author: REYNOLDS, Justice. ELLIS, Chief Justice REYNOLDS, Justice. ELLIS, Chief Justice.

text:
    Henry ABALOS, Appellant, v. OIL DEVELOPMENT COMPANY OF TEXAS, Appellee.
    No. 8529.
    Court of Civil Appeals of Texas, Amarillo.
    July 7, 1975.
    Rehearing Denied Aug. 25, 1975.
    Second Rehearing Denied Sept. 15, 1975.

      Warren Burnett Associated, Richard J. Clarkson, Odessa, for appellant.
    Gibson, Oehsner, Adkins, Harlan & Han-kins, S. Tom Morris, Amarillo, for appellee.
   REYNOLDS, Justice.

The trial court instructed a verdict against plaintiff in his action for personal injury damages founded on the doctrine of discovered peril. The instructed verdict was proper because there is no evidence to show the existence and violation of any duty owed plaintiff by the defendant. Affirmed.

Defendant Oil Development Company of Texas, the operator of an oil lease in Yoa-kum County, employed Ruthco Company, an independent contractor, to move and reset some pumping units on the lease. The crew assigned to do the work was composed of foreman Jesse Phillips and three other employees, one of whom was plaintiff Henry Abalos, who had been employed in this type of work for nine and one-half years by Ruthco. The operation was under the entire control of Ruthco’s crew and no employee of defendant had any control, direction or supervision of the work.

Pursuant to the work order for one well, the Ruthco crew removed and set aside the pumping unit and the base in the ground upon which it rested, enlarged the hole to accommodate a larger base, and installed from another location the larger concrete base to which was attached a larger pumping unit. The dirt that had been removed from the hole was used to fill the excavated area around the base. The base was required to be level for the proper operation of the pumping unit and, in the course of the installation, the pumping unit would be run to ascertain that the base was level and not rocking, particularly where, as in this instance, the base was uneven on the bottom. If the lease operator’s pumper is present, Phillips requests that he start the motor because he is more familiar with it; otherwise, Phillips starts the motor.

When the dirt backfilling was almost complete, defendant’s pumper, Curtis Ray Morgan, who had the responsibility for the operation of all the pumps on the lease, arrived at the well. Y/ithout a request to do so, Morgan connected the gas line to the motor. Phillips requested that Morgan start the motor. If Morgan had refused to do so, Phillips would have started, or tried to start, the motor. If Morgan had refused because the crew would be working close to the unit, Phillips would have called Ms office and “leave her down.”

When Phillips requested Morgan to start the motor, Abalos said, so he testified, “Do not crank that motor up, because we could get hurt real easy.” Both Phillips and Morgan denied that they heard the protest voiced by Abalos. Moreover, Phillips said that Abalos raised no objection to working around the pump while it was in operation and that his crew, including Abalos, had done so many times before. Morgan cranked the motor while Abalos watched. After the Ruthco crew and Morgan had observed the motor run for four or five minutes, Phillips, seeing that the base looked all right, gave the order to complete the backfill. According to Phillips, there was nothing to prevent anyone from seeing the pump going up and down, the counterweight revolving and the moving parts of the pump. He knew no reason for a man in the process of filling the hole to get close enough to the moving parts to get caught.

Abalos, who had observed motors run to see how level the base was going to set as many as 1,000 times in his work, joined the rest of the crew in the backfilling work. He readily admitted that he knew it was a dangerous situation because the unit was running and if he got too close to it, he might get caught by it. Nevertheless, he continued to work with full knowledge of the dangerous situation, knowing that he had to be careful or he was going to get hurt.

Morgan said he stated to Phillips, “I will throw it out of gear if you will throw it back in gear. I have got to go;” and that the response was, “No, he wanted it to run where they could level the dirt.” Phillips’ version was that “He said he had to leave, and I told him, asked if he wanted to leave the unit pumping when we got through. He said, ‘yes’. So we left it pumping; or was going to leave it pumping; still pumping while we backfilled.” Abalos did not hear the conversation; “the motor was making a noise” as he was shoveling dirt next to the base.

Morgan, standing near the head of the pumping unit some twenty-five feet from the motor, began cleaning his hands. He saw Abalos, who was working on the opposite side of the unit, tamping dirt around the base with his right foot. His right hand was holding a shovel and his raised left hand “went over toward the unit” Morgan thought “that’s bad business”, that the arm was in a dangerous position, and that Aba-los was not aware that he was sticking Ms arm into the moving machinery. Morgan was tempted to say something to Abalos, and his further thought was to turn off the machinery, but he took no action. When asked why he did not yell at Abalos, Morgan replied, “Well, I just didn’t”, adding later that he “didn’t have time.” When the revolving counterweight, which made about eight or ten revolutions a minute, had made one revolution and about the time Morgan “started to holler at him, it come (sic) over again, and he throwed (sic) his hand over in there again.” Morgan, in the courtroom— illustrated time lapse of three seconds, ran to the motor. When he stopped the motor, the counterweight had gone about one-half to three-fourths of a complete revolution.

Abalos remembered that he was not packing dirt around the base immediately prior to his injury, but he did not remember much about the accident itself, stating, “I don’t know how I got caught.” He said that when his arm was caught in the moving machinery, the counterweight made one revolution and his other arm was caught. When asked how he got close enough to get caught, he replied, “I don’t remember. I don’t know how I got so close.”

Phillips said that, at the time of the accident, the job had not been finished. The job is finished when Phillips is satisfied that the unit is pumping right and everything is all right with it, and the crew leaves the location. If the operator’s pumper tells Phillips he wants the pump shut down, the motor is stopped; otherwise, the custom is to leave it running.

After all of the evidence was presented before the jury, the trial court granted defendant’s motion for instructed verdict without specifying which one or more of the nine grounds urged in the motion the court found valid. Among the grounds urged was the one that defendant owed no duty to Abalos. If the instructed verdict was proper, it is because the evidence, and any proper inferences flowing therefrom, viewed in the light most favorable to Abalos without regard to the adverse testimony, fails to factually raise the issue of a duty arising under the doctrine of discovered peril. See Triangle Motors of Dallas v. Richmond, 152 Tex. 354, 258 S.W.2d 60 (1953); Calvert, “No Evidence” and “Insufficient Evidence” Points of Error, 38 Tex.L.Rev. 361.

This is the second time this cause has been before this court. A former appeal was taken from a summary judgment granted in favor of defendant. The opinion of the majority of the court reported in 491 S.W.2d 482, with this writer dissenting at p. 484, held that the summary judgment evidence failed to demonstrate the absence of a genuine issue of material fact as to the control of the pumping unit, which had a direct bearing on whether defendant owed a duty to Abalos. The application for writ of error was “Refused, No Reversible Error.”

Abalos invokes the doctrine of the law of the case. He seeks the application of the general principle that sihce the facts developed in both hearings are the same or nearly so, the prior appeal settled as a matter of law that a fact issue exists as to whether or not defendant owed to Abalos a duty to use ordinary care to prevent the injury when Morgan discovered Abalos in his perilous position. See Clem v. Fulghum, 37 S.W.2d 201 (Tex.Civ.App.—Dallas 1931), affirmed 58 S.W.2d 15 (Tex.Com.App.1933, jdgmt. adopted).

To establish tort liability, Abalos had to show the existence of a duty owed to him by defendant and a violation of that duty. Coleman v. Hudson Gas and Oil Corporation, 455 S.W.2d 701 (Tex.1970). Consequently, the defendant did not, strictly speaking, have the burden to establish that it owed no duty to Abalos. Greenhill, Assumed Risk, 20 Sw.L.J. 1, 2 (1986). Nevertheless, to prevail in the prior summary judgment proceeding, the defendant oil company had the burden to present summary judgment proof that, as a matter of law, it owed no duty to Abalos to do anything more than Morgan did. Adam Dante Corporation v. Sharpe, 483 S.W.2d 452, 454 (Tex.1972). The prior appeal determined that defendant failed to meet its burden of proof. However, to reach the jury in the present trial on the merits, Abalos had the burden to show the existence of a duty owed to Mm by defendant and a violation of that duty. Coleman v. Hudson Gas and Oil Corporation, supra.. The fact that defendant previously failed to summarily negative the existence of a duty as a matter of law is fundamentally different from the question of whether Abalos adduced proof of the existence of that duty as a part of Ms case at the present trial on the merits, and defendant’s failure in the first instance does not operate to establish that Abalos successfully discharged his burden. See Glenn v. Prestegord, 456 S.W.2d 901 (Tex.1970). Thus, the first appeal did not establish the law of the case with respect to the question of the existence of a duty.

The defendant, the occupier of the premises, had no duty to protect Abalos, an invitee, from or to warn him of the dangerous condition or activity of working around the pumping unit while it operated, because Abalos actually knew the open and obvious danger, Halepeska, v. Callihan Interests, Inc., 371 S.W.2d 368, 378 (Tex.1968), and he previously had exposed himself to this danger many times. See Wesson v. Gillespie, 382 S.W.2d 921 (Tex.1964). Nevertheless, the defendant had a duty to use ordinary care to prevent Abalos’s injury if Morgan was in control of the pumping unit and if the elements of discovered peril enumerated in Turner v. Texas Co., 138 Tex. 380, 159 S.W.2d 112 (1942), are present in this ease. Ford v. Panhandle & Santa Fe Ry. Co., 151 Tex. 538, 262 S.W.2d 561 (1952). The burden, of course, was on Abalos to raise the issue, as a part of his case, that Morgan was in control of the pumping unit. See 2 Restatement, Torts 2d, § 314, comment d. If not, Morgan’s status would be that of a bystander and, irrespective of any realization of danger by or any moral duty on the part of Morgan, the defendant would owe no legal duty to do more than Morgan did. Buchanan v. Rose, 138 Tex. 390, 159 S.W.2d 109 (1942); 2 Restatement, Torts 2d, § 314.

