, have carefully read and fully understand the terms and provisions of the foregoing contract, which represents the entire agreement between the parties.

Used as a column heading in paragraph (4), “mike” is an abbreviation for micro-naire which refers 'to the coarseness of the cotton fiber. The coarseness of the fiber is said to depend on the weather which varies from year to year in West Texas and, as a result, it is not possible to know at planting time what the micronaire quality of the future cotton production will be. Every bale of cotton is tested for coarseness at a government classing office. The most desirable upland cotton, called “premium mike cotton,” is that within the 3.5 to 4.9 micro-naire range; cotton below 3.5 and above 4.9 does not command as good a price as does premium mike cotton. In six of the seven years prior to 1973, a low of 19% and a high of 68% of all cotton processed in the Lubbock classing office, which processes the Abernathy area cotton, tested 3.5 or higher; however, during the ten years prior to 1973, Hancock had never raised any cotton testing higher than 2.8 mieronaire. Of the 1973 cotton crop tested by the Lubbock Office, 81% had a mieronaire reading of 3.5 or higher and 8% was above the 4.9 reading. Nearly all of Hancock’s 1973 production was in the 3.5 to 4.9 range.

The paragraph (4) “Points over” and “Pts. over” columns refer to the amount, calculated at one cent per pound for each 100 points entered for the class of cotton, in excess of the government loan rate, a form of price support, which is computed and published each year by the Commodity Credit Corporation of the United States Department of Agriculture. Each annual publication lists the loan price in cents per pound according to grade and staple length and the premium or discount, if any, for mieronaire differentials. Publication dates have varied from as early as May 17 in 1967 to as late as October 19 in 1965.

Mieronaire readings were introduced in 1965 to more accurately reflect the values of cotton having various mieronaire readings. Por that year’s upland cotton, the publication listed the most desirable micro-naire range as 3.6 through 4.8 for which a premium of 14 points was awarded. Neither a premium nor a discount was provided for mieronaire readings of 3.3 through 3.5 and 4.9 through 5.1. Discounts were shown for the mieronaire ranges of 2.6 or less, 2.7 through 2.9, 3.0 through 3.2, 5.2 through 5.4, and 5.5 and above.

Beginning with the crop year of 1966 and continuing through the crop year of 1973 to which the contract in dispute is referenced, the published regulations established the most desirable mieronaire range as 3.5 through 4.9, for which a premium above the loan rate was set in the years 1966 through 1970, but not thereafter. Discounts of varying amounts were shown for the micro-naire ranges of 2.6 and less, 2.7 through 2.9, 3.0 through 3.2, 3.3 through 3.4, 5.0 through 5.2, and 5.3 and above.

The 1973 publication was on July 20. It scheduled the mieronaire differentials for the 1973-crop upland cotton as follows:

Mieronaire Reading Points Per Pound

5.3 and above Discount of 150

5.0 through 5.2 Discount of 65

3.5 through 4.9 0

3.3 through 3.4 Discount of 70

3.0 through 3.2 Discount of 180

2.7 through 2.9 Discount of 300

2.6 and less Discount of 450

Other than the data contained in the 20 July 1973 publication, all of the foregoing facts and circumstances were either known to or easily ascertainable by the contracting parties on the date of their contract. Hancock had not planted his cotton. Each identified farm contained, and was later planted to, more cotton acreage than was shown for the farm in the contract. Hancock determined and measured the contracted acreage on each farm.

Hancock placed his copy of the contract in his pick-up truck. The original contract was assigned by Gant Cooley to Esteve Cotton Company, a Dallas based corporation engaged in the cotton merchandising business, which sold to cotton mills throughout the world cotton to be delivered in the future.

There was an unprecedented and significant rise of the market price of cotton during the summer and fall of 1973. By the November-December, 1973 harvest time, the market price was more than double the price fixed in the contract Hancock had signed.

Prom the measured 36 acres on farm D 31, Hancock produced the total of 32 bales of cotton, each of which tested in excess of 3.5 mieronaire. Without referring to the contract, Hancock delivered the 32 bales and received from Young the price shown in the contract for 3.5 micronaire cotton.

Thereafter and upon hearing talk that his contract did not “cover cotton that miked over 3.5,” Hancock reread the contract and then sought legal advice. Subsequently, Hancock’s attorney gave notice to both Es-teve and Gant Cooley that Hancock did not intend to deliver any cotton testing above 3.5 micronaire at the contract price for 3.5 micronaire cotton, but a tender of the cotton at the current market price was made.

Hancock produced 94 bales of cotton from the 120 measured acres on farm K 8. One of the bales tested 3.5 micronaire and it was delivered pursuant to the contract; the remaining bales tested in excess of 3.5 and they were sold on the open market. The measured 40 acres on farm D 104 produced 40 bales of cotton, all of which tested in excess of 3.5 micronaire and were sold on the open market. The open market sales were made to Dan Fry as buyer for H. C. Littlefield Cotton Company after Fry had read Hancock’s contract to Littlefield for approval of the purchases.

To fulfill its contracts, Esteve bought cotton on the open market at a price in excess of the price fixed for 3.5 micronaire cotton in the Young-Hancock contract. Esteve then brought this suit to recover from Hancock the difference between the contract price and the price it had paid for replacement cotton. Esteve grounded its suit on the theory that Hancock had contracted to sell and deliver all of the cotton he produced from the listed acreage because the “mike 3.5” provision in the contract referred to all cotton with a micronaire reading of 3.5 and higher at the price of 1100 points above the loan rate.

A jury heard the testimony of twenty-three witnesses and examined thirty-three exhibits. The foregoing and the following summaries are extracted from the record.

Young’s understanding of the contract was that the highest price was for cotton with a 3.5 and better micronaire reading; he had never seen a contract where a farmer sold only his cotton with a low micro-naire reading and excluded his cotton with a micronaire reading of 3.5 and higher. In Young’s opinion, when a farmer speaks the designation 3.5, he is talking about 3.5 and better. Young did not “remember for sure” whether he and Hancock discussed “what was being contracted and what prices,” but he testified, “I think he asked me what the 3.5 was. And I’m sure, if he did, I told him, ‘3.5 and better.’ ” Young further said that there was no conversation about leaving the price open on any cotton; yet, upon specific inquiry, Young said the contract does not attempt to cover below grade cotton, explaining, “Well, left it up to the farmer on that.” Young conceded that when he bought cotton for himself and another cotton company, he always put in the micronaire range and the price because he did not want any misunderstanding.

It was Hancock’s testimony that he signed the contract to lock in a profit at the price set, that both he and Young were in a hurry, and that he relied on Young’s skill and judgment when he signed the contract. When Hancock asked Young to explain the contract, Young showed him paragraph (4). Hancock said that they only discussed the price shown in the contract for 3.5 and down micronaire cotton. The question of any discussion whether the contract covered cotton with a micronaire in excess of 3.5 and the matter of Hancock’s assumption were developed in his pre-trial deposition as follows:

Q Did Mr. Young tell you that this contract did not cover cotton that miked over 3.5?
A The question was never brought up.
******
Q All right. He didn’t say it did; he didn’t say it did not?
A That’s right.
Q It just wasn’t discussed. All right. Was it your assumption that it did?
A No, sir.
Q Well, you did deliver some cotton at first on this contract that was above 3.5?
A I sure did.
Q All right, then. So, at the time you made the delivery, you were assuming that it was covered, is that right?
A Yes, but I didn’t — I hadn’t — I lost my cotton contract, and I didn’t find it.
⅜ * * * * *
Q So you assumed that the cotton covered all — that the contract covered all the cotton?
A I did until I read that contract.

Again referenced to his trial testimony, Hancock, called as an adverse witness by Esteve, was questioned and he answered as follows:

Q And what did you do with your contract after it was signed, Mr. Hancock?
A Put it in my pickup.
Q And actually didn’t think anything else about it until cotton went up to such a fantastic price and you began to gather your cotton and get it classed and graded, isn’t that right?
A I didn’t think anything about it until somebody told me I might better get that contract out and read it.
Q In other words, you were under the impression, apparently, that the contract covered — since the loan price was the same and the market price was the same, 3.5, didn’t make any difference whether it was 3.5, 3.6 or whatever it was, if it was 3.5 or over, that it would be 1100 points?
A I did until I reread that contract.
Q That was your understanding of it until you reread the contract?
A Yes, sir.

Shortly thereafter, Hancock was asked and he replied that:

Q Did you consider when you signed the contract that you were leaving the price open for part of the cotton?
A Yes, sir.
Q You thought that when you signed the contract?
A Yes, sir.
Q And, yet, you delivered thirty-two bales that had a micronaire of more than 3.5 and now say that, when you read the contract, you decided it didn’t cover cotton miking above 3.5?
A Yes, sir.

James Walker, a farmer in Lynn County some eighty miles distant, testified that he did not know what the custom was in Hale County, but in Lynn County 3.5 mike refers to a micronaire range of 3.5^4.9 in the government loan, and in his opinion the contract did not cover either 3.4 or 5.1 mi-cronaire cotton. It was the experience of Sammy Means in farming for six years twenty-two miles southwest from Lubbock that when farmers and cotton buyers are talking about cotton that might be 3.5 or 4.0, they refer to it as 3.5 mike “lot of times,” and as long as the cotton is in the approved range of 3.5 through 4.9, they refer to it as 3.5 “sometimes.” Although he had not talked with any Hale County farmers about the specific matter, Means was sure that all South Plains farmers use the same language. When shown the Young-Hancock contract, Means remarked, “Looks like the same contract that I have,” and stated that, in his judgment, the Young-Hancock contract covers 3.4 cotton at the 3.3 price and 5.1 and 5.2 cotton at the 3.5 price.

