author: HUMPHREYS, Justice.

text:
    REPUBLIC NATIONAL LIFE INSURANCE COMPANY, Appellant, v. UNITED STATES FIRE INSURANCE COMPANY, Appellee.
    No. 19852.
    Court of Civil Appeals of Texas, Dallas.
    Sept. 14, 1979.
    Rehearing Denied Oct. 30, 1979.

      John J. Irvin, Dallas, for appellant.
    James A. Williams, Milam Randolph Pha-ro, Bailey, Williams, Westfall, Lee & Fowler, Dallas, for appellee.
    Before GUITTARD, C. J., and ROBERTSON and HUMPHREYS, JJ.
   HUMPHREYS, Justice.

This is an action on a fidelity bond issued by appellee, United States Fire Insurance Company, insuring appellant, Republic National Life Insurance Company, against losses due to fraudulent acts of its employees. After discovery that one of Republic’s employees had forged a number of checks and had subsequently altered the amounts of some of them, Republic filed a proof of loss, showing a loss of $32,924.84, but actually claiming only $13,692.84, which U. S. Fire paid. Republic subsequently claimed an additional $19,232.00 of this loss, and when U. S. Fire refused further payment, Republic brought this suit. The trial court denied Republic’s latter claim and held: (1) the claim was abandoned; (2) Republic released U. S. Fire from liability; (3) the proof of loss was not filed according to the terms of the policy; (4) this action was not timely under the policy; and (5) Republic destroyed U. S. Fire’s subrogation rights against the California banks which cashed them and the Texas bank on which they were drawn by failing to pursue its remedies against them. Republic argues that these five conclusions were error, and we agree with Republic and reverse. We remand, however, to determine if Republic notified its drawee bank of the loss within one year.

The following facts were stipulated by the parties. U. S. Fire issued a bond to Republic in 1961 insuring against losses due to dishonest and fraudulent acts of Republic’s employees. In 1973, Republic’s employee Lenore Roberson issued checks drawn on its Texas bank account for fraudulent insurance claims. Later the amounts of some of these checks were altered. The checks were deposited in California banks, which paid most of them on the endorsements forged by the employee or others. The Texas drawee bank also paid most of these items. Republic filed an initial proof of loss with U. S. Fire dated October 31, 1973, for $12,948.71. This document stated that it was “a partial proof of loss” and that “efforts are in progress to collect the altered amounts over the original amount from banks accepting these items and these efforts have been commenced without waiver of the right to recovery under the bond.” On November 27, 1973, Republic filed a supplemental proof of loss showing the total loss to be $32,924.84, but limiting its claim against U. S. Fire to $13,692.84, the original face amount of the checks. Republic sent a letter with this supplemental proof of loss stating that it was the “final” proof of loss.

In response to this supplemental proof of loss, U. S. Fire paid Republic $13,255.59 and appellant signed a release which recites, “IN CONSIDERATION of the sum of . . ($13,255.59), . . Republic National Life Insurance Company does hereby forever release and discharge Industrial Indemnity Company [which had acquired U. S. Fire by merger] from and against any demand, claim, cause . . . whatsoever under [this policy].” The $13,255.59 check recited, “In full and final settlement, fidelity loss, principal Lenore Robertson.” No objection was made to the language in the release or in the check. About this time Republic informed U. S. Fire that it would continue in its attempt to recover from the banks the increases in the altered cheeks over the original amounts. Such attempt against the drawee bank was unsuccessful, but Republic took no legal action against either the drawee bank or the California depository banks. In January 1976, more than one year after Republic had discovered the forgeries and alterations, it filed another claim with U. S. Fire for $19,232, representing the increase in the amounts of the altered checks over the amounts for which they were originally drawn. U. S. Fire refused payment, and Republic brought this action. The trial court granted judgment for U. S. Fire.