The undisputed evidence is that while Morgan had the responsibility for the normal operation of the pumps on defendant’s lease, at all times before, during and after Abalos received his injury, Ruthco had complete control of its operation, which included the running of the pumping unit to insure that the work was properly performed. Morgan had no responsibility for or to assist in Ruthco’s work, and had he not been present when the work reached the stage where the pumping unit was required to be operated, Phillips would have started the motor. At the time Abalos suffered his injury, the work had not been finished and Ruthco had not relinquished its control over the operation. It follows that Abalos failed to present any evidence that Morgan had control of the pumping unit. Thus, Abalos failed to show that defendant owed him a duty to do more than Morgan did, and the instructed verdict was correctly granted.

The judgment of the trial court is affirmed.

ELLIS, Chief Justice

(dissenting).

I respectfully dissent. It is my opinion that the evidence raised fact issues bearing upon the ultimate question as to the existence and violation of duty owed by the defendant to the plaintiff under the particular circumstances existing on the occasion of the injury. Thus, the non-existence of duty or lack of violation thereof have not been established as a matter of law, and the judgment granting the instructed verdict should be reversed and the cause remanded.

The plaintiff alleged negligence of defendant’s agent, Curtis Morgan, who, upon discovery of plaintiff’s position of peril, failed to take timely action to prevent his injury and that under the doctrine of discovered peril he was entitled to recover against the defendant oil company. The defendant answered by alleging that plaintiff assumed the risk of his work, knew and appreciated the danger and failed to keep a proper lookout for his own safety. Thus, the contention of the plaintiff with respect to the defendant’s duty under application of the discovered peril doctrine is confronted by the affirmative defense of volenti non fit injuria raised by the defendant. The defendant takes the position that its status was that of a bystander and as a matter of law was under no duty to take affirmative action. The plaintiff insists that in seeking to define the source and extent of defendant’s duty, if any, fact issues are encountered relating to the ultimate issue as to whether the defendant had a duty to attempt to warn or rescue the plaintiff from his impending danger, and that as a matter of law, plaintiff is not barred from recovery by volenti.

On the occasion in question, the pumping unit had been set in the larger base, and when that work was substantially finished, the defendant’s pumper, Curtis Morgan, arrived at the wellsite. Morgan was the defendant’s agent who had the responsibility of seeing that the pumps on that particular lease operated and were in good operating order. The work remaining to be done at the time of Morgan’s arrival was to complete the hookup, see that the pump was level and finish the backfill of dirt around the pump base. The field superintendent of Ruthco’s crew was Jesse Phillips. Morgan hooked up the gas line on his own initiative, and at Phillips’ request he started the pumping unit. It was customary for the lease operator to start the engine and pump because he was more familiar with the equipment. The pump ran for several minutes to see if it was “setting level” before they began their backfilling around the base. When it appeared that the pump base was level, Phillips directed the Rutheo crew to complete the backfilling of dirt around the pump base. During the back-filling work Abalos got his arms caught in the pumping unit between the Pitman arm and the crank. According to Phillips, it was obvious that at the time Abalos was caught the pumping unit had not made one complete revolution by the time it was stopped, but it had completed a half turn. Just before Abalos was injured, the defendant’s pumper, Morgan, told Phillips, the foreman of Ruthco’s crew, that “I will throw it out of gear if you will throw it back in gear. I have got to go.” According to Morgan, Phillips said, “No, he wanted it to run where they could level the dirt.” Morgan then started to clean Ms hands. He looked up and observed that Abalos was dangerously close to the moving pump. He real-ised that Abalos was in danger of getting hurt, and he stated that he did not think that Abalos was aware that he was sticking Ms arm into the moving machinery. Morgan considered saying something to Abalos, but he never did speak to Mm. When asked why he didn’t yell at Abalos if he thought he was in a dangerous position, he stated, “Well, I-just didn’t.” In the next revolution of the pump Abalos’ hand was caught. Morgan then immediately ran from the wellhead to the pump controls and stopped the pump before it completed another revolution. The evidence shows that the distance from the point near the wellhead where Morgan was standing was about 25 feet from the controls, that the pump was making 8 to 10 revolutions per minute (which would be 6 or 7 seconds per revolution), and when Abalos’ arm was caught, Morgan was able to run the 25 feet and shut off the pump in less then 6 seconds.

Abalos, who at the time of his injury was engaged in backfilling dirt around the base of the pump, stated that he told Phillips and Morgan that they should not start the engine because he might get hurt, but they didn’t listen to Mm. He further stated that it was a dangerous situation because the engine was running.

Morgan and Phillips each testified that Abalos did not say anything concerning whether the motor should be started. Morgan said he “didn’t say a word to me.” Phillips’ testimony concerning this matter was to the effect that Abalos said nothing about whether the motor should be started, that he raised no objection about working around the pump while it was in operation, and that Ms crew, including Abalos, had done this type of work around a pump while it was in operation many times before.

In the case of Adam Dante Corporation v. Sharpe, 483 S.W.2d 452 (Tex.1972) the Texas Supreme Court pointed out that in the conventional occupier — invitee case, it is the plaintiff’s burden to prove the existence and violation of a legal duty owed by the defendant which includes Ms burden to prove that he did not possess actual knowledge of the danger, and that he did not fully appreciate the nature and extent of the danger. The court also noted that the defendant’s affirmative volenti defense created a burden on the defendant to prove the plaintiff’s knowledge and appreciation of the danger to which he was exposed. However, under the circumstances of this case, the additional basic question has arisen as to whether, under the evidence, the doctrine of discovered peril is applicable.

The essential elemente of discovered peril as set out in Turner v. Texas Co., 138 Tex. 380, 159 g.W.2d 112 (1942) quoting from Baker v. Shatter, Tex.Comm.App., 231 S.W. 349, 350, are: “(1) The exposed condition brought about by the negligence of the plaintiff; (2) the actual discovery by defendants’ agents of his perilous situation in time to have averted — by the use of all means at his command, commensurate with his own safety — injury to him; and (3) the failure thereafter to use such means.” In order to have these elements of discovered peril submitted to the jury, the plaintiff is required to sufficiently prove all of such facts and circumstances as taken together with all reasonable inferences therefrom to constitute some evidence of probative force of their existence. Ford v. Panhandle is Santa Fe Ry. Co., 151 Tex. 538, 252 S.W.M 561 (1952). However, fact issues concerning primary and contributory negligence are immaterial in passing upon the question as to whether a duty has arisen to prevent injury to the plaintiff under the doctrine of discovered peril. See Parks v. Airline Motor Coaches, Inc., 145 Tex. 44, 193 S.W.2d 967 (1946). In Ford v. Panhandle & Santa Fe Ry. Co., supra, the court significantly stated:

“If one discovers another in a position where injury in all reasonable probability will be inflicted unless the discoverer uses ordinary care to prevent the injury, the duty to use such care arises, and that wholly without reference to the character of the discoverer’s conduct before the discovery.” (emphasis added)

In determining the vital questions presented, there are significant aspects of this case which should be kept in proper perspective. First, it is basic that we are here considering the propriety of an instructed verdict and to recognize that the “no evidence” rule applies, and any inference which properly may be drawn from the evidence must be indulged against the granting of the motion. McRoy v. Riverlake Country Club, Inc., 426 S.W.2d 299 (Tex.Civ.App.—Dallas 1968, writ ref’d n. r. e.). We are not concerned whether the evidence was sufficient to sustain a jury verdict had the case been submitted to a jury, but whether there were any fact issues raised which bear upon or are related to the ultimate question of duty on the part of the defendant under the evidence and circumstances of this case. In re King’s Estate, 150 Tex. 662, 244 S.W.2d 660 (1951); Calvert, “ No Evidence’ or ‘Insufficient Evidence’ Points of Error,” 38 Tex.L.Rev. 361. If so, until such issues are resolved it cannot be said as a matter of law that there was no duty and thus the instructed verdict was inappropriate.

Another significant aspect of this case is that this is the second appeal of the ease, and it is contended by appellant that all material aspects were settled in his favor in the first appeal in the summary judgment proceeding, Abalos v. Oil Development Company of Texas, 491 S.W.2d 482 (Tex.Civ.App.—Amarillo 1973, writ ref’d n. r. e.). Thus, appellant invokes the doctrine of the “law of the case.” In the case of Clem v. Fulghum, 37 S.W.2d 201 (Tex.Civ.App.—Dallas 1931, affirmed at 58 S.W.2d 15) it was stated:

“We recognize the general rale that a question of law decided on appeal will govern throughout subsequent stages of the case, including decisions that determine the sufficiency of evidence to raise or establish am issue of fact” (cases cited)

In 4 Tex.Jur.2d Rev. Part 2, Appeal and Error — Civil Cases, § 1002, we find the following:

“The doctrine of the law of the case is applicable only if it appears, on the second trial of the cause or on the appeal from the judgment rendered at the second trial, either that the facts involved are substantially the same as those involved on the first trial, or else that such facts are so nearly the same as those of the first trial that any difference between them will not result in materially affecting the legal questions involved.”

The former appeal of this case involved a summary judgment proceeding wherein the burden was upon the defendant, as movant, to clearly demonstrate that no genuine issue of material fact existed and that the movant had established as a matter of law that no duty existed on the part of defendant Oil Development Company on the occasion in question. Substantially the same evidence was submitted by deposition as summary judgment proof as that relied upon by both parties in this trial of the case on its merits. This court held in the former appeal that a fact question was raised as to matter of actual control of the operation of the pumping unit at the time of the plaintiff’s injury. In such appeal, this court stated:

“Although the question of duty is one of law, in this case the movant has not established as a matter of law that no duty existed. The fact issue exists as to the essential element of actual control of the operation of the pumping unit, this issue having a direct bearing upon the ultimate issue of duty.”

Also, this court held on the former appeal that a fact issue was raised as to whether or not appellee’s employee, in the light of these particular circumstances, had sufficient time to take action to prevent the injury to Abalos when he discovered him in the dangerous position. By reason of the existence of the fact issues above mentioned, the summary judgment entered by the trial court was reversed and the cause was remanded for trial on its merits. Application for writ of error was brought by the defendant to the Texas Supreme Court, and the application for writ was refused, “No Reversible Error.”