Roy Davis, a Plainview cotton merchant for twenty-nine years, reported that his interpretation of a farmer’s statement that he has so many bales of 3.5 cotton would be “3.5 to 4.9.” When asked, Davis replied that under the contract in issue, the buyer would be obligated to take all cotton with a micronaire reading of 3.5 or above, but he said there was no custom and usage in the trade that 3.5 means 5.1. John K. Yorston, vice-president of Esteve, testified that the common usage of the term 3.5 in the cotton business means 3.5 micronaire and better.

L. G. Montgomery, a nineteen year farmer in the Abernathy area, expressed the opinion that there was not, and Raymond Akin, a forty-five year Plainview cotton grower, said he doubted that there was, a custom whereby a farmer would understand that a reference to 3.5 in a cotton contract includes 3.5 and higher micronaire. From his knowledge of the business in which he was engaged, Montgomery said, and Akin agreed, that the contract in dispute does not cover any cotton above 3.5 micronaire quality. J. F. Buskey’s testimony was that he was familiar generally with the custom of selling cotton in the Abernathy area where he has been raising cotton since 1950, and that, based upon his experience and an examination of the Young-Hancock contract, it “would cover anything from 3.5 on down” but not above.

Harvey Lutrick, who was generally familiar with the customs of the sale of cotton in the Abernathy area where he has farmed cotton since 1948, said the contract in dispute only covers the micronaires that are set forth in it. Horace Wardlow, a thirty year cotton farmer in the Plainview area, gave similar testimony. Martin Schur, a Plainview cotton farmer for twenty-seven years, expressed the opinion that the Young-Hancock contract did not cover cotton with a micronaire reading of 3.4 or above 3.5.

Acknowledging a general familiarity with the customs of the sale of cotton, James Davis, an Abernathy farmer for thirty-nine years, W. T. Settle, an Abernathy farmer for thirty-one years, Elbert Harp, an Abernathy farmer raising cotton since 1951 and Mrs. Kathryn Raymond, who has farmed for herself near Hale Center for four years, all stated that the cotton with a micronaire reading above 3.5 was not covered by the Young-Hancock contract; however, each admitted having pending a suit involving the question whether cotton above 3.5 micronaire was covered under a similar contract. Davis further said that there was no custom or usage of the trade by which the contract would cover above a 3.5 micronaire reading and that the disputed contract did not cover 3.4 micronaire cotton, although he agreed that 3.3 and 3.4 micronaire cotton carries the same discount and that the premium base is 3.5 through 4.9.

T. E. Chapman, a Plainview cotton buyer since 1946, has been in the cotton merchandising business for sixty-one years. He also buys for Gant Cooley. He testified that he never had read a contract like the one in dispute and, in his opinion, it did not cover cotton with a micronaire of 3.4 or of 3.6 and above. He conceded, however, that he had never seen a provision in a contract that specified cotton with micronaire higher than 3.5 was not covered. Acknowledging the government loan micronaire ranges, Chapman declared that he and most shippers pay more for cotton with a 4.2 and better micronaire reading than they will pay for 3.5 micronaire cotton. The cotton house for which he buys will pay more for a group of bales of 4.0 micronaire or better than for a group with 3.5 to 3.9 micronaire readings because it is better cotton.

L. L. Duckett, the manager of the City Gin owned in part by Hancock, testified that during the latter part of November of 1973, Young “asked me if any farmers, any farmers, had any cotton contracted that only showed up to 3.5 that he would like the chance at buying the cotton all above 3.5, 3.5 and up.” According to Duckett, Young did not actually buy any of the cotton and, apparently, the conversation occurred after Young heard that some of the Abernathy farmers had decided their cotton contracts were incomplete.

Charles Lambert, an Abernathy farmer and part owner of the City Gin, had signed, and has pending a suit on, a contract similar to the Young-Hancock contract. He recalled his fall of 19.73 conversation with Young in which Young, who had seen Lambert’s contract, asked Lambert what he was going to do with his cotton “that miked over 3.5” and said that he, Young, would be willing to buy it. Lambert did not know any custom in Hale County by which “3.5 mike . . . means 3.5 to 4.9 mike cotton.”

Vic Struve is an Abernathy farmer since 1939 and part owner of the City Gin. He and another cotton buyer had entered into, and Struve has pending a lawsuit over, a contract similar to the Young-Hancock agreement. About the first of November, 1973, Struve showed his contract to Young and asked about it. Young said, as reported by Struve, that, “The contract means just exactly what it says, says 3.5 and below.” Thereupon, Struve testified, Young offered to buy all of Struve’s cotton “over 3.5.” Shown the Young-Hancock contract, Struve said he knew of no custom or usage in the trade whereby the contract and the prices “would cover 3.6 cotton and above.”

Duckett’s version of the Struve-Young conversation was that Young told Struve the contracts “were absolutely incomplete,” and that Young said “he would like to buy all the cotton above 3.5 mike.” Mrs. Ruth Cox, a City Gin employee, testified that she overheard Young tell Struve “that the contract was not complete,” but that she did not hear the rest of the conversation.

Young denied that he made the statements attributed to him by the latter four witr esses.

The first special issue submitted to the jury inquired whether

. at the time the contract in question was signed, the parties mutually intended that the contract prices specified for 3.5 mike cotton should apply to any cotton produced by the defendant Hancock on the land described in the contract that would mike 3.5 (sic) or higher?

Ten members of the jury answered, “They did not intend,” and then, in response to the other special issues, found that: (2) the applicable market price of Hancock’s undelivered cotton was 54 cents per pound; (3) the contract price of the undelivered cotton was 27.35 cents per pound; and (4) the expenses saved by Esteve in consequence of Hancock’s failure, if any, to deliver the cotton was $5.00 per bale.

The trial court accepted the verdict. Overruling Esteve’s motions for judgment non obstante veredicto and to disregard the jury’s answer to the first special issue, the court rendered judgment that Esteve recover nothing.

Utilizing seventeen points of error, Es-teve complains of the judgment in three major respects. Points one, two, three and five are directed to the proposition that Esteve is entitled to judgment on the contract and under the evidence as a matter of law. The jury’s answer to special issue no. 1 is challenged by legal insufficiency and against the great weight and preponderance points four and six. Points seven through seventeen are complaints of the admission and exclusion of evidence.

Esteve’s claim to judgment begins with its theory that the contract is unambiguous and covers all of Hancock’s 1973 cotton production from the identified acreage with the price shown for “3.5” applying to all cotton of 3.5 and higher micronaire readings. Therefore, Esteve continues, the first special issue was immaterial and should be disregarded with the result that under the stipulations of 133 undelivered bales at an average weight of 500 pounds and the jury’s answers to the remaining special issues, Esteve is entitled to judgment of $18,-592.40, including prejudgment interest.

To illustrate its theory that the contract is unambiguous, Esteve cites H. Molsen & Co., Inc. v. Harp and Lovelace, 516 S.W.2d 433 (Tex.Civ.App.—Amarillo 1974, no writ), a venue case involving the identical contract defect, and declares, “This Court held that the buyer was entitled to judgment as a matter of law, holding that the farmer-plaintiffs had no cause of action.” Esteve has misconstrued our holding on the issue before us.

Harp and Lovelace filed in Hale County a suit seeking a declaratory judgment that their contract with Molsen did not embrace cotton with a micronaire test above 3.5. Molsen interposed a plea of privilege, claiming the right to defend in Dallas County, its domiciliary county. In the course of the opinion we did say at p. 436:

If in fact the trial court impliedly found, consistent with plaintiffs’ pleaded dominant purpose to secure the declaration, that there is no contract requiring plaintiffs to deliver the cotton Molsen demanded, then plaintiffs failed in their burden to prove the existence of a contract which could be breached by Molsen. In that event, there would be an absence of proof that a cause of action or part thereof arose in Hale County so as to support venue under subdivision 23.

But those statements are nothing more than the rationale why venue is not maintainable in Hale County under one of the subdivisions of the general venue statute relied on by Harp and Lovelace. We did not hold that Harp and Lovelace had no cause of action; we merely held that they failed to specifically plead and prove that their declaratory judgment action came within any exception to the general venue statute so as to deprive Molsen of the right to defend in Dallas County.

By supplemental briefs, Esteve contends, and Hancock disagrees, that the recent Supreme Court decision in Hohenberg Brothers Company v. George E. Gibbons and Company, 537 S.W.2d 1, 19 Tex.Sup.Ct.J. 310 (1976), necessarily means that Hancock’s entire crop was sold and that the price listed next to “35” in the contract applies to 3.5 and all above micronaire cotton. In Esteve’s view, the Gibbons-Hohenberg contract “describes the highest micro-naire category simply as ‘3.3’ without spelling out ‘3.3 and up,’ ” and “the Supreme Court was satisfied that the contract unambiguously covered all of the production.” Here, again, Esteve has misconstrued the issue before the Court and the holding.

In Hohenberg, the brokerage firm of George E. Gibbons and Company, which had reached an oral but not a written agreement with farmer Setliffe for the purchase of the future cotton production from 295 acres, contracted in writing to sell “the entire production on 295 acres of lint cotton” to be produced by Setliffe to cotton merchants Hohenberg Brothers Company. The price was 1650 points over the 1973 government loan price subject to the quality clause provisions that “micronaire 3.3 and bales with micronaire below 3.3” and bales “showing bark or grass” are “to be discounted according to the 1973 government discounts” therefor. A clause in the contract provided for shipment as soon as the cotton warehouse receipts, samples and classification cards were delivered to Gibbons. Setliffe refused to give a written confirmation or to deliver his cotton production; Gibbons did not deliver Setliffe’s cotton and Hohenberg sued Gibbons for failure to deliver pursuant to their written contract. Setliffe was not made a party to the suit. Gibbons sought to escape liability for non-delivery on the ground that its receipt of the instruments enumerated in the shipment clause was a condition precedent to its performance. The ultimate issue before the Court was whether the contracting parties intended for the delivery of the instruments to Gibbons to be a condition precedent to its liability. After setting out and reviewing the entire contract and the controlling principles of law, the Supreme Court held that the parties did not so intend. In amplification, the Court said that Gibbons’ receipt of the instruments did not condition its duty to deliver the cotton and that its failure to receive them cannot be a defense to the contract.