We consider first Republic’s argument that the court erred in holding that Republic’s filing of the supplemental proof of loss for $13,692.84 abandoned all of Republic’s other claims. Abandonment is a question of intent. It is defined as the voluntary relinquishment of a known right or conduct inconsistent with an intent to assert that right. It is a question of fact to be established by clear and convincing evidence. Shosid v. Hughes Tool Co., 258 S.W.2d 945, 948 (Tex.Civ.App.—Dallas 1953, writ ref’d n. r. e.); City of Anson v. Arnett, 250 S.W.2d 450, 454 (Tex.Civ.App.—Eastland 1952, writ ref’d n. r. e.; Jordan Drilling Co. v. Starr, 232 S.W.2d 149, 159 (Tex.Civ.App.—El Paso .1949, writ ref’d n. r. e.). The proof of loss showed the total amount of loss to be $32,924.84, which covered this $19,232 claim as well as the initial claim of $13,692.84. Republic’s initial proof of loss stated that efforts to collect from the banks “have been commenced without waiver of the right to recovery under the bond.” Republic did not assert at any time that it would not pursue a claim for the entire loss from U. S. Fire. Neither Republic’s claim for the smaller amount in the supplemental proof of loss nor its statement that it was trying to recover the remainder of the loss from the banks is evidence of probative force of an intent to abandon the claim for the remainder from U. S. Fire.

Republic’s second point concerns the release which it executed after accepting the $13,255.59 check from U. S. Fire. This purported release of all claims under the policy for losses due to this employee cannot cover the $19,232 claim now being asserted because there was no consideration for the release of that claim. U. S. Fire did not dispute owing $13,255.59 to Republic under its policy. Consequently, payment of that amount cannot serve as consideration for a release of another claim under the bond. Potter v. Reinhart, 337 S.W.2d 174, 178 (Tex.Civ.App.—Waco 1960, writ ref’d n. r. e.); Woodman of World Life Insurance Society v. Smauley, 153 S.W.2d 608, 612 (Tex.Civ.App.—Eastland 1941, no writ).

U. S. Fire contends that consideration existed to release this claim because, in reliance on Republic’s statement that it would seek recovery from the banks for the raised amounts of the checks, U. S. Fire lost its subrogation rights to sue the banks. It argues that the statute of limitations for Republic’s suit against the California banks and its claim against the drawee bank was one year, and that since Republic failed to sue the banks within one year, U. S. Fire cannot now successfully bring such a suit. Even if we hold that limitation has run, Republic’s failure to bring such a suit would not constitute consideration for the release. At the time the release was executed, U. S. Fire was not contracting to forfeit any sub-rogation rights or to give up any future rights. Republic’s failure to sue the banks within a year, which allegedly resulted in U. S. Fire losing its subrogation rights more than six months later, is not consideration to support the release. The consideration to support a contract must be regarded by the parties as such when they enter into the contract. Johnson v. Breckenridge—Stephens Title Co., 257 S.W. 223, 226 (Tex.Com.App.1924, jdgmt. adopted); Hardwicke v. Trinity Universal Insurance Co., 89 S.W.2d 500, 506 (Tex.Civ.App.—Eastland 1935, writ dism’d).

Republic also attacks the trial court’s holding that the proof of loss was not filed according to the terms of the policy, which require the proof of loss to be filed within one hundred days of the discovery of the loss. The loss was discovered in August, and the supplemental proof of loss was filed November 27. This supplemental proof listed the total loss as $32,-924.84, although it further stated that Republic did not then claim that entire amount from U. S. Fire. It is not clear from the record if this was filed within the one hundred days. U. S. Fire, however, paid the amount then claimed on this proof of loss and has not shown the proof of loss to be untimely. Therefore, any delay in filing this proof of loss has been waived, and the question is whether the supplemental proof of loss showing a total loss of $32,924.84, but claiming only $13,692.84, can be considered a sufficient proof of loss for the $19,232 claim. We hold it is sufficient because all the necessary proof for this latter claim is contained in the supplemental proof of loss. The policy only requires the proof of loss be filed “with full particulars.” The proof of loss forms only require that the losses be itemized in detail and the originals of the items claimed as loss be attached. Substantial compliance with the proof of loss requirements of the policy is sufficient. Hanover Insurance Co. of New York v. Hagler, 532 S.W.2d 136, 138 (Tex.Civ.App.—Dallas 1975, writ ref’d n. r. e.); Home Insurance Co. v. Greene, 443 S.W.2d 326, 330-31 (Tex.Civ.App.—Texarkana 1969), aff’d, 453 S.W.2d 470 (Tex.1970). No contention is made that Republic did not follow U. S. Fire’s requirements. The proof of loss gave appellee all the information it needed to investigate and determine its liabilities on this policy, regardless of the amount initially claimed by Republic. Consequently, we hold that the proof of loss was sufficient for the entire claim.