In this trial of the cause on its merits, the trial court granted the defendant’s Motion for Directed Verdict, and in this appeal, among other contentions, the appellant invokes the doctrine of “law of the case.” Appellee insists that the former appeal was from a summary judgment, and that an instructed verdict may be proper in this proceeding although a summary judgment was not proper in the previous proceeding. Prestegord v. Glenn, 441 S.W.2d 185 (Tex.1969); Glenn v. Prestegord, 456 S.W.2d 801 (Tex.1970). In the first Prestegord appeal, a medical malpractice suit, summary judgment for the defendant was reversed by the Supreme Court while in the second appeal, instructed verdict in favor of the defendant was affirmed by the Supreme Court. The difference in the two holdings was based upon placement of the burden of proof. In the first proceeding, a summary judgment proceeding, the defendant had the burden of proof, and the court found that there was a fact issue on the question of the defendant’s negligence and that the summary judgment should not have been entered. In the trial of Prestegord on its merits, the plaintiff had the burden of establishing both negligence and proximate came, and in the absence of any proof in either hearing as to proximate cause, the plaintiff had not borne its burden, instructed verdict was proper and thus the judgment of the trial court was affirmed.

It is recognized that in this trial of the instant case on its merits the burden is upon the plaintiff to prove the existence and violation of a legal duty owed to him by the defendant and that he did not have actual knowledge and appreciation of the risk to which he was exposed. After the plaintiff had rested its case and prior to the filing of its Motion for Directed Verdict, the defendant presented its evidence in support of its affirmative defense of volenti and sought to establish the plaintiff’s knowledge and appreciation of the danger to support its contention of “no duty” .in this occupier-invitee setting. Bees,use of the substantial identity and overlapping of required proof with respect to the issues raised in the trial on its merits and those raised in the summary judgment proceeding, i. e., whether the defendant had a duty being dependent upon proof of plaintiffs actual realization and appreciation of the danger, Adam Dante v. Sharpe, supra, the burden of proof on summary judgment and the motion for instructed verdict was substantially the same. This situation is therefore distinguishable from the difference in the burden of proof requirements in (1) the summary judgment proceeding and (2) the trial on its merits which were involved in the two Prestegord appeals. Because of the overlapping and substantial identity of the fact issues raised from the evidence presented in the two appeals of this case, the essential holdings in the previous appeal of the summary judgment aspect of this case, i. e., that “no duty” was not established as a matter of law since certain fact issues were raised upon which reasonable minds could differ which were related to the ultimate question of duty, would also be applicable with respect to the question of the granting of the Motion for Directed Verdict in the instent case. It has not been established that the fact issues recognized by this court in the summary judgment proceeding have been eliminated by the evidence in this trial on the merits, particularly when the recognized “no evidence” standards are applied.

However, irrespective of the applicability of the holding in the summary judgment proceeding involved in the previous appeal, and by considering this appeal independently, the evidence raises fact issues as to the actual control of the operation of the pump at the time of the occurrence in question; and the determination of the issue of actual control will bear directly on the ultimate and vital issue of the defendant’s duty. Further, if it is established from the various facts and circumstances bearing on duty that a duty on defendant’s part did arise, then the additional fact issue is raised as to whether the appellee’s employee, in the light of these particular circumstances, had sufficient time to take action to prevent the injury to Abalos when he discovered him in the dangerous position. Also, there is some doubt, and it does not appear to have been established as a matter of law, that Abalos sufficiently appreciated the dangerous position at the time he assumed the risk of working while the pump was operating. Since he was experienced in this type of work and had performed similar duties many times, it is indicated that on this occasion he apparently did not actually realize and appreciate the danger of this particular undertaking. Although Abalos stated that he requested that the motor not be started, he did not make any apparent effort to stay out of the way of the pump, thereby indicating that he may not have fully appreciated and realized the actual danger. Morgan and Phillips both testified that they did not know that Abalos requested that the engine not be started, and Morgan expressed doubt as to whether Abalos realized and appreciated his perilous condition. In view of this, the matter of Abalos’ knowledge and appreciation of the danger raises a fact issue. Further, a determination of these fact issues are related to the ultimate issue of duty on defendant’s part and the applicability of the doctrine of discovered peril. Because of these fact issues, “no duty” has not been established as a matter of law, and the instructed verdict would not be justified.

The appellee contends that the applicable rule is the rule adopted by the Restatement, Second, Torts § 314, which provides:

“Duty to Act for Protection of Others “The fact that the actor realizes or should realize that action on his part is necessary for another’s aid or protection does not of itself impose upon him a duty to take such action.”
“The rule stated in this Section is applicable irrespective of the gravity of the danger to which the other is subjected and the insignificance of the trouble, effort, or expense in giving him aid or protection.”

Comment c under that Section states:

Also, it is significant that the term “actor,” as set out in Restatement, Second, Torts § 3, comment a, used to describe the person whose conduct is in question as a basis for liability, includes one whose conduct consists of failure to act as well as one who does act.

In this connection, appellant refers to comment d of the above cited § 314 of Restatement, Second, Torts, which states in part:

“d. The rule stated in this Section applies only where the peril in which the actor knows that the other is placed is not due to any active force which is under the actor’s control. If a force is within the actor’s control, his failure to control if is treated as though he were actively directing it and not as a breach of duty to take affirmative steps to prevent its continuance (see § 802, Comments a and c).”

Under comment d, it is apparent that Section 314 does not apply if it is factually determined that the party who discovers the plaintiff’s peril is the person who is in charge of the instrumentality that is about to injure the plaintiff. At least a fact issue was raised as to the matter of control of this particular instrumentality at the time of the injury.

Appellant contends that the facts in this case fall within the purview of the authority of Restatement, Second, Torts § 821:

“§ 321. Duty to Act When Prior Conduct is Found to be Dangerous
“(1) If the actor does an act, and subsequently realised or should realize that it has created an unreasonable risk of causing physical harm to another, he is under a duty to exercise reasonable care to prevent the risk from taking effect.
“(2) The rule stated in Subsection (1) applies even though at the time of the act the actor has no reason to believe it will involve such, a risk.” (emphasis added)

It was Morgan who was the actor and discovered, subsequently to starting the engine, that the moving parts of the pump were about to cause injury to the appellant. Under “(2)” of the above rule, it is immaterial whether Morgan realized at the time he started the pump that such action on his part would later result in injury to Abalos.

It is established that appellee’s agent, Morgan, discovered the appellant’s peril and there was a sufficient lapse of time after such discovery to raise a jury issue on the question as to whether Morgan was negligent, under the circumstances, in failing to take some prompt action to prevent Abalos’ injury. The facts in this case which have been previously discussed show that a jury issue exists as to the aspects of the case which related to the ultimate issue of defendant’s duty to aid the appellant, or whether, under these circumstances, he was a mere bystander and under no duty to act. Appellee contends that Morgan was a bystander and under no duty to act because he did nothing to create the danger, while appellant contends that the duty arose when he realized the danger, although it was previously unanticipated that such danger would arise. In determining Morgan’s legal duty, if any, a jury question has been raised as to which of the parties had actual control of the pumping unit at the precise time in question, and whether, under these particular circumstances, a duty had arisen which required Morgan not to be regarded as a bystander but as one who was legally obligated to seek to rescue the appellant from the impending danger. Restatement, Second, Torts § 314, supra. Additionally, it is well established that the questions of Abalos’ contributory negligence or primary negligence of the Ruthco crew are not determinative in this appeal. Montgomery v. Houston Electric Co., 135 Tex. 538, 144 S.W.2d 251 (Tex.Com.App. Sec. B 1940, opinion adopted by Supreme Court); Parks v. Airline Motor Coaches, Inc., supra. The record shows that it was Morgan, an agent of the appellee, who by his connecting the gas line to the engine and starting the engine began a sequence of events that culminated in Abalos’ injury. Significantly, it was Morgan who finally stopped the motor after the accident.

The appellee insists that the doctrine of discovered peril is not applicable to relieve a plaintiff from the bar of volenti. The recent case of Fish v. Ovalle, 512 S.W.2d 718 (Tex.Civ.App.—Houston [1st Dist.] 1974, writ ref’d n. r. e.) involved a situation in which both plaintiff and defendant voluntarily engaged in a dangerous activity, wherein the plaintiff allegedly “requested” the defendant driver of an automobile to hit him with the vehicle while he was standing in front of it, and it was contended that such conduct on plaintiff’s part would preclude the application of the doctrine of discovered peril. The court pointed out that even if the plaintiff had voluntarily placed himself in front of the automobile, the humanitarian doctrine of discovered peril would still be applicable. Further, the court stated:

“Since, after plaintiff invited defendant to participate in the game, the defendant discovered him in a position where injury in all reasonable probability would be inflicted on him unless the defendant exercised ordinary care to prevent the injury, the duty to use such care arose, and that wholly without reference to the character of the plaintiff’s conduct before the discovery. Ford v. Panhandle & Santa Fe Ry. Company, supra.

It appears reasonable that this holding to the effect that the duty arose after the plaintiff discovered the peril, regardless of the defendant’s voluntariness in assuming the apparent risk, and that under such circumstances, the doctrine of discovered peril is applicable, is relevant to a determination of the basic questions in this case.

The record in this case establishes the existence of fact issues bearing on the ultimate question of defendant’s duty toward the plaintiff and the doctrine of discovered peril. Also, it does not appear that it has been established as a matter of law that at the precise time the defendant’s agent became aware of plaintiff’s perilous position, under the circumstances of this case, he had the status of a mere bystander with no duty toward the plaintiff on the occasion in question; therefore, the directed verdict granted cannot be supported.

For the reasons above stated, the judgment of the trial court should be reversed and the cause remanded.

ON MOTIONS FOR REHEARING

REYNOLDS, Justice.

Abalos contends that a conclusion different from the one reached by the majority is dictated by the recent case of Farley v. M. M. Cattle Company, 18 Tex.Sup.Ct.J. 398 (July 9, 1975), which abolished the defense of assumed risk. The brief answer is that this case was tried before the Farley announcement that “. . . henceforth in the trial of all actions based on negligence, volenti non fit injuria — he who consents cannot receive an injury — or, as generally known, voluntary assumption of risk, will no longer be treated as an issue . .” But the more definitive response is that the abolition of the defense does not change Abalos’s initial burden, which we have held he failed to discharge, to show the existence and violation of a duty owed him by defendant before he can establish defendant’s tort liability under the doctrine of discovered peril.