In the course of its opinion, the Supreme Court did state that “it is clear that a contract was made whereby Gibbons agreed to furnish Hohenberg with the 295 acres of Setliffe cotton”; but, unlike our controversy, no one in Hohenberg questioned that Gibbons had agreed to deliver Setliffe’s entire production of cotton from 295 acres at the price stated less discounts applicable under the quality clause. The Supreme Court did not speak to the matter of micro-naire quality and, in our view, the quality clause, rather than being descriptive of the micronaire readings covered by the contract, only provides for thé discount for bales with a micronaire reading of 3.3 and below and those showing bark or grass. Moreover, as Hancock replies, if “3.3” means “3.3 and up,” as Esteve interprets the contract, then every bale of cotton, regardless of its micronaire quality, would be discounted and, consequently, the price clause would be a nullity. For these reasons, Hohenberg is not dispositive of the meaning of the contract before us.

We, then, must look to the contract to ascertain if the intention of the contracting parties is expressed in or apparent from the language used. This entails an examination and consideration of the entire writing with the view toward harmonizing and giving effect to all the provisions. Universal C. I. T. Credit Corp. v. Daniel, 150 Tex. 513, 243 S.W.2d 154, 158 (1951). Absent any ambiguity in the contract, its construction is a question of law for the court, Myers v. Gulf Coast Minerals Management Corporation, 361 S.W.2d 193, 196 (Tex.1962); but, if the contract is reasonably capable of conflicting constructions as to its true meaning, parol evidence is admissible and, if it is also conflicting, the intent of the contracting parties is a question of fact for the trier of the facts. Neece v. A.A.A. Realty Co., Inc., 159 Tex. 403, 322 S.W.2d 597, 602-603 (1959).

The contractual paragraph first quoted is clear and, therefore, unambiguous. The unequivocal agreement there is for the sale and delivery of the entire future production of the 1973-74 crop of lint cotton from the listed acreage, the exclusion of cotton already harvested being patently inapplicable because the crop had not then been planted. This expression is harmonious with the paragraph (6) provision that Hancock is authorized to contract for the sale of each and every bale of cotton produced on the described acreage. An inconsistency creeps in, however, when the two paragraphs (5) are considered, for then it becomes unclear whether below grade cotton is included in or excluded from production. Although the discrepancy exists, it is neither of sufficient import to render ambiguous the otherwise plainly expressed intention of the parties to contract for the sale and delivery of the entire production, cf. Lone Star Gas Co. v. X-Ray Gas Co., 139 Tex. 546, 164 S.W.2d 504, 508 (1942), nor necessarily inharmonious with a reasonable construction of the contract as hereinafter demonstrated.

Given the agreement of the parties for the sale and delivery of the entire production from the identified acreage, the crucial inquiry is whether the language used in paragraph (4) expresses as a matter of law, or is so unclear as to require parol evidence to ascertain, the parties’ intent of the price to be paid and received for the complete range of the quality of cotton that may be produced. Esteve says that “3.3” means “3.3 through 3.4” and that “3.5” means “3.5 and higher” micronaire quality. Hancock says that “3.3” and “3.5” mean only “3.3” and “3.5” respectively.

A consideration of the language shows that the price is structured according to grades and micronaire quality. The price computation for the micronaire readings from minus 2.4 through 3.3, inclusive, is precisely scheduled, but omitted from the schedule is any definite mention of cotton with a micronaire reading of 3.4 or 3.6 and above. Although the price of the cotton is related to the government loan value not then published, the contract schedule of mi-cronaire ranges is not, except for the two ranges of 2.7 through 2.9 and 3.0 through 3.2, compatible with any schedule of range of micronaire differentials theretofore published by the government. In the government publications establishing micronaire differentials for loan rate purposes, with which the contracting parties were familiar, there is no expression indicating that “3.3” or “3.5” has any meaning different from the single micronaire quality one would normally expect each term to represent. From these considerations, it is neither so evident nor so notoriously well known that “3.3” means “3.3 through 3.4,” or that “3.5” means “3.5 and higher,” micronaire quality that we can say so as a matter of law. Further considering that Young had entered the micronaire ranges in a precise manner from minus 2.4 through 3.3, but then skipped 3.4 and entered 3.5 before Hancock saw and signed the contract, we cannot hold as a matter of law that they intended the terms to have the meaning for which Esteve contends.

Still, Esteve argues that the only reasonable construction is that “3.5” means “3.5 and higher” because, otherwise, the contract would mean that Esteve is not entitled to delivery of most of the cotton Hancock did produce. The immediate difficulty with the argument is that it is premised on hindsight and not on the circumstances surrounding the execution of the contract. It overlooks the facts that when the contract was signed, Young had been buying most of Hancock’s cotton production for ten to fifteen years, Hancock had not theretofore produced any cotton with a micronaire reading above 2.8, and there is no evidence that Hancock’s 1973 crop was expected to be of any higher quality than his prior crops.

Conversely, Esteve insists that the contract cannot be construed as covering only the cotton with the micronaire readings listed because that construction would ignore the emphatic references in the first paragraph to the “entire production of lint cotton” and in paragraph (6) to Hancock’s warranty “that he has authority ... for the sale of each and every bale of cotton to be produced on the above described acreage.” Reference is made to V.T.C.A. Bus. & C. § 2.201(a) which, insofar as it is consistent with Esteve’s position, declares that “(a) writing is not insufficient because it omits or incorrectly states a term agreed upon . . . .” Hancock is just as insistent that the contract is unambiguous and must be construed to cover only the micro-naire quality actually listed because paragraph (7) of the contract provides that it is the “entire agreement between the parties,” and to enlarge upon the plain language used in paragraph (4) would violate the V.T.C.A. Bus. & C. § 2.201(a) provision that a writing which omits or incorrectly states a term agreed upon “is not enforceable under this paragraph beyond the quantity of goods shown in such writing.”

In connection with Hancock’s position, it is appropriate to observe that the contract’s micronaire terms are qualitative and not quantitative; but, whatever the ultimate construction of the contract, no violence is done to V.T.C.A. Bus. & C. § 2.201(a). The crux of the code provision is the phrase “a term agreed upon.” If paragraph (4) of the contract has omitted or incorrectly stated the micronaire quality ranges agreed upon, the contract is enforceable for the quantity —i. e., the entire production of lint cotton— shown in the contract; if paragraph (4) correctly states the micronaire ranges agreed upon, then V.T.C.A. Bus. & C. § 2.201(a) is not applicable. More important, however, is that the conflicting contentions overlook the equal alternative construction that the contracting parties may have intended, as was their right, to conclude the contract without settling the price for cotton with micronaire quality other than that explicitly listed, V.T.C.A. Bus. & C. § 2.305(a); H. Molsen & Co., Inc. v. Harp and Lovelace, supra, at 437, resulting in a price therefor, absent any other agreement, as the reasonable price at the time for delivery. V.T.C.A. Bus. & C. § 2.305(a)(1). If that was the real intent of the contracting parties, the conflicts posed by the litigants would disappear and all provisions of the contract, including the two paragraphs (5) which would then be understood to include any below grade cotton at the market price, would be in harmony and would be given effect.

Yet, we cannot conclude as a matter of law that the contracting parties intended to make a contract for the entire production and to leave the price open for any 3.4 and any above 3.5 micronaire cotton that may be, but had not theretofore been, produced by Hancock. In such an event, it is reasonable to expect that, in the light of the explicit micronaire ranges entered in paragraph (4), some mention of the exclusion of any open price cotton would have been, but it was not, made in. the contract, particularly when the first paragraph-excluded previously harvested cotton, which could not exist on the date the contract was signed. The reasonableness is strengthened by the recollection that both parties are chargeable with the knowledge that, on the date of the contract, the micronaire quality of the future production could not be determined with any degree of certainty and that cotton with micronaire quality above 3.5 was produced each year in the area.

Obviously, the examination and consideration of the entire contract leaves unresolved the true intent of the contracting parties. While the various contentions of the litigants have predicated merit, they more aptly illustrate that the contract is reasonably capable of conflicting constructions. Thus, the trial court correctly determined that the contract is ambiguous and properly admitted parol evidence bearing on the intent of the contracting parties.

Esteve next asserts that the extrinsic evidence of Hancock’s judicial admissions and of his own interpretation of the contract is conclusive that Hancock intended to contract his above 3.5 micronaire cotton at the contract price for 3.5 cotton. The evidence selected is Hancock’s testimony previously quoted by which Esteve says Hancock admitted, without later modification or explanation, that at the time he signed the contract he was under the impression that if he produced cotton above 3.5 micronaire, it would be 1100 points. The evidence of Hancock’s own interpretation of the contract is Hancock’s delivery of the 32 bales, without protest and knowing that each bale was over 3.5 micronaire, at the contract price for 3.5 micronaire cotton, under the assumption that the contract covered all cotton until he reread the contract.

The term “judicial admission” is used in Texas law to connote a deliberate, clear and unequivocal formal act done in the course of a judicial proceeding which amounts to a waiver of proof in favor of the opposing party and binds the declarant contrary to an essential fact embraced in his theory of recovery or defense. Within the meaning of judicial admission is a litigant’s testimony of positive and definite facts which, if true and not modified or explained by him, would defeat his right of recovery or defense. Griffin v. Superior Insurance Company, 161 Tex. 195, 338 S.W.2d 415, 418-19 (1960). Because the effect is that the declarant swears himself out of court, the principle is, as it should be, applied with caution. United States Fidelity & Guaranty Co. v. Carr, 242 S.W.2d 224, 229 (Tex.Civ.App.—San Antonio 1951, writ ref’d).