Republic’s fourth point asserts that the trial court erred in holding that the suit was filed within the time allowed by the policy, which requires legal proceedings to be brought within twenty-eight months “after the cause of action shall have accrued.” This action was brought February 9,1976. U. S. Fire asserts that the cause of action accrued when the loss was discovered in late August, 1973. We disagree. A cause of action in a suit on an insurance policy accrues when liability is denied by the insurer. Trinity Universal Insurance Co. v. Howeth, 419 S.W.2d 704, 706 (Tex.Civ.App.—Texarkana 1967, no writ). Here, U. S. Fire did not deny liability for the $19,232 claim until Republic made the claim in January, 1976. Even if the cause of action accrued as early as October 31, 1973, when the first “partial proof of loss” was filed, twenty-eight months after that date had not elapsed when this suit was filed on February 9, 1976. We hold that the cause of action did not accrue before the initial proof of loss was filed, although we need not determine the exact date it did accrue.

Republic’s final point contends the court erred in holding that the suit was barred because Republic’s delay in making its claim destroyed U. S. Fire’s subrogation rights. U. S. Fire argues that this suit is barred because Republic destroyed any sub-rogation rights against the California banks by failing to bring suit against them within one year after discovery of the loss. Although the policy here does not provide U. S. Fire with the right of subrogation, we agree that U. S. Fire, on payment of this claim, would be subrogated to whatever rights Republic had against the drawee and depository banks. International Insurance Co. v. Medical—Professional Building of Corpus Christi, 405 S.W.2d 867, 869 (Tex.Civ.App.—Corpus Christi 1966, writ ref’d n. r. e.). We agree also with appellee’s contention that if Republic’s failure to sue the banks destroyed U. S. Fire’s subrogation rights against the banks, Republic’s right of recovery under its policy with U. S. Fire for that amount would be barred. Foundation Reserve Insurance Co. v. Cody, 458 S.W.2d 214, 216 (Tex.Civ.App.—Dallas 1970, no writ); Millers Mutual Fire Insurance Co. v. Mitchell, 392 S.W.2d 703, 706 (Tex.Civ.App.—Tyler 1965, no writ). Additionally, we recognize that if the limitation period has run against the subrogor, Republic, U. S. Fire’s cause of action as subrogee against the banks would also be barred. Fishel’s Fine Furniture v. Rice Food Market, 474 S.W.2d 539, 541 (Tex.Civ.App.—Houston [14th Dist.] 1971, writ dism’d).

We disagree, however, with U. S. Fire’s assertion that any suit by Republic against the California depository banks would be barred by Republic’s failure to sue them within one year of discovery of the altered checks. U. S. Fire relies on a California statute, Cal.Civ.Proc.Code § 340(3) (1972), providing that suits by a depositor on forged or materially altered items must be brought within one year of discovery. Under Tex.Bus. & Comm.Code Ann. § 4.102(b) (Tex.UCC) (Vernon 1968), California law would apply to a suit against the California banks. We hold the California statute does not bar Republic’s action since Republic was not a depositor of the California banks.

U. S. Fire contends, nevertheless, that any claim by Republic or its subrogee against the banks would be barred because the depository banks would be entitled to make the same defense as the banks on which the checks were drawn. In support of this contention, U. S. Fire cites Allied Concord Financial Corp. v. Bank of America National Trust and Savings Association, 275 Cal.App.2d 1, 80 Cal.Rptr. 622 (1969). That case is not controlling here because the drawee bank’s defense in that case, the California one-year statute of limitation, would not bar a suit by Republic against its drawee bank, which is a Texas bank. We are not aware of any statute in Texas barring suits for alterations not brought within a year of discovery. Since the California one-year statute would not bar a suit against the drawee bank, it does not bar a suit against the depository banks.

U. S. Fire also argues Republic is barred from suing either the' Texas or the California banks because Tex.Bus. & Com. Code § 4.406(d) (Tex.UCC) (Vernon 1968), which is also in effect in California, requires Republic to bring suit within one year. This statute does not require suit to be brought within a year, but rather bars a claim by a customer against a bank for an alteration of an item if the customer does not report the loss to the bank within one year of the time the statements are made available to it. The record does not reflect whether Republic reported the alterations to its drawee bank within a year of the time the statements were made available to it. Since the evidence was not fully developed on this question, we cannot render judgment for Republic, but must remand for a determination of whether the bank was notified of the alterations within one year. United States Fire Insurance Co. v. Carter, 473 S.W.2d 2, 3 (Tex.1971). If it was not, section 4.406(d) would bar a claim by Republic against the banks and Republic would have destroyed any of U. S. Fire’s subrogation rights against the banks. This in turn would bar Republic’s claim against U. S. Fire. If on remand it is determined that Republic did notify its bank of the alterations within one year after receiving the statements, it may have a claim against either its drawee or the depository banks. If the court determines that U. S. Fire has lost no subrogation rights, Republic should recover its claim against U. S. Fire.