The motion and amended motion for rehearing are overruled.

ELLIS, Chief Justice.

I respectfully dissent to the overruling of the appellant’s amended motion for rehearing on the grounds that, as indicated in my original dissenting opinion dated July 7, 1975, the record establishes the existence of fact issues bearing upon the ultimate question of defendants duty toward the plaintiff and also concerning the applicability of the doctrine of discovered peril under the particular circumstances of this case. It is, therefore, my opinion that the matters relevant to the existence or arising of a duty or breach thereof have not been resolved as a matter of law.


source: Caselaw Access Project

author: BREWSTER, Justice.

license: Public Domain

text:
    ROADRUNNER INVESTMENTS, INC., Appellant, v. TEXAS UTILITIES FUEL COMPANY, Appellee.
    No. 17623.
    Court of Civil Appeals of Texas, Fort Worth.
    July 11, 1975.
    Wilbur T. Knape, Bedford, for appellant.

      Jennings, Montgomery & Dies, Graham and Worsham, Forsythe & Sampels and John P. Pinkerton, Dallas, for appellee.
   OPINION

BREWSTER, Justice.

This is an appeal by the plaintiff, Roadrunner Investments, Inc., from the trial court’s order denying its application for a temporary injunction.

In another case, being No. 12280, which also pends in the Wise County District Court, the defendant here, Texas Utilities Fuel Company, had filed a condemnation suit in which it sought to condemn a natural gas pipeline easement across Roadrunner’s land.

For convenience we will refer herein to plaintiff as Roadrunner and to the defendant as TUFCO.

After TUFCO had filed the condemnation suit Roadrunner responded by filing this separate case against TUFCO in the same Court. It is case No. 12304 in the trial court,, Roadrunner, in its petition in this case, sought a temporary injunction against TUFCO temporarily enjoining it from proceeding and continuing with its condemnation suit and with the hearing before special commissioners which hearing was set before them at 10 A.M. on November 14, 1974. Roadrunner also prayed that upon final trial it be granted a permanent injunction enjoining TUFCO from further proceeding with its condemnation suit and from proceeding with the hearing before the commissioners. It is noted that the provisions of the temporary and permanent injunctions sought herein by Roadrunner are the same.

A hearing was held on the temporary injunction on November 13,1974, and at its conclusion Roadrunner’s application for a temporary injunction was denied by the trial court and this appeal is from that decree.

We must first pass on a motion, filed herein by TUFCO, to dismiss Roadrunner’s appeal. The grounds of the motion are that the appeal is now moot.

We are convinced that this appeal from the order denying Roadrunner’s application for a temporary injunction is now moot and hereby sustain TUFCO’s motion to dismiss the appeal.

When facts have occurred pending an appeal of a case that are not shown by the record that have rendered the appeal moot, such facte can be proved to the appellate court by means of affidavits. Hopkins v. City of Dallas, 106 S.W.2d 783 (Fort Worth Tex.Civ.App., 1937, writ ref.); 4 Tex.Jur.2d Rev., Part 1, Appeal & Error, Sec. 638, and see Rule 406, Texas Rules of Civil Procedure.

By affidavit it has been established that after the decree denying the temporary injunction was rendered, the trial court did on May 23,1975, grant the motion for summary judgment filed in the case by TUFCO and therein rendered judgment denying Roadrunner’s application for the permanent injunction that is above referred to. The fact that summary judgment was heretofore rendered on May 23, 1975, by the trial court denying Roadrunner’s application for the permanent injunction is also admitted by Roadrunner on page 7 of its supplemental brief. This fact is also shown by the docket sheet which is a part of the transcript. At submission time counsel for Roadrunner stated to the court that such a decree had been rendered by the trial court and that he had not had time to study and return for the trial court’s signature the proposed written draft of that judgment that had been submitted to him.

The record is thus made to show that at the time this appeal from the order denying Roadrunner’s application for a temporary injunction was argued and submitted to this Court the merits of the case alleged by Roadrunner in its petition against TUFCO had already been disposed of by the trial court when it rendered the summary judgment denying the permanent injunction that Roadrunner had asked for.

The purpose of the temporary injunction sought herein by Roadrunner was to maintain the status quo until the ease could be heard on its merits. The temporary injunction would only remain in effect until judgment was rendered on the merits of the case. City of Corpus Christi v. Cartwright, 281 S.W.2d 343 (San Antonio Tex.Civ.App., 1955, no writ hist.); Southern Properties v. Carpenter, 21 S.W.2d 372 (Dallas Tex.Civ.App., 1929, writ dism.); and Thomas v. Howell, 258 S.W. 558 (Fort Worth Tex.Civ.App., 1928, no writ hist.).

The question before the Court on this appeal (whether the trial court erred in denying Roadrunner’s application for a temporary injunction) became moot at the time the trial court rendered its decree denying Roadrunner’s application for a permanent injunction. City of Corpus Christi v. Cartwright, supra; Thomas v. Howell, supra.

By affidavits it was further shown that the commissioners’ hearing in the condemnation suit, which hearing Roadrunner sought to enjoin, was scheduled for November 14, 1974; that on November 13, 1974, the trial court heard and denied Roadrunner’s application for the temporary injunction and when this occurred, the commissioners then went ahead and held their hearing that had been scheduled for November 14; on November 18 the decision of these commissioners was filed with the trial judge and the amount of damages they awarded Roadrunner, together with a surety bond of an equal amount and a cost bond, were filed with the clerk of court; TUFCO then took possession of the easement on November 19, 1974, and started construction of the pipeline involved; the construction of the entire natural gas pipeline was thereafter completed on December 28, 1974, and the pipeline has been operational in the transportation of natural gas from January 24, 1975, to the present time.

A case is moot when a judgment therein, for some reason, cannot have any practical legal effect upon a then existing controversy. McNeill v. Hubert, 119 Tex. 18, 23 S.W.2d 331 (1930, op. adopt.) and Stephenson v. State, 515 S.W.2d 382 (Dallas Tex.Civ.App., 1974, writ dism.).

Under the undisputed facts referred to above, if the trial court’s decree was reversed and if the temporary injunction was then granted as prayed for it would have no legal effect whatever on the controversy involved.

The temporary injunction sought by Roadrunner was that TUFCO “be temporarily enjoined from proceeding and continuing with the aforesaid condemnation action and/or proceedings and the hearing before Special Commissioners . . .

The commissioners’ hearing has already been held. Roadrunner’s reason for seeking to enjoin the condemnation proceeding was to prevent it from reaching the stage to where TUFCO, by means of that suit, could get possession of Roadrunner’s land and build its pipeline thereon. A temporary injunction enjoining TUFCO from further proceeding with the condemnation case pri- or to a hearing on the merits of this case could no longer have any practical legal effect on the matter,' because the pipeline is now already in existence. The question of whether or not the pipeline was wrongfully built on Roadrunner’s land could not be determined at a hearing of an application for the temporary injunction.

A somewhat similar situation existed in the case of Continental Pipe Line Co. v. Gandy, 142 S.W.2d 631 (San Antonio Tex.Civ.App., 1940, no writ hist.). There the landowners obtained a temporary injunction prohibiting Continental from constructing, operating, and maintaining a telephone line across Gandy’s land. The injunction was superseded pending appeal and the telephone line was then completed and put into operation pending the appeal. In dismissing the appeal and the cause of action, in so far as it related to the temporary injunction on the grounds that the questions involved were moot, the Court said: “The preliminary question ... of whether appellant shall or shall not construct its telephone line and put it in operation is no longer a live subject of controversy, since those acts have been actually consummated, and are existing facts and this Court may not now, in this proceeding for temporary injunction, say whether those acts were wrongfully committed.”

The things we have referred to other than the fact that Roadrunner’s case has already been disposed of on its merits are additional reasons why we hold that the issues presented by this appeal are now moot. Granting of the temporary injunction sought by Roadrunner would at this time have no practical legal effect on the controversy between the parties.

Other cases that support our holding that the questions presented by this appeal are moot are: Toudouze v. Urban Renewal Agency, 404 S.W.2d 821 (Ban Antonio Tex.Civ.App., 1966, ref., n. r. e.); Johnson v. City of Corpas Christi, 419 S.W.2d 201 (Tex.Sup., 1967); and Corpus Christi Developers v. Chiles, 275 B.W.2d 700 (San Antonio Tex.Civ.App., 1955, no writ hist.).

It is settled that a trial court has a broad discretion in deciding the question of whether or not he should or should not grant a temporary injunction, and on an appeal from a ruling made in that type of a hearing the scope of the appellate review is limited to the narrow question of whether or not the trial court’s ruling was a clear abuse of discretion. Janus Films, Inc. v. City of Fort Worth, 168 Tex. 616, 858 S.W.2d 589 (1962), and Ben Wheeler Ind. Sch. Dist. v. County School Trustees, 414 S.W.2d 477 (Tyler Tex.Civ.App., 1967, ref., n. r. e.).

In the event we are mistaken in holding that the questions presented on this appeal are moot, we would affirm the decree of the trial court on the grounds that the record made at the hearing of the application for a temporary injunction does not show that the trial court abused its discretion in denying Roadrunner’s application for a temporary injunction.

Because the questions presented by this appeal are now moot, the trial court’s order pertaining to the temporary injunction is set aside, and Roadrunner’s case, in so far as it relates to the matter of a temporary injunction, is dismissed at Roadrunner’s costs. See Johnson v. City of Corpus Christi, 419 S.W.2d 201 (Tex.Sup., 1967).


author: MASSEY, Chief Justice.

text:
    CITY OF WICHITA FALLS, Texas, Appellant, v. STATE of Texas ex rel. Richard VOGTSBERGER, Appellee.
    No. 17636.
    Court of Civil Appeals of Texas, Fort Worth.
    July 11, 1975.
    Rehearing Denied Sept. 12, 1975.