Akin to the question of Hancock’s judicial admissions is the issue of the construction he placed on the contract. Where there is a doubt as to the meaning of a contract, the courts may consider the interpretation placed upon it by the parties themselves. Lone Star Gas Co. v. X-Ray Gas Co., supra, 164 S.W.2d at 508. It has been said that great, if not controlling, weight should be given to the interpretation the parties place upon an uncertain contract. James Stewart & Co. v. Law, 149 Tex. 392, 233 S.W.2d 558, 561 (1950).

But on the other hand, informal statements made incidentally in the course of judicial proceedings which are inconsistent with the declarant’s present position, and acts from which it may be inferred that the facts in issue are not as the actor now claims, are extra-judicial admissions or quasi-admissions. They are admissible against, but they are not conclusive on, the admitter or actor; the statements and acts merely form a part of the evidence and their weight and probative force are matters for the trier of the facts. 2 C. McCormick and R. Ray, Texas Law of Evidence §§ 1127-29; §§ 1147-48 (2d ed. 1956).

In our appraisal, the testimony given by Hancock in response to the questions of his impression, understanding and assumption, and his act of delivering the 32 bales of cotton under the contract, amount to no more than extra-judicial admissions which are not conclusive against him. Careful perusal of the record reveals that nowhere in his testimony did Hancock unequivocally admit that at the time he signed the contract he was under the impression or understood or assumed that it covered all of his cotton with that in excess of 3.5 micro-naire selling at the contract price for 3.5 cotton. The questions eliciting the answers that Hancock’s impression and understanding was that the contract covered all of his cotton did not include a definite reference to the time Hancock signed the contract. In context, the questions and answers are as easily referable to sometime after the contract was executed. In fact, shortly after this examination when the questioner pinpointed the time of the signing of the contract, Hancock said he considered and thought that he was leaving the price open for part of the cotton. The inquiries developing Hancock’s assumption that the contract covered all his cotton was clearly referenced to the time Hancock delivered the 32 bales, and these inquiries came immediately after Hancock had testified that he and Young had not discussed whether the contract covered above 3.5 mi-cronaire cotton and that it was not his assumption that the contract did cover it. Hancock’s delivery of 32 bales of above 3.5 micronaire cotton for the contract price of 3.5 micronaire cotton is evidence of his intent at the time he signed the contract; and, in a like manner, his refusal to deliver any more cotton of like quality for the same contract price, together with his testimony that at the time he signed the contract he did not assume it covered cotton above 3.5 micronaire and he considered and thought he was leaving the price open for part of the cotton, is also evidence of his intent at the time he signed the contract. The evidence, therefore, is not conclusive of Hancock’s intent at the time he signed the contract, but it only forms a part of the submissible evidence for whatever weight and probative force the jury should accord it.

Because the contract is ambiguous and the parol evidence is conflicting, the matter of the intent of the contracting parties became a fact issue for the jury. It follows that special issue no. 1 and the jury’s answer thereto are not immaterial.

With this status, Esteve next urges that the jury’s answer to special issue no. 1 is contrary to the great weight and preponderance of the evidence and requires a reversal of the judgment and a remand of the cause. The evidence has been summarized in some detail and it will not be repeated or enlarged upon. Suffice it to state that among the conflicting evidence properly before the jury there is evidence which, if believed by the jury, would support an answer that the contracting parties either did or did not mutually intend that the contract price for 3.5 micronaire cotton should apply to Hancock’s cotton of higher micronaire quality. It was the province of the jury to judge the credibility of the witnesses and the weight to be given their testimony, and to resolve the conflicts and inconsistencies in the testimony of any one witness as well as in the testimony of different witnesses. Ford v. Panhandle & Santa Fe Ry. Co., 151 Tex. 538, 252 S.W.2d 561, 563 (1952). Accordingly, the jury was privileged to believe all or none of the testimony of any one witness or accept it in part while rejecting it in another part. Creech v. Thompson, 156 Tex. 561, 297 S.W.2d 817, 820 (1957). After reviewing all of the evidence with due regard for the jury’s prerogative, we cannot say that the jury’s answer to the special issue is so against the great weight and preponderance of the evidence as to be manifestly wrong and unjust.

The final segment of Esteve’s attack on the judgment contains its complaints of the admission and exclusion of certain evidence. By this attack, Esteve seeks a reversal of the judgment and a remand of the cause to the trial court.

The attack begins with the contention that the trial court erred in allowing the witnesses Montgomery, Buskey, Harp, Lu-trick and Raymond to testify, over Esteve’s objection, that each had examined the Young-Hancock contract and in the opinion of each the contract did not cover cotton above 3.5 micronaire quality. It must be noted that prior to this testimony, the witnesses Walker, Means and Roy Davis were presented by Esteve and testified on cross-examination without objection to their individual opinions of the contract coverage. Furthermore, Esteve does not complain on appeal of similar testimony, some of which appears to have escaped the running objection permitted Esteve, which was given by the witnesses Akin, Wardlow, Schur, James Davis, Settle, Chapman and Struve.

Ordinarily, a witness will not be permitted to state what in his opinion an instrument covers. 2 C. McCormick and R. Ray, Texas Law of Evidence § 1425 (2d ed. 1956). However, while the failure to object to certain testimony furnishes no basis for the trial court’s admission of improper testimony of like import upon proper objection, the appellate court will not order a reversal because of the admission of improper testimony objected to when testimony to the same effect is permitted without objection. Slayden v. Palmo, 108 Tex. 413, 194 S.W. 1103, 1104 (1917).

Continuing, Esteve asserts that the testimony of the witnesses Duckett, Lambert, Struve and Cox as to Young’s statements made to or heard by them was inadmissible. The grounds given for inadmissibility are: the testimony amounts to an expression of a legal conclusion; there was no showing that Young was authorized by Esteve or Gant Cooley to make the statements; and the testimony was not admissible for impeachment purposes because it would be collateral impeachment.

The substance of the statements charged to Young was that the contracts having a micronaire schedule similar to the one in the Young-Hancock contract did not cover cotton in excess of 3.5 micronaire and Young would be willing to buy such cotton that was outside the contract coverage. This testimony followed Young’s testimony of his intent in making the contract, his understanding what the contract covered, and his denial that he had made the statements to Duckett, Lambert and Struve. The complained of testimony was admitted by the careful trial judge for the limited purpose of aiding the jury, if it did, in determining the intent of Young and Hancock at the time they entered into the contract. Under these circumstances we believe that, on balance, it was within the discretion of the trial judge to receive the testimony limited to its relevancy to the contested issue of intent. See 1 C. McCormick and R. Ray, Texas Law of Evidence § 685 (2d ed. 1965).

The attack concludes by a challenge to the trial court’s exclusion of the tendered contracts executed by the witnesses Walker and Means with the same price provisions as the Young-Hancock agreement and their evidence that they made full delivery of all premium micronaire cotton at the price shown for 3.5 micronaire cotton. The claim of admissibility is that the tender was evidence of trade usage, showing it was the practice of cotton farmers to make written contracts using the term “3.5” in the sense that it refers to all cotton of 3.5 and better. The refusal of the tendered evidence is said to be significant because thirteen defense witnesses were allowed to testify that the Young-Hancock contract did not cover cotton above a 3.5 micronaire reading.

Walker and Means gave testimony, previously summarized, of their understanding of the custom of selling cotton and expressed their opinions, which were favorable to Esteve’s position, of the coverage under the Young-Hancock contract. Means testified that his contract looked like the one at issue. During his testimony, Young declared that he had entered into contracts with Walker and Means which had the same price provisions as the one before the court.

Generally, contracts with other persons are excluded. 2 C. McCormick and R. Ray, Texas Law of Evidence § 1523 (2d ed. 1956). In any event, with the proceedings thus postured, the exclusion of the proffered evidence, if error, was not reasonably calculated to cause and probably did not cause the rendition of an improper judgment, nor did it prevent Esteve from making a proper presentation of the case on appeal. Rule 434, Texas Rules of Civil Procedure.

Consistent with the foregoing, Esteve’s points of error are overruled. We do not consider Hancock’s cross-point which is to be reached only in the event of a reversal and remand.

The judgment is affirmed.

      . Throughout the trial proceedings, Hancock took procedural steps to present his objections that Esteve’s petition is insufficient, as a matter of law, to form the basis of any judgment against Hancock, and that there is a defect of parties. These matters are mentioned by Hancock on appeal, but, because they are not the subject of any cross-point, they will not be further noticed.

      . The formal acts, according to 2 C. McCormick and R. Ray, Texas Law of Evidence § 1127 (2d ed. 1956), include facts admitted by the pleadings, by agreed statement of facts or other stipulations and by formal declarations in open court by a party or his attorney.

      . The same authority states that writings which employ technical terms are susceptible to interpretation by expert opinion; however, in view of the disposition compelled by the complaint, we do not reach the question whether this principle is applicable to the facts of this record.


source: Caselaw Access Project

author: KEITH, Justice.

license: Public Domain

text:
    SCURLOCK OIL COMPANY, Appellant, v. Mary S. KNOX et al., Appellees.
    No. 7854.
    Court of Civil Appeals of Texas, Beaumont.
    June 24, 1976.
    J. B. Whittenburg, Larry Germer, Beaumont, for appellant.
    Jon B. Burmeister, Port Arthur, for ap-pellees.
   KEITH, Justice.

Defendant below appeals from an order overruling its plea of privilege to be sued in Harris County. We reverse the judgment of the trial court and order the cause transferred for the reasons now to be stated.