      H. P. Hodge, Jr., City Atty., Wichita Falls, for appellant.
    Paul 0. Wylie, County Atty. Archer County, Archer City, and Douthitt & Mitchell, and Frank J. Douthitt, Henrietta, for appellee.
   OPINION

MASSEY, Chief Justice.

The City of Wichita Falls accomplished procedure whereby it purported to annex certain territory lying in Wichita and Archer Counties, all to the southeast of its previously existent corporate limits wholly within Wichita County. There was no validation statute applicable thereto prior to the institution of this suit in Quo Warranto by the State of Texas upon the relation of Richard Vogtsberger. The suit constituted a direct attack upon the validity of the annexation.

Trial was to the court without a jury. Judgment was rendered to the effect that the City’s annexation be set aside and annulled, and the City appealed.

We affirm.

We have concluded that while there was error, nevertheless there were two persisting grounds upon which the judgment should be affirmed. One reason is because, under the state of the record, there was want of requisite notice of the pendency of annexation proceedings. The other is because the City’s Ordinance No. 2756 purported to annex territory which was not (and impliedly was factually found not to have been) “adjacent” to the pre-existent city limits. “Adjacency” would be a necessary requisite for valid annexation.

The points where the territory intended to be annexed touched the pre-existept boundary line of the City consisted in the width of U. S. Highway No. 281 as it entered the City from the south. For our purposes the width may be treated as 125 feet. From said pre-existent boundary line the “finger of land” sought to be annexed “took-off” — with such width as constant— down the highway toward the south, thence into open country to the east, and ending at the west boundary line of a tract of land called the H. & T. C. R.R. Survey, a distance of approximately 3.5 miles from the points of adjacency to the City of Wichita Falls.

One predicate for the judgment by the trial court was the holding among the Conclusions of Law filed that the description of the land to be annexed by Ordinance No. 2756 was insufficient. With this holding we disagree. It is our opinion that by State v. Wofford, 90 Tex. 514, 39 S.W. 921 (1897), and by Lower Nueces River Water Supply Dist. v. Cartwright, 274 S.W.2d 199, 204, 205 (San Antonio Civ.App., 1954, writ ref., n. r. e.) that in a construetion of the subject matter of the ordinance we should treat as certain that which might be made certain, exactly as would be the requirement in the construction of a statute. In a statutory construction it is the duty of a court, where it is possible, to ascertain the intent of the legislative body which has acted and when so ascertained to give effect to the intent; that there is not a requirement for the specificity which is the requirements of deeds. See also the authorities cited in State v. City of Fort Worth, 339 S.W.2d 707, 709 (Fort Worth Civ.App., 1960, writ ref., n. r. e.). We believe that in the present instance the intent of the City in its enactment of Ordinance No. 2756 might be made certain. We therefore sustain the City’s contention.

In comport with what is written in the foregoing paragraph, notice given to the public pursuant to the attempted annexation proceedings would in the ordinary case have been sufficient. There would have been sufficiency of notice in so far as it described the property to be annexed.

However, in the instant ease we have the peculiar situation where the positive showing is by the partial Statement of Facts before us. In other words, it is not made to appear that we have before us on the appeal all that was before the trial court as evidence. And while we have the court’s Conclusions of Law there are no Findings of Fact. At least one of the Conclusions of Law would indicate that denial of due process of the law as provided by our Constitution might lie in the court’s implied fact finding that there was want of adequacy of notice to citizens whose rights would be adversely affected by the annexation, and also to the State whose right-of-way on Highway No. 281 was intended to be annexed.

We know that there were Admissions of Fact by the parties filed upon request made therefor. And the Stipulations of Fact to which the parties agreed were reduced to writing and filed. These, along with the exhibits separately filed, constitute the Statement of Facts on appeal. But the foregoing does not necessarily constitute the whole of the evidentiary matter. Nothing anywhere in the record evidences that it did constitute the whole evidence before the trial court.

The judgment reads, in material part, as follows: “. . . the parties entered their appearance by counsel and the exhibits were introduced and evidence stipulated; thereafter,, the stipulations, including the proof of the exhibits, were reduced to writing and filed in the record herein; attorneys . . . submitted Memorandum or Trial Briefs, . . . after considering all of the competent evidence, exhibits, briefs and argumente of counsel, the Court is of the opinion that judgment should be entered herein for Petitioner; . . . .” So in the judgment where the court speaks of exhibits introduced and evidence stipulated it is left uncertain whether the whole of the evidence or only some of the evidence was stipulated. In such a circumstance, there being nothing elsewhere in the record in clarification, and since presumptions to be made are such as would support and not impair the judgment of the trial court, we consider ourselves obliged to read the judgment as to the effect that “some of the evidence” was stipulated, not that all the evidence was encompassed by the stipulation.

The result is that we must presume that the newspaper of the City of Wichita Falls, in which there was publication of the notice of the intended annexation (the City’s Charter providing merely that there be publication in a newspaper of general circulation published in the City of Wichita Falls), was in the instant case shown by evidence not to have been a publication of general circulation in the territory proposed to be annexed outside the City and in part outside Wichita County — in Archer County lying to the south, the location of property of a number of persons affected, including that of the Relator in the case. The form of our statement is correct because it was the State’s burden to prove the negative and not the City’s burden to prove that the newspaper by which there was publication of notice did have general circulation in the territory annexed. 47 Tex.Jur.2d, p. 587, “Quo Warranto”, Sec. 28, “Burden of proof”.

By provisions of V.A.T.S., Art. 970a, “Municipal Annexation Act”, Sec. 6, “Notice and hearing — annexation proceedings”, the publication of notice must be in a newspaper having general circulation both in the annexing city and also in the territory proposed to be annexed. In this case the City’s notice, published in a paper in the City of Wichita Falls, complied with its Charter provision, but in view of the peculiar state of the record it appears that the notice did not comply with the provisions of statutory law protecting persons in or owning property in the area annexed. There was necessity for compliance with the provisions of both the Charter and the statute. Here, therefore, the judgment must be affirmed upon the theory that there was want of proper notice as provided by Art. 970a relative to territory proposed to be annexed, which want is to be presumed to have been proved. Here the article purports to prescribe the due process of law requisite with reference to notice in annexation cases. The contentions of the City are overruled as applied to its “notice” propositions and also upon its “due process” theory.

We believe and hold that on and prior to the approval and adoption of Ordinance No. 2756, annexation such as attempted was not merely vulnerable to direct attack as in the instant proceeding, but even to collateral attack. It would be a void annexation because of the legal non-adjaeeney of the premises intended to be annexed.

We may take judicial notice that the City is a Home Rule City, and we know that by our legislative enactments it has been granted certain enumerated powers as such. By V.A.T.S., Art. 1175, the power to annex additional territory lying adjacent to its incorporated boundaries was granted to it. Only such powers granted to it by the legislature may it possess and not additional or contradictory powers, for these would be reserved to the State as representative of its citizens. Therefore it was only land lying adjacent to the City’s former boundaries which it had the power to annex.

In 1970, Justice Brewster of this Court made an exhaustive search into the state of the law in the attempt to resolve the question of whether an attempt by a municipality to annex territory was void. Culmination was the conclusion that an ordinance which purported to annex a strip of land 50 feet wide at the point it was adjacent to an existent municipality, and then “took off across country for I2V2 miles and ended up by adjoining onto the limits of the City of Mansfield” was void for want of that adjacency requisite to the exercise of the power of annexation by Art. 1175. City of Arlington v. City of Grand Prairie, 451 S.W.2d 284 (Fort Worth Civ.App., 1970, writ ref., n. r. e.). Therein those authorities which we believe controlling as applied to this case are referred to and relied upon.

It is the exercise of authority by the municipality seeking to effect annexation with which Art. 1175 deals. We reject the argument by the City that the rule of City of Arlington v. City of Grand Prairie should not be applied because all the cases relied upon involved contests between municipalities and did not involve situations where no municipality contested the annexation of territory by another. Furthermore there would not be a material distinction to be made in a case where one municipality contested the validity of annexation attempted by another from a case in which the contest was by the State pursuant to a suit in Quo Warranto.

The City relies on the decision and opinion in May v. City of McKinney, 479 S.W.2d 114 (Dallas Civ.App., 1972, writ ref., n. r. e.). This is a most interesting case where the City of McKinney extended its boundaries by annexing areas consisting of “fingers of land” which were the highways/roadways and rights-of-way thereof leading from existent city limits in all directions away from that city, and for a distance of exactly one mile. The suit was a collateral, and not a direct attack, and it was filed by land owners whose property abutted upon the highway/roadway rights-of-way annexed. None of them had their property taken by the annexation (though their use of their own neighboring land would suffer regulatory burdens pursuant to the extra-territorial jurisdiction of the City following annexation). The State of Texas was not made a party to the suit. The Dallas Court of Civil Appeals held that the City’s annexations were not void so as to be subject to collateral attack. The holding of the court was that the one-mile territorial extensions were contiguous and adjacent to the City’s boundaries as theretofore existent, and, as such, were not void so as to be subject to collateral attack. Such had been the judgment of the trial court in the case, and its judgment was affirmed.

There obviously are hypothetical circumstances where the question of whether a finger or fingers of land sought to be annexed are or are not “adjacent” to pre-exis-tent municipal boundaries would be a question of fact upon determination of which a proper judgment depended. It seems to us that in the City of McKinney case the trial court might have factually concluded, and probably did conclude factually, that there was the requisite “adjacency” entitling the City to annex the fingers of the land there involved. Conversely, in the instant case we have the conclusion of law (which might be treated as having been based upon a finding of fact) that there was not the requisite “adjacency” entitling the City of Wichita Falls to annex the finger of land running into Archer County. Here, if the judgment of the trial court be unsupported as a legal proposition it would nevertheless find support as a one where there had been resolved the fact question upon “adjacency”. The presumed finding was in favor of the State upon evidence justifying the conclusion that the requisite “adjacency” did not exist in this case.

In any event we find nothing in City of McKinney which necessarily conflicts with our decision here.

There were other Ordinances purporting to annex additional tracts of land which are under attack, but it is conceded that if the trial court was correct in its judgment as applied to Ordinance No. 2756 on the ground of want of “adjacency” then such other ordinances and annexations would necessarily be invalid since their validity depended upon proper annexation of territory by Ordinance No. 2756. The City’s contentions as applied to Ordinance No. 2756 having been overruled by such a holding, its contentions of validity of the other ordinances are overruled as a consequence.

It is contended in this case that the trial court erred in holding that there was want of compliance with provisions relative to annexation in the City’s own Charter and that the judgment might be upheld on that ground. We agree that the trial court did err, though that does not alter the necessity to affirm the judgment.

The language of the Charter directs that where enlargement of existent city boundary lines are proposed by án annexation ordinance that the ordinance describe the boundaries of the entire city as it would be enlarged in the event the proposed annexation be accomplished, etc. However, there is furthermore provided by the ordinance “as an alternative method of enlarging and extending the corporate limits” that the board of aldermen of the city shall have the power by ordinance to provide for the alteration and extension of the City’s boundary limits and that upon conformity with certain rules relative to notice and hearing (not in question for these purposes) the boundary limits of the City shall thereafter be fixed as designated in the ordinance.

By the rales of statutory construction it is our holding that such alternative method authorized the City to annex additional territory in the same general manner as customarily used by other municipalities, i. e., by ordinance describing only the property to be annexed without necessity to additionally describe the boundaries of the entire City following accomplishment of the proposed annexation. The part of the charter requiring that an annexation ordinance describe the entire City as enlarged by its adoption is not spelled out as matter unnecessary to be made a part thereof, but we deem such to be necessarily implied by the “alternative method” prescribed. Therefore, the contention of the City is sustained.

Nevertheless, for other reasons stated, our sustaining the contention above considered does not entitle the City to have reversal.

Judgment is affirmed.

March 28,1975

OPINION ON MOTION FOR REHEARING OF MOTION TO EXTEND TIME FOR FILING STATEMENT OF FACTS

Our opinion filed February 21,1975, relative to extension of time within which to file statement of facts in this case, is withdrawn with the following substituted therefor:

The motion under scrutiny is labeled “Motion to Extend Time for Filing Statement of Facts”. Immediately, it would appear, the duty of this Appellate Court would be to test its sufficiency under the provisions of T.R.C.P. 386, “Time to File Transcript and Statement of Facts”, or, this being a case in quo warranto, T.R.C.P. 384, “Appeal in Quo Warranto Proceedings”.

Under Rule 386 this Court recently had occasion to examine the state of the law relative to what is necessary if one might be found by a Court of Civil Appeals to be entitled to an extension of time provided by the Rule; and, furthermore, the occasions when the Court of Civil Appeals would not be entitled to make any fact finding upon the existence of good cause for delay because of failure to raise fact issues thereupon, but would be committing reversible error by granting extensions of time within which to file some part of the appellate record. See opinion of this Court in Home Fund, Inc. v. Garland, 520 S.W.2d 939 delivered February 21, 1975. There would be like application of Rule 384.

If Rule 384 or Rule 386 applied in the instant case there would be an absence of entitlement to grant any extension of time to file the instrament denominated “Statement of Facts” because of the failure to raise a fact issue upon which we would be privileged to find good cause for delay. By the examination of the record as exhibited by the Transcript, which was timely filed, we have concluded that what appellant desires to have admitted is something other than the Statement of Facts contemplated by Rules 384 and 386.

T.R.C.P. 378, “Agreed Statement”, provides that where the parties have agreed upon a statement of the facts proved in the trial court, etc., it shall be copied into the Transcript in lieu of the proceedings (as a substitute for Statement of Facts). We have found in the Transcript an instrument denominated “Stipulation of Facts”, reduced to writing and signed by the parties as contemplated by Rule 378.

In view of the “Stipulation of Facts” embodied in the Transcript the appellant had actually timely filed the Statement of Facts contemplated by Rules 384 and 886.

Thus it is not the Statement of Facts contemplated by Rules 384 and 386 that is the subject of the motion of appellant but a “Supplement” to the Statement of Facts already on file.

T.R.C.P. 428, “Amendment: Record” is the Rule which has application under these circumstances. Thereunder is provided that if anything material to either party is omitted from the Transcript or Statement of Facts, the parties by stipulation, or the trial court or the appellate court, may direct a supplemental record to be certified and transmitted supplying such omitted matter.

Application of Rule 428 is especially apparent when it is observed that the instrument which appellant desires leave to file consists solely of exhibits. References to these exhibits are made in the parties’ “Stipulation of Facts” which amounts to the Statement of Facts contemplated by Rules 384 and 386.

Thus, as applied to supplementation of the record already existent, i. e. the Statement of Facts already on file, a Court of Civil Appeals is at liberty to permit the instrument to be filed without concern to the question of good cause (at least the good cause contemplated by Rules 384 and 386).

Since we consider the exhibits material we grant appellant’s motion and direct the clerk to file the instrument desired to be filed as the Supplemental Statement of Facts under authority of Rule 428.


author: SPURLOCK, Justice.

text:
    LIFE INSURANCE COMPANY OF NORTH AMERICA, Appellant, v. Joyce SPRADLIN, Appellee.
    No. 17644.
    Court of Civil Appeals of Texas, Fort Worth.
    July 11, 1975.
    Rehearing Denied Sept. 12, 1975.

      Thompson, Knight, Simmons & Bullion, and David S. Kidder and William T. Han-kinson, Dallas, for appellant.
    Dalton C. Gandy, Fort Worth, for appel-lee.
   OPINION

SPURLOCK, Justice.

This is a suit brought by Joyce Spradlin, appellee, to recover upon an accident insurance policy issued by the defendant, appellant, Life Insurance Company of North America. Joyce Spradlin will be referred to as the beneficiary and Life Insurance Company of North America will be referred to as LINA. The policy was in effect at the time her husband died in an airplane crash. LINA refused payment on the ground that at the time of his death, Mr. Spradlin was engaged in an activity excluded under the policy, in that he was flying in an airplane owned or operated by a person insured under the same policy.

The insurance policy insured those who may be exposed during travel and sojourn on the business of the policy holder, provided such travel-is to a point or points located outside the city of permanent assignment. The policy contained various exclusions. The beneficiary asserted that the deceased was covered by the terms of the policy and was not excluded. She further contended that the policy was ambiguous.

The beneficiary and LINA each filed a motion for summary judgment in the court below. Their motions were based upon the pleadings, the parties’ answers to requests for admissions of fact, the deposition of Donald V. Long, and the subject accident insurance policy.

The trial court granted beneficiary’s motion for summary judgment, on the question of liability only and overruled defendant’s motion for summary judgment. Thereafter, the parties entered into a stipulation which in effect resolved all the issues in the lawsuit except the interpretation of the policy. This stipulation provided for attorney’s fees and penalty in the event that the beneficiary should ultimately prevail. Thereafter, the court rendered and signed the final judgment to the effect that the beneficiary should recover the principal sum of the policy in the amount of $150,000 plus statutory penalty of $18,000, plus attorney’s fees in the amount of $15,000 being the amount stipulated to by the parties.

The parties are in agreement as to the factual background of this case. This accident insurance policy was issued to Leggett & Platt, Inc. Thereafter, the policy was amended by a rider to include The Dalpak Corporation, a company wholly owned by Leggett & Platt. At the time of the fatal airplane crash, Donald V. Long was president of The Dalpak Corporation and Donald Spradlin, the deceased, was manager of that corporation.

LINA, in its brief, summarizes the deposition testimony as follows:

“Donald Y. Long, an insured, owned the aircraft in which Donald Spradlin was riding on the day of his death. On November 6,1973, the day of the crash, Donald Sprad-lin was traveling in Mr. Long’s aircraft in pursuit of the business of The Dalpak Corporation. At the time of the crash, the plane was piloted by Mr. Long’s personal pilot. Mr. Long, the president of The Dal-pak Corporation, customarily charged The Dalpak Corporation for use of the plane on company business by submitting an invoice at the close of the business journey. He did not charge the corporation for the use of the plane on this occasion due to the crash.”

There is no controversy over the fact that the airplane crash occurred while the deceased was on a business trip for his employer; he was enroute to his home or place of employment at the time of the crash; he was not engaged in commutation travel and was not a pilot or crew member of the plane; the plane was operated by a certified pilot, had a current unrestricted airworthiness certificate, and was not being used for fire fighting, pipeline inspection, power line inspection, aerial photography or exploration.

LINA assigned three points of error. By the first two points of error LINA asserts that the trial court erred in concluding that the accident insurance policy in question is ambiguous because the policy plainly excludes recovery when the insured is flying in a plane, owned or operated by an insured; and that the trial court erred in concluding that the accident insurance policy is ambiguous because no reasonable interpretation favors Mrs. Spradlin’s recovery. By its third point of error LINA asserts that the trial court erred in granting a summary judgment without making an attempt to resolve the ambiguity by considering extrinsic evidence.

We overrule these points of error and affirm the trial court’s judgment.

The dispute in this cause of action ultimately relates to the construction of the following section of the insurance policy which is contained in “SCHEDULE II DESCRIPTION OF HAZARDS”, as follows:

“The hazards against which insurance is granted under this policy are (subject to the conditions, limitations and exclusions of the Policy) All those to which an Insured may be exposed during travel and sojourn on the business of the Policyholder, provided such travel is to a point or points located outside the city of permanent assignment. The following shall specifically qualify the above:

“(a) Coverage begins at the actual start of an anticipated trip whether it be from an insured’s place of employment, Ms home, or other location. Coverage terminates upon his return to his home or place of employment, whichever shall first occur;

“(b) Commutation travel is excluded from coverage;

“(c) With respect to flying in aircraft, coverage shall not apply except while riding as a passenger, and not as pilot or crew member, on any transport aircraft operated by the Military Air Transport Service (MATS) of the United States of America or by the similar military air transport service of any other country; or on any civil aircraft, except one owned or operated by an Insured, a member of Ms household or the Policyholder, provided such covered aircraft (1) is operated by a properly certificated pilot, (2) has a current unrestricted airworthiness certificate, and (3) is not being used for fire fighting, pipeline inspection, power line inspection, aerial photography or exploration.”