Mary S. Knox, alleging that she was the surviving wife of Ira Knox, Jr., deceased, and the natural mother of the surviving children of the said Ira Knox, Jr., namely, Lynn Marie Knox and Ira Knox, III, instituted this suit for the wrongful death of the said Ira Knox, Jr. The suit was brought under the provisions of the Wrongful Death Statute, Art. 4671, Tex.Rev.Civ. Stat.Ann., et seq., and no recovery was sought under the Survival Statute, Art. 5525, Tex.Rev.Civ.Stat.Ann. (1958).

Plaintiffs sought to maintain venue in Jefferson County under the provisions of subdivision 9a, Art. 1995, Tex.Rev.Civ.Stat. Ann. (1964), the negligence subdivision. Upon the venue hearing, plaintiffs offered a police officer who testified as to his investigation at the scene of the accident, a supervisor of the defendant who testified generally on the question of the scope and course of the employment of the truck driver, and portions of the deposition testimony of the driver of defendant’s truck. Plaintiffs then offered, over defendant’s objections, the original petition and the controverting plea of privilege.

For the purposes of this appeal, we concede that plaintiffs made out a prima facie case of negligence proximately causing the death of Ira Knox, Jr. However, there is not a scintilla of evidence in this record that any of the named plaintiffs is a beneficiary as set out in Art. 4675, Tex.Rev.Civ.Stat. Ann. (1940). No plaintiff testified; there were no stipulations, no requests for admission of facts, no interrogatories. There is simply a complete absence of proof that any person designated as plaintiff in the original petition is entitled to prosecute and maintain the action or suffered any injury or damage by reason of the death of Ira Knox, Jr.

We readily concede, as indeed we must, that the extent of the injury or damage suffered by plaintiff relying upon subdivision 9a of the statute is not a venue fact. Spoon v. Penix, 422 S.W.2d 167, 168 (Tex.1967). However, it is necessary, in order to maintain venue under such subdivision, for plaintiff to show “that a legal right of his has been violated as a result of a particular class or kind of wrongful act.” Hawkins v. Schroeter, 212 S.W.2d 843, 846 (Tex.Civ.App.—San Antonio 1948, no writ), cited in Spoon v. Penix, supra, for the proposition that the uncontroverted evidence there showed that “the defendant had violated a legal right of the plaintiff and that is all the statute requires.”

In Petrey v. Williams, 312 S.W.2d 383, 387 (Tex.Civ.App.—Amarillo 1958, no writ), some of the plaintiffs had succeeded in showing actionable negligence causing the death of the decedent. The court said that under the third requirement of subdivision 9a [footnote 2 hereof] the plaintiffs must prove that the negligent act or omission was a proximate cause of plaintiffs’ injuries. From this premise, the court continued:

“The proof is completely void of any testimony showing the named plaintiffs as beneficiaries of the deceased, Poindexter. If they are not his beneficiaries the plaintiffs suffered no legal injuries. In order to show they suffered legal injuries they would have to prove their relationship to him.”

The court concluded: “Appellees, having failed to prove one of the necessary elements of the venue exception relied on in Cause No. 11,886, the judgment of the trial court in that case is reversed and rendered.” Id. at 388.

We find Petrey v. Williams to be disposi-tive. It is true, as pointed out by plaintiffs’ counsel, that this case was cited in Burris v. Wilson, 363 S.W.2d 885, 887 (Tex.Civ.App.—Amarillo 1962, no writ), which was overruled by Spoon v. Penix, supra. In Burris and in Spoon, the plaintiffs showed conclusively that the defendants had violated a legal right of plaintiffs. No such showing was made in either Petrey or in this case. Spoon v. Penix has not weakened the holding in Petrey.

Having considered the authorities cited by plaintiffs and, remaining convinced that plaintiffs failed to prove an essential ingredient of the case upon the hearing, we proceed to render the judgment which the trial court should have rendered: an order sustaining the plea of privilege. Consequently, the judgment of the trial court is reversed and the cause is remanded to the trial court with instructions to transfer the cause to one of the district courts of Harris County, Texas. It is so ordered.

REVERSED and REMANDED with instructions.

STEPHENSON, J., not participating.

      . See in this connection: Landers v. B. F. Goodrich Company, 369 S.W.2d 33, 35 (Tex.1963); Huntington v. Walker’s Austex Chili Co., 285 S.W.2d 255, 258 (Tex.Civ.App.—Waco 1955, writ ref’d); Carter v. Van Meter, 495 S.W.2d 583, 585 (Tex.Civ.App.—Dallas 1973, no writ).

      . The parties are in agreement that plaintiffs’ burden was that set out in the statute: “The venue facts necessary for plaintiff to establish by the preponderance of the evidence to sustain venue in a county other than the county of defendant’s residence are: 1. That an act or omission of negligence occurred in the county where suit was filed. 2. That such act or omission was that of the defendant, in person, or that of his servant, agent or representative acting within the scope of his employment. 3. That such negligence was a proximate cause of plaintiff’s injuries.”

      .Upon appeal, plaintiffs concede that the introduction of the pleadings availed them nothing, saying: “The Plaintiff [sic] further agrees with the Defendant’s quotation from the case of Ideal Baking Company v. Boyd, 417 S.W.2d 613 (Tex.Civ.App.—Tyler 1967, no writ), wherein the Court discusses the fact that the Plaintiff cannot utilize the allegations contained in his petition or controverting affidavit as a substitute for testimony to prove his venue facts.”


author: GUITTARD, Justice.

text:
    Allan ZIDELL et al., Appellants, v. JOHN HANCOCK MUTUAL LIFE INSURANCE CO., Appellee.
    No. 18856.
    Court of Civil Appeals of Texas, Dallas.
    June 24, 1976.
    Rehearing Denied July 22, 1976.

      Gerald R. Coplin, Passman, Jones, Andrews, Coplin & Holley, Dallas, for appellants.
    William P. Fonville, Dallas, for appellee.
   GUITTARD, Justice.

This suit concerns whether the proceeds of casualty insurance on an apartment complex should be paid to the mortgagors or to the mortgagee. We hold that even though the mortgagors have repaired the property at their own expense, the mortgagee is entitled to the proceeds under the deed of trust, which contains an assignment of the policy and its proceeds to the mortgagee as security for the debt.

The case was tried on a stipulation of facts from which the following statement is taken. Allan and Alvin Zidell were owners of an apartment complex subject to a deed of trust securing a note for $1,850,000 held by John Hancock Mutual Life Insurance Company. The note and deed of trust limit the liability of the Zidells to their interests in the property securing the note. Paragraph 4 of the deed of trust requires the Zidells as grantors to keep the property repaired and also to keep it insured in terms satisfactory to the beneficiary. This paragraph further provides that all policies are payable in case of loss to the beneficiary, that all amounts recoverable under any policy are assigned to the beneficiary, and that in the event of loss the amount collected shall, “at the option of the beneficiary” be (a) applied on the indebtedness, (b) used to fulfill any of the covenants of the grantors, (e) used to replace or restore the property, or (d) released to the grantors. The full text of this paragraph is copied in the margin.

The Zidells procured the required insurance coverage. On April 13, 1974, the buildings and their furnishings were damaged by wind and hail. The Zidells repaired the damage and made claim against the casualty insurer for the loss. On July 12, 1974, the insurer issued its draft for $30,987.69 payable jointly to the Zidells and John Hancock Mutual Life Insurance Company.

When the loss occurred the note was not in default. The Zidells failed, however, to make the payments due on June 1 and July 1, 1974, and on September 4, 1974, Hancock notified them that it had accelerated the maturity of the remaining installments. On March 4,1974, the trustee sold the property under the deed of trust, and Hancock bid it in for $1,738,757.76, the amount of the principal balance, without any amount to cover the interest or the attorney’s fee provided in the note.

Both the Zidells and Hancock claimed the proceeds of the draft from the insurer, and this litigation resulted. By agreement, the proceeds were paid into the registry of the court.

The stipulation recites that Hancock gave the Zidells no notice of its exercise of the option to apply the proceeds of insurance on the amount of the note before completion of the repairs. The stipulation contains no information as to when Hancock learned that the loss had occurred or that the Zi-dells had undertaken to repair the damage. The Zidells alleged in their pleading that Hancock had failed and refused to endorse the draft in their favor. Hancock answered that it “exercises its option to apply the amount collected upon the indebtedness due it on the promissory note and will so apply such proceeds when it obtains possession of the draft.”

The trial court concluded that under paragraph 4 of the deed of trust, Hancock had “the unrestricted option” to apply insurance proceeds on the indebtedness secured by the deed of trust, that it had exercised that option, and, therefore, was entitled to the proceeds. Accordingly, judgment was rendered for Hancock, and the Zidells have appealed.

The Zidells’ principal contention here is that the beneficiary’s “option” to apply the proceeds of the insurance claim to the indebtedness or to use it to replace or restore the property must be exercised within a reasonable time by notice to the grantors or otherwise, and that no such exercise of the option is established by the stipulated facts. They do not specify the event from which the “reasonable time” began to run. Since the stipulation does not state when Hancock first had notice or knowledge of the loss or of the repairs undertaken by the Zidells, we find no basis in the record to say that a reasonable time had expired before Hancock filed its pleading stating that it “exercises its option” to apply the proceeds to the balance of the note. That balance included interest and attorney’s fees which were not extinguished by the foreclosure sale, as was the principal indebtedness. Consequently, we cannot agree with the Zidells that Hancock has lost its contract right to apply the insurance proceeds to the amount of the note by failing to exercise its option to do so within a reasonable time.

Moreover the “option” in paragraph 4 is not like an option to purchase, which must be exercised within a specified time to avoid loss of contract rights. It does not involve a continuing offer that expires if not accepted by a certain date. This paragraph does not provide, even by implication, that the beneficiary will lose its contract right to apply insurance proceeds on the indebtedness if it fails to act promptly. Rather, we understand this provision to mean that all insurance policies and their proceeds are assigned to the beneficiary, who is given its choice as to how such proceeds shall be applied. Mere lapse of time does not shift this choice to the grantors. The Zidells have urged no estoppel or other circumstance that would preclude Hancock from making that choice.