The question of whether an ambiguity exists in the language of a contract is a law question. Melton v. Ranger Insurance Company, 515 S.W.2d 871 (Fort Worth, Tex., Civ.App., 1974, ref., n. r. e.).

Exceptions and words of limitation in the nature of an exception are strictly construed against the insurer, especially if they are of uncertain import or reasonably susceptible to double construction. Providence Washington Ins. Co. v. Proffitt, 150 Tex. 207, 239 S.W.2d 379 (1951); Continental Cas. Co. v. Warren, 152 Tex. 164, 254 S.W.2d 762 (Tex.Sup., 1953). An insurance contract will be construed strictly against the insurer and liberally in favor of the insured, as applied to all provisions relating to a forfeiture of the rights of the assured and to any language in the policy regarding exceptions, warranties, and conditions, and, if said language is not clear, and ⅛ ambigúous and uncertain, any doubt as to the meaning thereof will be resolved against the insurer. American Fidelity & Casualty Co. v. Williams, 84 S.W.2d 396 (Amarillo Tex.Civ.App., 1930, writ ref.).

Careful consideration of the rules mentioned in the preceding cases, as applied to the facts of this case, leads us to the conclusion that the trial court’s judgment with respect to points 1 and 2 is correct.

Similar rules of construction were used to construe this same clause in the case of Iowa-Des Moines Nat. Bank v. Insurance Company of North America, 459 F.2d 650 (8th Cir., 1972). In that case LINA contended that there was only one reasonable interpretation of the policy in question, to-wit: that coverage is not provided for pilots operating company owned planes. The court disagreed and stated as follows:

“. . . The plain meaning of the clause in question is not only confusing to a reasonable person standing in the shoes of the insured, but the language is admittedly confusing to the insurer as well. The syntax of the sentence structure is so befuddled that any number of meanings could be read into it. We find as one reasonable interpretation, that the passengers are covered on any aircraft; that pilots or crew members are not covered ‘on any transport aircraft operated by the Military Air Transport Service (MATS) of the United States of America or by the similar military air transport service of any other country; or on any civil aircraft, except one owned or operated by an insured. . .

“We do not find this construction to be unnecessarily strained. We agree that this is not the only interpretation and that the insurer’s interpretation is a reasonable one as well. . . .” (Emphasis ours.)

The court further held (at p. 656): “. where two reasonable interpretations exist, the one that will sustain the claim and cover the loss will be adopted over the interpretation which will defeat recovery. (Citing authorities.)” Bee also Aeroline Flight Service v. Insurance Company of North America, 257 Iowa 409, 133 N.W.2d 80, 85 (1965).

We agree with that court’s analysis of this clause and the conclusion that it is susceptible of more than one interpretation, one of which favors the insured. This is an “exception”, “exemption”, or “exclusion” clause and under the applicable rules we find that the trial court did not err in interpreting the policy as affording coverage or concluding that the loss was not within an exception or exclusion of coverage. See also the following: Goodson v. American Home Assurance Company, 251 F.Supp. 125 (U.S.Dist.Ct., Eastern Dist., Tennessee, 1966); Southwestern Life Insurance Company v. Rowsey, 514 S.W.2d 802 (Austin Tex.Civ.App., 1974, ref., n. r. e.); United States Fidelity & G. Co. v. Bimco Iron & M. Corp., 464 S.W.2d 353 (Tex.Sup., 1971); Continental Cas. Co. v. Warren, supra.

As mentioned, the third point relates to alleged error by the trial court in granting summary judgment without attempting to resolve the ambiguity by considering extrinsic evidence. Prior to the summary judgment hearing LINA was placed on notice by the beneficiary’s pleadings that she contended that the policy was ambiguous. LINA offered no summary judgment evidence in the nature of extrinsic evidence calculated to assist the court in construing the terms of the policy. The learned trial court rendered judgment based upon the record, including the pleadings, depositions, admissions, a portion of the insurance policy, and the stipulations. The beneficiary asserts that for this reason LINA is bound by the record made in the trial court.

The general rule applicable to the facts in this case is stated in 13 Tex.Jur.2d, Sec. 110, p. 263-4 (1960 Ed.), “Construction of Contracts — Function of court and jury”: “If there is no ambiguity whatever in a written contract, its construction then becomes a question of law for the trial court only. This principle also obtains where, though there is doubt as to the meaning of a written contract, the ambiguity arises solely from the language used in the agreement and not from any extrinsic matters.”

In support of its third point of error LINA relies as authority upon Ruby v. Cambridge Mutual Fire Insurance Company, 358 S.W.2d 943 (Dallas Tex.Civ.App., 1962, no writ hist.). In that case an insurance policy was issued covering the dwelling. The question arose as to whether or not a wall to wall carpet was a part of the dwelling or was personalty. Here, obviously, it was proper to admit evidence to determine this fact issue.

There are many cases holding that extrinsic evidence is admissible to determine whether or not an item is covered or excluded under the terms of the policy. Many of these cases involve technical terms used between merchants, custom and usage, whether or not a person was in fact a passenger or a crew member of plane, and other fact situations of similar import. None of these exceptions apply in the case at bar.

LINA calls to the court’s attention that in the Iowa-Des Moines Nat. Bank v. Insurance Company of North America, supra, that the court submitted to the jury questions involving the ambiguity contained in the policy. Even in that case it was probably a question of law to be determined by the court. That court did not state that a fact issue was presented. It is apparent that the trial court out of an abundance of precaution submitted the issues to the jury even though it was a law question. The court concludes its opinion as follows: “The jury resolved the question of intent here. The court was relieved of the problem (Emphasis ours.)

LINA’s point of error is controlled by the principle of law announced in Continental Cas. Co. v. Warren, supra, in which that court had before it the construction of a similar clause in an aviation life insurance policy. That court declined to pass on any fact question with regard to an ambiguity in the policy because of the long established rules concerning the construction of policies of this type. That court stated:

“But for the fact that insurance policies are governed by the special rule of construction, which is a familiar part of our jurisprudence, we might, indeed, hold either that the interpretation against liability of the insurer should prevail or that, the policy being ambiguous, there is a fact issue as to what was intended. Yet the rule, of course, applies, and under it the insurer may not escape liability merely because his or its interpretation should appear to us a more likely reflection of the intent of the parties than the interpretation urged by the insured. The latter has to be no more than one which is not itself unreasonable. Lloyds Casualty Insurer v. McCrary, 149 Tex. 172, 179, 229 S.W.2d 605, 609. A related or subsidiary rule is ‘that exceptions and words of limitation will be strictly construed against the insurer.’ Providence Washington Ins. Co. v. Proffitt, 150 Tex. 207, 239 S.W.2d 379, 381. For all the particular considerations reasonably indicating that the pilot is not covered, there are yet others making it not unreasonable to say that he is, and that the insurer is therefore liable.” (Emphasis ours.)

Under the facts in this case it was the duty of the court to construe the meaning of the contract under the principles here discussed without the aid of extrinsic evidence.

We overrule this point.

The judgment is affirmed.


author: SHANNON, Justice.

text:
    TEXACO INC., Appellant, v. Robert S. CALVERT, Comptroller of Public Accounts, et al., Appellees.
    No. 12273.
    Court of Civil Appeals of Texas, Austin.
    July 16, 1975.
    Rehearing Denied Sept. 10, 1975.
    J. W. Bullion, Buford P. Berry, Emily A. Parker, Thompson, Knight, Simmons & Bullion, Dallas, for appellant.
    John L. Hill, Atty. Gen., Rick Harrison, Gordon C. Cass, Asst. Attys. Gen., Austin, for appellees.
   SHANNON, Justice.

This appeal concerns Tex. Tax.-Gen.Ann. Art. 12.01 et seq., commonly called the “Franchise Tax.” More specifically, the question involves the application for an alternative “allocation formula” by which the franchise tax of a corporation is measured.

Appellant, Texaco Inc., sued the Comptroller of Public Accounts in the district court of Travis County for a refund of $2,474,266.00 representing franchise taxes paid under protest for the year beginning May 1, 1971, and ending* April 30, 1972. The basis for suit was that appellant had lodged a petition with the Comptroller, pursuant to Tex. Tax.-6en.Ann. Art. 12.02(2), requesting the application of an alternative allocation percentage in calculating its franchise tax. The Comptroller denied the application for an alternative allocation formula, and appellant sued the Comptroller challenging that order of denial. Upon trial to the court, judgment was entered that appellant take nothing. We will affirm that judgment.

Appellant is a Delaware corporation with a valid permit to do business in Texas. In Texas and in other states appellant conducts a fully integrated oil and gas business. It also owns several subsidiary corporations and affiliated companies within the United States which are in the pipeline, chemical, or some other aspect of the oil and gas business. All of such subsidiary corporations or affiliated companies are legally constituted and separate corporate entities. Operations outside of the United States are handled altogether through subsidiary corporations or affiliated companies.

Appellant has so structured its business operation that the. only business receipts it obtains from the subsidiary corporations or affiliated companies, wherever located, are dividends and interest. The dividends and interest represent the net amount earned by the subsidiaries or affiliates after allowance is made for cost of goods sold and operating and administrative expenses. Appellant’s gross receipts from domestic activities are derived from the employment of operating assets and are predominantly comprised of the gross amount received from sales of oil, gas, and other petroleum products.

Tex. Tax.-Gen.Ann. Art. 12.01 levies the franchise tax. Article 12.01(1) provides that every domestic and foreign corporation chartered or authorized to do business in Texas shall pay an annual franchise tax computed upon the basis of whichever of three methods set out in subsections (a), (b), or (c) will yield the greatest tax. Subsection (a)(i) is the “basic tax.” The basic tax places a tax of three dollars and twenty-five cents per one thousand dollars applied to that portion of the sum of the stated capital, surplus and undivided profits of the corporation which is “allocable to Texas” in accordance with Art. 12.02. In addition to the tax due under that subsection, subsection (a)(ii) levied upon all corporations paying a franchise tax under subsection (1) for the privilege of doing business in the corporate form an additional tax for the year May 1, 1970 to April 30, 1971 an additional tax of one dollar and fifty cents per one thousand dollars “. . . applied to that portion of taxable debt allocable to Texas.”

Art. 12.02(l)(a) sets out the measurement of the tax or the “allocation” formula:

“(l)(a) Each corporation liable for payment of a franchise tax shall determine the portion of its entire taxable capital taxable by the State of Texas by multiplying same by an allocation percentage v/hich shall be the percentage relationship which the gross receipts from its business done in Texas bear to the total gross receipts of the corporation from its entire business.”

Art. 12.02(l)(b) and (d) sets forth the statutory definition of gross receipts to be employed in the allocation formula.

“(b) For the purpose of this Article, the term ‘gross receipts from its business done in Texas’ shall include:
“(i) Sales of tangible personal property when the property is delivered or shipped to a purchaser within this State, regardless of the F.O.B. point or other conditions of the sale, reduced by the deduction, if applicable, allowable under Subsection (c) of this Section (1);
“(ii) Services performed within Texas;
“(in) Rentals from property situated, and royalties from the use of patents or copyrights, within Texas, and
“(iv) All other business receipts within Texas.”
* ⅝****
“(d) For the purpose of this Article, the term ‘total gross receipts of the corporation from its entire business’ shall include all of the proceeds of all sales of the corporation's tangible personal property, all receipts from services, all rentals, all royalties and all other business receipts, whether within or outside of Texas. Provided, however, that, as to the sale of investments and capital assets, the term ‘total gross receipts of the corporation from its entire business’ shall include only the net gain from such sales.”

The refusal of the Comptroller to permit appellant to adopt alternate methods of allocation pursuant to the provisions of Art. 12.02(2) is the foundation of appellant’s complaint in district court and in this Court. Art. 12.02(2) provides as follows:

“(2) If the allocation and apportionment provisions of Section (1) of this Article do not fairly represent the extent of the taxpayer’s business activity in Texas, the taxpayer may petition for and the Comptroller may permit, in respect to all or any part of the taxpayer’s business activity, if reasonable:
“(a) separate accounting;
“(b) the inclusion of one or more additional factors which will fairly represent the taxpayer’s business activity in Texas; or
“(c) the employment of any other method to effectuate an equitable allocation and apportionment of the taxpayer’s capital.”

The “allocation formula,” set out in Art. 12.02(l)(a), is the method used by the Comptroller in the measurement of the franchise tax. Reduced to a mathematical equation the “allocation formula” is as follows:

GROSSi. RECEIPTS IN TEXAS ALLOCATION GROSS RECEIPTS OF PERCENTAGE x ENTIRE BUSINESS ENTIRE CAPITAL TAX TAXABLE = TAXABLE X RVyF = TAX CAPITAL BY TEXAS

At all levels of the proceedings appellant has consistently claimed in the terms of Art. 12.02(2) that the allocation formula, as applied to it, does not “fairly represent the extent of its business activity in Texas.” Appellant says that this is so whether it is considered to be a domestic operating company which receives only dividends and interest from its investments in its subsidiaries and affiliates, or whether it is considered to be an integrated operation which conducts its business activities directly as Texaco Inc. and indirectly through its foreign subsidiaries and affiliates.

To remedy the claimed unfairness appellant petitioned the Comptroller for permission to use an alternative allocation formula or, alternatively for permission to file a consolidated report. As we understand, appellant’s alternative allocation formula would involve a separate accounting whereby those assets representing investment capital employed or controlled and managed outside of Texas would be deducted from taxable capital prior to the computation of the franchise tax. The capital-remaining would be apportioned under Art. 12.02(1). Another method proposed by appellant was permission to file on a consolidated basis wherein the gross receipts of appellant’s subsidiaries and affiliates would be included in the gross receipts of appellant and that the allocation percentage thus attained would be applied against the entire combined capital of appellant and its subsidiaries and affiliates. One more alternative method pressed by appellant was the use of “constructive gross receipts.” Under that method the gross receipts which give rise to dividends would be reconstructed or as a witness said “estimated” and would be in-eluded with the other gross receipts of appellant for the purpose of allocation under Art. 12.02(1). Under any of the proposed alternative methods of allocation, as we understand, the denominator of the fraction in the allocation formula would be increased, thereby decreasing the allocation percentage and substantially increasing the tax savings to appellant. The refusal of the Comptroller to permit appellant to adopt one of the alternative methods of allocation pursuant to the provisions of Art. 12.02(2) is the foundation of appellant’s complaint.

The record was largely stipulated. After judgment and upon request the court filed findings of fact and conclusions of law. The court concluded, among other things, that the franchise tax is a privilege tax levied, on appellant for the right to do business in Texas in the corporate form, and the tax so levied is constitutional. The receipts from appellant’s investments in subsidiary or affiliated corporations in the form of dividends or interest are gross receipts of appellant within the meaning of Art. 12.-02(1), and the inclusion of those receipts in the allocation formula designated “total gross receipts of the corporation from its entire business” does not amount to a taxation of the extraterritorial values and activities. Appellant is not authorised to utilize the gross receipts of its subsidiary or affiliated corporations in the compilation of alternative formulae for relief because such gross receipts are not receipts of appellant but instead are the receipts of the said subsidiaries or affiliates which are separate, legally constituted corporate entities. The court concluded further that appellant failed to prove by “clear and competent” evidence that the allocation and apportionment provisions of Art. 12.02(1) did not fairly represent the extent of appellant’s business activities in Texas for the period in question. Finally, the court concluded that the alternative methods of computing the franchise tax requested by appellant did not reasonably represent the extent of appellant’s business activity in Texas.

Appellant attacks the judgment by five points of error: (1) the court erred in finding that appellant failed to prove by clear and competent evidence that the allocation and apportionment provision, Art. 12.-02(l)(a), as applied to appellant, did not fairly represent the extent of its business activities in Texas for the year in question, (2) the court erred in finding the Comptroller afforded appellant a full and comprehensive hearing on its petition for alternative allocation because the Comptroller and the court failed to apply correctly the statutory standards in considering the petition, (8) the court erred in finding that the alternative methods of computing franchise taxes requested by appellant did not reasonably represent the extent of Texaco’s business 'activity in Texas, (4) the court erred in finding that appellant is not authorized its consolidated financial statement in the compilation of the allocation percentage, and (5) the court erred in finding that the allocation and apportionment provisions of Art. 12.02(l)(a) as applied to appellant, did not result in the taxation of extraterritorial values and activities of appellant by Texas in violation of the Constitution of the United States.

The franchise tax does not burden any specific asset of the corporation, but instead that tax is a payment for the privilege of transacting business within Texas. The State is empowered to levy such a charge against domestic or foreign corporations for the opportunity to transact such business. Ford Motor Co. v. Beauchamp, 308 U.S. 331, 60 S.Ct. 273, 84 L.Ed. 304 (1989). The Texas gross receipts formula was held to be constitutional in Ford Motor Co. v. Beauchamp, supra.

Before the Comptroller is called upon to consider alternative allocation for-mulae, pursuant to the terms of Art. 12.-02(2), the taxpayer has the burden to demonstrate that the allocation and apportionment provisions of Section (1) do not fairly represent the extent of the taxpayer’s business activity in Texas. If the taxpayer successfully discharges that burden, then the Comptroller may permit other allocation methods if reasonable. The Comptroller is not required to grant the taxpayer relief simply because alternative formulae, which produce a lesser tax, are proposed. The Comptroller’s grant of relief to the taxpayer is permissive and is predicated upon a showing that the proposed alternate formulae are reasonable.

We are in general agreement with the trial court that the appellant failed to show that the allocation and apportionment provisions of Art. 12.02(1) did not fairly represent the extent of appellant’s business activities in Texas for the period in question. But assuming that appellant made that showing, we are of the opinion that the Comptroller did not abuse his discretion in failing to adopt one of the alternative for-mulae proposed by appellant. Appellant’s chief complaint is the inclusion of the dividends and interest of its subsidiaries in the denominator of the allocation formula without the inclusion of the gross receipts of those subsidiaries. The inclusion of the gross receipts of the subsidiaries wound increase the denominator, would thereby lower the percentage of business done in Texas and lower, of course, the amount of franchise tax due.

The alleged unfairness to appellant came about by appellant’s decision in times past to operate in part through separate subsidiary corporations and affiliated companies rather than through divisions of the same corporation. As a result, dividends and interest constitute all of the “business receipts” which appellant receives from its subsidiaries. Art. 12.02(l)(d) provides that the term “ ‘total gross receipts of the corporation from its entire business’ shall include all of the proceeds of all sales and all other business receipts, whether within or outside of Texas.” (Emphasis added) As previously observed, all of the subsidiary corporations or affiliated companies are legally constituted and separate corporate entities. For purposes of computing the franchise tax, dividends and interest, whether from sources within or without Texas can properly be considered under Art. 12.02(l)(d) as “other business receipts.”

Because the subsidiary corporations or affiliated companies are separate corporate entities, their gross receipts may not be included in those receipts of appellant. To do so, would ignore the fact of their separate corporate existence.

Moreover, Art. 12.02(l)(a) begins: “Each corporation liable for payment of a franchise tax shall determine the portion of its entire taxable capital . . .” (Emphasis added) That language plainly requires that the gross receipts formula applies to only one corporation at a time.

Appellant made the decision with respect to the formulation of its corporate structure. Appellant’s choice was to incorporate as a parent corporation with subsidiaries as separate corporate entities, instead of as a parent corporation with divisions, joint ventures or partnerships. Appellant knew that in the parent corporation-subsidiary corporation arrangement, the gross receipts of the subsidiaries could not be used under Art. 12.02(1), but instead only the dividends and interest from those subsidiary corporations.

The judgment is affirmed.

Affirmed.

      . Although appellant’s fifth point of error is that the application to appellant of the allocation and apportionment formula of Art. 12.02(l)(a) was “in violation of the Constitution of the United States,” that point was not seriously urged in the trial court or this Court. For example, counsel for appellant told the trial court, “We [appellant] don’t contend that the Texas statute is necessarily unconstitutional.”