The Zidells also contend that they are entitled to the insurance proceeds because they paid for the insurance and they restored the property at their own expense. To support this contention they cite the early decision of this court in Huey v. Ewell, 22 Tex.Civ.App. 638, 55 S.W. 606 (Dallas 1900, no writ). In that case, under similar facts, the mortgagor was held entitled to the insurance proceeds although he had, in effect, assigned the policy to the mortgagee. The court reasoned that since the mortgagee had the benefit of the covenant to repair, which was the “covenant of greatest dignity,” and since the mortgagor had paid the insurance premium and also the cost of the repairs, it would be inequitable to award the insurance proceeds to the mortgagee.

We do not accept the Huey reasoning as sound. Even if one provision of a contract may be considered as of greater “dignity” than another, the provision of lesser “dignity” cannot properly be disregarded unless the two are inconsistent. We find no inconsistency between the covenant to repair and the assignment of insurance proceeds, since the mortgagees can comply with the covenant by using their own funds if the mortgagee insists on applying the proceeds to the debt. Neither can we disregard the assignment of insurance proceeds on the ground that to give it effect would be inequitable. Courts are not at liberty to rewrite the contract between the parties without pleading and proof of fraud or mutual mistake. Milliken v. Callahan County, 69 Tex. 205, 6 S.W. 681, 684 (1887); see British America Assurance Co. v. Miller, 91 Tex. 414, 44 S.W. 60, 62 (1898). The assignment of the proceeds from a policy of insurance on mortgaged property is a proper subject of contract. Schultz v. Morton, 101 S.W.2d 373, 375 (Tex.Civ.App.—Dallas 1936, writ ref’d). We know of no reason of public policy that would prevent a mortgagor from agreeing that the mortgagee may apply the insurance proceeds to the indebtedness, even when the property has been restored at the mortgagor’s expense.

Nor do we find such an arrangement to be grossly inequitable. A mortgagor gets the benefit of insurance proceeds when they are applied to his debt. This benefit is not affected in the present case by the provision relieving the Zidells of personal liability on the note. In the absence of foreclosure, application of the insurance proceeds on the note would reduce the outstanding indebtedness for which the property would stand as security, and thus the Zidells would have the opportunity to clear that indebtedness by paying a lesser sum. Their default and the consequent foreclosure do not give them any additional right to these proceeds. So long as the entire indebtedness, including both principal and interest, has not been paid, the insurance proceeds, as well as the other property, stand good for the balance due on the note, according to the express agreement of the parties. The trial court properly gave that agreement full effect.

All of the Zidells’ points have been considered, and all are overruled for the reasons stated.

Affirmed.

      . That grantors will at all times during the continuance of this trust, as long as said note remains unpaid, keep protected and in good order, repair and condition at all times, the buildings and improvements (including fixtures) now standing or hereafter erected or placed upon the granted premises, and any and all appurtenances, apparatus and articles of personal property, including but not limited to, furniture, furnishings and equipment, now or hereafter in or attached to or used in connection with said buildings or improvements, promptly replacing any of the aforesaid which may become lost, destroyed or unsuitable for use, and will not do or permit any act by which the value of the granted premises may be impaired; that grantors will comply with, or cause to be complied with, all statutes, ordinances and requirements of any governmental authority relating to the granted premises; that grantors will keep insured the aforesaid real and personal property, and the interests and liabilities incident to the ownership thereof, in manner, forms, companies, sums and length of terms satisfactory to the beneficiary; that all insurance policies are to be held by and, to the extent of its interests, are to be for the benefit of and payable in case of loss to the beneficiary, and the grantors shall deliver to the beneficiary a new policy as replacement for any expiring policy at least fifteen (15) days before the date of such expiration; that all amounts recoverable under any policy are hereby assigned to the beneficiary, and in the event of a loss the amount collected shall, at the option of the beneficiary, be used in any one or more of the following ways: (a) applied upon the indebtedness secured hereby, whether such indebtedness then be matured or unmatured; (b) used to fulfill any of the covenants contained herein as the beneficiary may determine; (c) used to replace or restore the property to a condition satisfactory to the beneficiary; (d) released to the grantors; and the beneficiary is hereby irrevocably appointed by the grantors as attorney of the grantors to assign any policy in the event of the foreclosure of this deed of trust or other extinguishment of the indebtedness secured hereby.


author: PEDEN, Justice.

text:
    Dougal C. POPE, Appellant, v. SOUTHAMPTON CIVIC CLUB et al., Appellees.
    No. 16730.
    Court of Civil Appeals of Texas, Houston (1st Dist.).
    Aug. 5, 1976.
    Rehearing Denied Sept. 2, 1976.

      Dougal C. Pope, Houston, for appellant.
    Urban, Coolidge, Pennington & Scott, Gary L. Murphree, Houston, for appellees.
   PEDEN, Justice.

Southampton Civic Club and several of its representative members brought this suit for a declaration of the parties’ rights under restrictions affecting Lot 13, Block 41, of Southampton Place Addition in Houston and to enjoin the defendant from using it for any purpose other than as a single-family residence. Both sides filed motions for summary judgment. The defendant, Mr. Pope, appeals from the judgment of the trial court denying his motion and holding, as a matter of law, that his proposed paving of the property and use of it as a parking lot for the employees of his law office (located outside the addition) would materially violate the restrictions. The court also enjoined Mr. Pope’s proposed use of the lot.

His points of error are:

“1. Only the facts which have been stipulated in this case should be considered.
“2. The practice of law is a professional service and is not a wholesale or retail business.
“3. Restrictions are construed strictly in favor of the grantee and against the grantor and any ambiguity must be resolved in favor of the free use of the land.”

We affirm the judgment of the trial court.

The parties’ stipulation filed in the trial court included these provisions: 2) the defendant owns Lot 13, Block 41, of Southampton Place Addition, Houston, Harris County, Texas; 3) he holds title to it under a recorded deed; 4) during 1922 and 1923, E. H. Fleming and San Jacinto Trust Co., as owners of a tract of 160.75 acres including the lot in question, subdivided it and dedicated streets and alleys in a map filed for record in Volume 6, Page 52, Map Records of Harris County; 6) said, subdividers promulgated and recorded certain deed restrictions filed for record in Volume 567 at Page 413 and in Volume 534, Page 408, of the Deed Records of Harris County; 7) those instruments contain certain basic restrictions applicable to all the lots in Southampton Place Addition, and a copy of them was made a part of the stipulation; 8) an agreement of some 500 of the 600 owners of lots was filed to extend the restrictions for 50 years beyond April 15, 1973; 11) the first conveyance of the lot in question from the subdivider was expressly made subject to the restrictions referred to above.

Pardo v. Southampton Civic Club, 239 S.W.2d 141 (Tex.Civ.App., Galveston, 1951, writ ref.) was also a suit brought by members of the Southampton Civic Club for a judicial construction of the wording used in the restricting of lots in Southampton Place Addition to the City of Houston and seeking a permanent injunction restraining a defendant from using a certain lot in the addition for any purpose other than as a dwelling and residence for a single family.

It is apparent from a reading of that opinion that the restrictions there involved are the same ones as in the case under submission. We have conclusively determined that they are the same by examining the record in Pardo. In Pardo this court reviewed the restrictions in question and concluded, after applying the rules of construction to the facts in the case, “that the developer of Southampton Place Addition clearly intended that the property in the addition which was reserved for residential use should be used for that purpose exclusively ... All of the lots listed in paragraph (e) of the restrictions . were designated and sold as integral parts of a ‘high class exclusive residential’ area and were restricted to the exclusive use of a residence of a single family.”

An examination of the basic restrictions included in the stipulation in the.case under submission shows that Lot 13, Block 41, is also one of the lots listed in paragraph (e) of those restrictions and thus was one of those designated and sold as part of a high class residential area restricted to use as a single-family dwelling.

In Mitchell v. Mitchell, 157 Tex. 346, 303 S.W.2d 352 at page 354 (1957) the Texas Supreme Court stated:

“It is a well-established rule that under the doctrine of stare decisis when the Supreme Court once determines the true construction of a will or other written instrument that construction is binding in all subsequent suits involving the same subject matter, even though the parties in subsequent suits may not be the same as in the original suit.”

We have carefully considered each of the appellant’s points presented on appeal and find no error.

Affirmed.


author: AKIN, Justice.

text:
    OAK LAWN PRESERVATION SOCIETY, Appellant, v. BOARD OF MANAGERS OF DALLAS COUNTY HOSPITAL DISTRICT et al., Appellees.
    No. 18972.
    Court of Civil Appeals of Texas, Dallas.
    June 29, 1976.

      Joe Harrison, Morris I. Jaffe, Wynne & Jaffe, Dallas, for appellant.
    Earl Luna, Dallas, for appellees.
   AKIN, Justice.

This is an appeal by plaintiff from an order of dismissal sustaining a plea in abatement based on res judicata. The principal question presented is whether the trial court correctly sustained the plea of res judicata because of a federal court’s post-judgment order directing the Dallas County Commissioner’s Court to acquire the Wood-lawn Hospital facility for use as a minimum security jail. Because we hold that it is not res judicata, we reverse and remand for trial.

The Oak Lawn Preservation Society, a non-profit corporation, filed suit against the Board of Managers of the Dallas Hospital District; the Honorable John Whittington, Dallas County Judge; and James Jackson and .Roy Orr, two of the Dallas County Commissioners, seeking a declaratory judgment pursuant to Tex.Rev.Civ.Stat.Ann. art. 2524-1 (Vernon 1965). Plaintiff alleged that the defendants Whittington, Orr, and Jackson, constituting a majority of the Dallas County Commissioners Court, had voted to acquire the Woodlawn Hospital facility from the Dallas County Hospital District for use as a minimum security jail. Plaintiff alleged further that for the Hospital District to permit Woodlawn to be used for a minimum security jail would violate Tex.Rev.Civ.Stat.Ann. art. 4494n (Vernon 1966) which established a standard as to the type of contract into which the Hospital Board could enter. Since the hospital district was created and funded by an election in 1954 for hospital purposes, plaintiff contended that the Hospital District had neither the right nor authority to permit its property to be used as a jail. Plaintiff alleged that the proposed agreement between the Commissioners and the Hospital District created a controversy between plaintiff and defendants justifying declaratory relief. In response, defendants filed an unsworn motion to abate and dismiss the cause on the sole basis that the United States district court had approved the use of Woodlawn as a jail and had directed the Commissioners to acquire it. Defendants contended that this order of the federal court was res judicata as to this cause. Defendants’ motion was sustained and plaintiff appealed.

Since the only ground upon which defendants predicated their motion and plea in abatement was res judicata, this was the only apparent basis for the trial court’s dismissal. The doctrine of res judicata applies only where all of these elements exist: Identity of parties, issues, subject matter, relief sought and cause of action. Lozano v. Patrician Movement, 483 S.W.2d 369, 371 (Tex.Civ.App., San Antonio 1972, writ ref’d n. r. e.); Coulson v. City of San Angelo, 286 S.W.2d 202, 204 (Tex.Civ.App., Austin 1956, writ ref’d n. r. e.). The burden of proving these elements by a preponderance of the evidence at the hearing on the plea in abatement is upon the party asserting it unless each is established as a matter of law by the plaintiff’s petition. E. g., Hastings v. Royal-Globe Insurance Companies, 521 S.W.2d 869, 872 (Tex.Civ.App., San Antonio 1975, no writ). In the hearing on the plea in abatement, no testimony was taken; however, by stipulation of the parties three documents were introduced into evidence: (1) The deed transferring Woodlawn from the City of Dallas to the County of Dallas; (2) an order dated March 2, 1976, of the United States District Court for the Northern District of Texas in Cause No. CA-3-5220-B styled Joseph Taylor et al. v. W. L. Sterrett et al.; and (3) an opinion of the District Attorney of Dallas County dated February 20, 1975, concerning article 4494n and his opinion of its effect on the disposition of Woodlawn. The only item even remotely bearing on defendants’ plea of res judicata is the order of the federal court. That order on its face shows a lack of identity of parties and concerns regulation of the jail facilities operated by Dallas County. The only possible reference to any matter in this case is a provision directing the Commissioners Court to proceed to acquire Woodlawn as a jail facility.

This order was a post-judgment order in the case of Taylor v. Sterrett, 344 F.Supp. 411 (N.D.Tex.1972). That case was a civil rights decision under the first, eighth, and fourteenth amendments to the United States Constitution in which inmates of the Dallas County jail asserted certain constitutional rights and in which the federal court ordered the Commissioners to upgrade the jail facilities. The defendants rely on the post-judgment order which states that the federal district judge approved the proposal of the Commissioners to use Woodlawn as a jail and directed them to proceed. Neither this order nor the decision in Taylor v. Sterrett, supra, adjudicates the present controversy. This case concerns an interpretation of whether article 4494n authorizes the Hospital Board to lease or sell Woodlawn to the Commissioners for use as a jail. This question was not presented to the federal court, and, consequently, was not adjudicated in that proceeding. As we read the order of the federal court, the issue decided was whether use of Woodlawn would be in compliance with its previous order to provide an adequate jail, not whether the Hospital District could properly authorize use of its property for that purpose. This issue can be determined only in a proceeding to which the Hospital District is a party. Consequently, the doctrine of res judicata is not applicable.

Nor are we persuaded that this case is controlled by the decision of Allied Van Lines, Inc. v. Central Forwarding, Inc., 535 S.W.2d 412 (Tex.Civ.App., Waco 1976, writ filed). In that suit, Allied Van Lines and seven other motor carriers filed suit seeking a declaratory judgment to interpret the meaning of a motor carrier certificate which conferred upon Central Forwarding the right to haul for hire household goods from Dallas to all points in Texas. Allied and Central were competitors and Allied sought by the suit to protect its property rights in the existing motor carrier operating authorities. Central filed a plea in abatement alleging that Allied was barred from bringing the suit because the same issues had been litigated in a prior action in the district court of Travis County. That prior suit was initiated by the Attorney General of the State of Texas and resulted in a judgment construing certificate no. 31166. Thereafter, Allied instituted suit against Central Forwarding seeking to obtain a construction of the exact same motor carrier certificate. The trial court sustained the plea in abatement. The court of civil appeals reasoned that where matters adjudicated affect the public generally a judgment is binding upon all residents, citizens and taxpayers pursuant to the doctrine of virtual representation. Id. at 415-16. The court concluded that since the matters litigated by the attorney general involved the same issues sought to be adjudicated by Allied, the former suit effectively bound Allied. Id. at 415.

Defendants also argue that the trial court properly dismissed the suits because the federal court has retained continuing jurisdiction. They conclude that any order in the present case granting relief to appellants would interfere with the order of the federal court. We cannot agree. Since defendants’ motion to abate was predicated solely on res judicata, and, since defendants made no showing in the trial court that the present proceeding would interfere with any further proceedings in the federal court, we cannot consider this argument as justifying dismissal of this action. An appellee cannot try the case on one theory and have judgment entered in his favor and then have such judgment affirmed on a different theory. National Life & Accident Insurance Co. v. Wigley, 96 S.W.2d 154 (Tex.Civ.App., Galveston 1936, writ dism’d).

Moreover, 28 U.S.C. § 2283 (1965) authorizes a federal court to restrain a state court proceeding when necessary to protect its jurisdiction. If prosecution of this action will interfere with the orders of the federal court, that court can entertain an application to restrain this proceeding and then, presumably, plaintiff, as well as defendants, will have an opportunity to present its contentions to the federal court.

Reversed and remanded.

CLAUDE WILLIAMS, C. J., not sitting.

      . Although we doubt that res judicata is a matter of abatement justifying dismissal of an action rather than an affirmative defense to be determined on final judgment, this point has not been raised in the present appeal.


text:
    UNITED STATES FIDELITY & GUARANTY COMPANY, Appellant, v. BORDEN METAL PRODUCTS COMPANY, Appellee.
    No. 7841.
    Court of Civil Appeals of Texas, Beaumont.
    July 8, 1976.
    Rehearing Denied July 29, 1976.

      D. W. Garrett, Houston, for appellant.
    W. C. McClain, Conroe, Ralph S. Carri-gan, Houston, for appellee.
   KEITH, Justice.

This is an appeal by the surety cast in judgment in a suit by a materialman suing upon a construction payment bond. The trial was to the court and extensive findings of fact and conclusions of law were filed. We affirm.

Central Louisiana Electric Company needed a generating plant constructed at Boyce, Rapides Parish, Louisiana. It contracted with Babcock and Wilcox Company [“B&W”] to construct and erect the steam boilers in the plant; and, for the purposes of this appeal, B&W is to be considered the general contractor. B&W entered into a subcontract with National Fabricating Company [“National Fab”] for the fabrication, but not the erection, of the metal walkways and stairways, called gallery work, around the boilers.

B&W required National Fab to be bonded and it paid the premium on the bonds as a part of the subcontract price. It received two bonds on forms provided by our appellant, United States Fidelity & Guaranty Company [“Surety”] which were titled “Subcontract Performance Bond” and “Subcontract Labor and Material Bond”, respectively.

Thereafter, National Fab entered into an oral subcontract with Borden Metal Products Company [“Borden”] for the fabrication of the metal grating portion of the gallery work. National Fab failed to complete its contract with B&W and left the job owing Borden $24,913.45. Borden sued B&W and Surety upon the material bond. B&W answered by a general denial and filed an action over against Surety insisting upon the payment by Surety of the indebtedness due Borden. Surety answered by pleading numerous policy defenses, some of which will be discussed herein. In a non-jury trial, judgment was entered in favor of Borden against Surety for its indebtedness and a take nothing judgment was entered as to B&W.

As noted earlier, the trial court filed extensive findings of fact. In considering the contentions advanced by Surety we do so under the rule enunciated in Commercial Union Assurance Company v. Foster, 379 S.W.2d 320, 322 (Tex.1964). If there is some evidence of a substantial and probative character to support the trial court’s findings of fact, they are controlling upon this court and will not be disturbed, even though this court may have reached a different conclusion.

It is well to recognize at this point another rule of equal importance in passing upon Surety’s complaints as to factual insufficiency of the evidence. The surety has the burden of establishing the defense of discharge by reason of an extension or alteration, or similar defenses. Hester v. Ross, Banks, May, Cron & Cavin, 492 S.W.2d 378, 379 (Tex.Civ.App.—Waco 1973, no writ), and authorities therein cited.

The court’s findings of fact are analogous to jury findings in response to special issues submitted in the court’s charge. Nathan v. Hudson, 376 S.W.2d 856, 862 (Tex.Civ.App.—Dallas 1964, writ ref’d n.r.e.). In the article entitled “Evidence Points on Appeal,” 37 Tex.B.J. 839, 840 (September, 1974), the author speaks to the burden of one challenging jury findings using this language:

“When a party has the burden of proof on an issue and the jury fails to answer his special issue in his favor, on appeal he maintains that he carried his burden of proof. The purpose of his complaint is twofold: (1) to neutralize the jury’s adverse answer, which in effect held that he did not carry his burden, and (2) to show that he did carry his burden. He has a conceptually more difficult task on this kind of issue because he has to first disprove the finding, then prove the reverse.”

In its first point of error, Surety contends that the trial court’s finding that B&W did not grossly or materially deviate from its contractual payment obligations with National Fab is against the great weight of the evidence; in its second point, Surety contends that the evidence shows conclusively that B&W did deviate grossly and materially from its contractual payment obligations. These evidentiary points are submitted with an argument proceeding along these lines:

1. A material departure from the express requirements of a contract for which a bond has been issued, with regard to the times and amounts of payments, without the surety’s consent, operates to discharge the surety from liability.

2. Overpayment by the obligee of a bond will release the surety.

3. A surety is only bound by the strict terms of the contract. “It is often said that the liability of a surety is strictissimi juris, that is, held to the letter of the contract.”

4. “[T]he surety is ‘deemed a favorite of the law . . . ’ ”

Surety cites one or more Texas cases which it asserts support each of the several positions noted above.

Before we enter into our discussion of the authorities, it is well to express our reluctance to continue following the cases cited by Surety. More than thirty years ago, Justice Critz noted that the Texas decisions were “out of harmony with the great weight of authority in this country.” Standard Acc. Ins. Co. v. Knox, 144 Tex. 296, 184 S.W.2d 612, 615 (1945). Yet, we have in this case a corporate surety which has entered into a contract of suretyship for profit, contending that it is “a favorite of the law” and that it is entitled to have its liability determined under the rule of stric-tissimi juris, “meaning that the guarantor is entitled to have his agreement strictly construed and that it may not be extended by construction or implication beyond the precise terms of his contract.” McKnight v. Virginia Mirror Company, 463 S.W.2d 428, 430 (Tex.1971).

This surety prepared its own printed form of bond for use in this transaction and collected a premium from B&W for the risk it undertook as surety upon the bond. Our record shows that it is a compensated corporate surety and should be held liable as such.

We recognize that the question was reserved by the Supreme Court in Standard Acc. v. Knox, supra, and that it is our duty, as an intermediate court, to follow the decisions of the Supreme Court and to leave changes to the court of last resort. See Wilkinson v. Stevison, 514 S.W.2d 895, 897 (Tex.1974). However, we consider it our duty to point out to the Supreme Court the desirability of reconsidering the rule with reference to compensated corporate sureties.

If we were free to adopt the rule prevailing in the majority of the jurisdictions in this country, we could and would follow the rule enunciated in the Restatement of the Law of Security, § 82, Comment i (1941):

“It is important to distinguish between compensated and other sureties because the rules of suretyship, notably those relating to the defenses of the surety, are not in all respects alike for the two classes. The basis for the distinction is that one engaged in the business of executing surety contracts can be expected to have contemplated and taken account of, in the premium charged, certain elements of risk which are not considered to have been assumed by other sureties.” (emphasis supplied)

However, considering the broad and extensive findings of fact and conclusions of law filed by the trial court, we arrive at what we consider to be the correct result following the Texas minority rule about which we complain.

The trial court found as a fact [No. 19] that the contract between B&W and National Fab was not “substantially or materially changed, modified or altered.” Other findings are summarized: The purchase order contract required B&W to make installment payments to National Fab [No. 20] on the basis of 90% of the invoice amount for work actually completed and approved by buyer; shipments were made by National Fab to the job site [No. 21] where the material was stored in the field; in September, 1973 [No. 22] National Fab was maintaining that the original contract had been completed and was requesting retainage; it was not until November, 1973 [No. 23] that B&W discovered material discrepancies in the material stored along with many missing and defective pieces; the previous payments made by B&W to National Fab [No. 24] “were made in good faith and without knowledge that the shipments were subject to missing pieces and defective pieces”; B&W did not grossly or materially deviate [No. 27] from its contractual payments with National Fab. Similar and supporting conclusions of law were filed.

We accept these findings of the trial court since Surety does not challenge them, taking the position that the findings are irrelevant.

In essence, it is Surety’s position that because its principal was successful in overreaching Surety’s obligee, this would operate as a release of Surety. We decline to approve this position.

Having reviewed the record under the appropriate standards as noted earlier and being of the opinion that the findings of fact and conclusions of law are supported by testimony, points one and two are overruled. There is no evidence of fraud or bad faith on the part of B&W and the trial court found that the payments were made in good faith. No error is shown. American Employers' Ins. Co. v. Huddleston, 123 Tex. 285, 70 S.W.2d 696, 698 (1934).

In point three, Surety contends that the court erred in finding that the contract between B&W and National Fab was not substantially or materially altered because the finding is against the great weight of the evidence. Point four urges the contention that the evidence “shows conclusively as a matter of law” that B&W did substantially and materially alter the contract between B&W and National Fab.

In passing upon these points we will concede the rule Surety claims applicable: A material alteration in the amount or nature of the contract bonded will discharge the surety from its bonded obligation. See, e. g., Straus-Frank Co. v. Hughes, 138 Tex. 50, 156 S.W.2d 519, 521 (1941), holding that the case there under review fell “within the general rule that a surety or guarantor is discharged by a material alteration of the contract made without his consent.” See also, Hester v. Ross, Banks, May, Cron & Cavin, supra (492 S.W.2d at 379).

We do not differ with Surety upon the law applicable to the points under review; but, we find that the complaints lack a proper factual base in our record. The bond upon which liability is predicated read in part:

“NOW, THEREFORE, THE CONDITION OF THIS OBLIGATION is such that, if the Principal shall promptly make payment to all claimants as hereinafter defined, for all labor and material used or reasonably required for use in the performance of the subcontract, then this obligation shall be void; otherwise it shall remain in full force and effect, subject, however, to the following conditions: * * # tl

Borden was a claimant under the definition contained in the bond, and had a right of action upon the bond. As between the principal and sureties, the latter is discharged from liability because of the violation by the principal of the terms of the bond. But, where the bond is for the benefit of the materialmen and laborers and is conditioned for the payment of claims for labor performed and material furnished, the surety is not discharged under such circumstances. Williams v. Baldwin, 228 S.W. 554, 557 (Tex.Comm’n App. 1921, jdgmt. adopted); New Amsterdam Casualty Co. v. Bettes, 407 S.W.2d 307, 318 (Tex.Civ.App.—Dallas 1966, writ ref’d n.r.e.). In 72 C.J.S. Principal & Surety § 126, pp. 610, 612-613 (1951), the rule is stated in this language:

“Even though there has been a material alteration of the contract between the contractor and the owner, the surety is not discharged as to materialmen for whose benefit the bond is required to be given and who furnished material after such alteration without actual or constructive notice thereof.”

One of the authorities cited in support of the text is Southern Surety Co. v. Nalle & Co., 242 S.W. 197, 203 (Tex.Comm’n App.1922, holding approved), where the court followed Williams v. Boyd, supra. Points three and four are overruled.

In its fifth point, Surety complains, without citation of authority, that the trial court erred in finding that Borden did virtually all of the additional work it performed under the bonded contract so that it was entitled to recover such sums from Surety. It presents, at considerable length, its version of the facts and argues that the evidence is insufficient to support the trial court’s findings. The short answer to this contention is that the trial court was authorized to weigh the evidence; this court has no such authority.

However, from our consideration of the record, it is apparent that the trial court considered the deposition testimony of Borden’s witness LaMar Henry concerning the invoices for work performed under the bonded contract. Henry testified that virtually all of Borden’s work was under the first bonded contract because, as he stated, “the changes were very minor, because most of this work was done in the field” after shipment of the grating from Borden’s plant. We find no merit in Surety’s point five and it is overruled.

Surety, in its eighth and final point of error, asserts that the trial court erred in finding that National Fab owed Borden the amount of its claim and in concluding that Borden was, consequently, entitled to recover that amount from Surety. The argument thereunder shows conclusively that such point is a combination of several of Surety’s earlier points which we have already discussed. Point eight is overruled.

The judgment of the trial court is affirmed.

STEPHENSON, J., not participating.

      . Although the ultimate site of the electric generating plant was in the State of Louisiana, all parties agree that Texas law controls.

      . Borden alleged that National Fab was notoriously insolvent. B&W called Surety’s counsel as a witness on this issue and elicited evidence which we find to be sufficient to support the trial court’s express finding that National Fab was in fact notoriously insolvent and was not a necessary party. So holding, points six and seven, complaining of the nonjoinder of National Fab, are overruled. See Standard Acc. Ins. Co. v. Knox, 144 Tex. 296, 184 S.W.2d 612 (1945).

      . We have examined very carefully the cases cited by Justice Daniel in McKnight, supra, including the long list of Texas cases cited in the text (38 C.J.S. Guaranty § 38d, at pp. 1181-1183, and note 19 at page 1182, including those cited in the 1976 cumulative pocket part) and find none which specifically mentioned that the surety was a compensated corporate surety such as we have in the case under consideration.

      . The corporate surety in this case has been in business for eighty years and does business in all of the fifty states. In 1975, it had a net premium income in excess of $952,000,000; it had admitted assets in excess of 1.8 billion dollars; and, it paid nearly forty million dollars in cash as dividends to its stockholders. Source: 2 Moody’s Bank & Finance Manual, pp. 1888-1889 (Moody’s Investors Service, Inc., N.Y., 1976).

      . Surety’s brief, p. 19: “Findings of Fact XXII, XXIII, XXIV and XXVI, all to the general effect that B&W paid National Fab in good faith, are wholly and totally irrelevant.”

      . The holding in Van Buren County v. American Surety Co., 137 Iowa 490, 115 N.W. 24, 30 (1908), more nearly expresses our view of this position: “If we were to hold that this operates to discharge a bond given to secure the performance of the contract, it is equivalent to saying that the surety may reap advantage by the default of the very party against whose failure he has undertaken to indemnify the obli-gee. That this may not be done is a fundamental principle in the law of suretyship.”

      . This is the definition in the bond: “A claimant is defined as one having a direct contract with the Principal for labor, material, or both, used or reasonably required for use in the performance of the contract, * * *”