Republic asserts several other arguments that there were no subrogation rights to lose in this case. We do not discuss these because the record was not adequately developed on these matters and thus can be better determined by the trial court on another trial.

Reversed and remanded.


source: Caselaw Access Project

author: MASSEY, Chief Justice. SPURLOCK, Justice,

license: Public Domain

text:
    Dan A. WATSON, Appellant, v. SHEPPARD FEDERAL CREDIT UNION, Appellee.
    No. 18206.
    Court of Civil Appeals of Texas, Fort Worth.
    Sept. 27, 1979.
    Rehearing Denied Nov. 29, 1979.

      James Q. Smith, Wichita Falls, for appellant.
    Banner, McIntosh & Dobbs and Juanita Pavlick, Wichita Falls, for appellee.
   OPINION

MASSEY, Chief Justice.

Dan A. Watson, co-maker of an installment promissory note, by writ of error seeks to have the default judgment rendered against him reversed and remanded for new trial. He contends that he is entitled to this relief because no statement of facts is available because no record was made of the proceedings upon the default hearing.

We affirm the judgment insofar as it decrees Watson’s liability upon the note and as to the amount for which he was found liable; we reverse and remand for a new trial the issue of the amount of Sheppard Federal Credit Union’s entitlement as attorney’s fees.

Our holding in this case is made in full awareness of the holding in Burrows v. Bowden, 564 S.W.2d 474 (Tex.Civ.App.—Corpus Christi 1978, no writ). Furthermore, our opinion is written after consideration of the dicta in the dissenting opinion of Chief Justice Calvert in Southwestern Fire & Casualty Company v. Larue, 367 S.W.2d 162, 167 (Tex.1963), a summary judgment case. The opinion of the majority in Southwestern was reaffirmed as to matters discussed in Dallas County State Bank v. Thiess, 575 S.W.2d 20 (Tex.1978), another summary judgment case. Therein was discussed the obligation of a defendant to a suit on a note to affirmatively plead in order to avail himself of payment as a defense.

Here Sheppard Federal Credit Union brought its suit against Dan Watson, alleging that Watson, for value, executed and delivered to it an installment promissory note in the amount of $5,790.00. Sheppard further alleged that it is the present owner of the note and that Watson has defaulted thereon. Sheppard exercised its right to accelerate the installments due and alleged that after all payments and offsets and credits were given Watson, $2,339.12 was due, plus 10% interest thereon. Sheppard also sued for reasonable attorney’s fees.

Watson, although served with process, defaulted. The trial court rendered a default judgment against him for $2,539.64 plus $850.00 attorney’s fees. The difference between $2,539.64 and $2,339.12 represents $200.52 of interest. No record was made of the proceedings at the default judgment hearing and therefore the statement of facts to which Watson is entitled is not available. By writ of error Watson attacks the trial court’s judgment, claiming that he is entitled to reversal because of the unavailability. We agreed that the general rule is that if through no fault or lack of diligence of an appealing party, he cannot secure a statement of facts, the proper action of the appellate court is to reverse and remand for a new trial. Sheppard contends that “Statement of the Evidence” signed by the trial judge and made a part of the transcript can serve as a statement of facts. We do not agree. An appealing party is entitled to a statement of facts in question and answer form. Fisher v. First Security State Bank of Cranfiiis Gap, Texas, 576 S.W.2d 886 (Tex.Civ.App.—Waco 1979, no writ); Morgan Express, Inc. v. Elizabeth-Perkins, Inc., 525 S.W.2d 312 (Tex.Civ.App.—Dallas 1975, err. ref’d.).

As a general rule no evidence is required to support a default judgment because the defendant’s failure to appear or answer is taken as admission of the allegations of the plaintiff’s petition. Proof is required only with respect to damages that are unliquidated or not proved by a written instrument. Gourmet, Inc. v. Hurley, 552 S.W.2d 509 (Tex.Civ.App.—Dallas 1977, no writ). Here we deem the general rule to be applicable. Therefore, if no evidence is required to support the judgment Watson cannot secure reversal because no statement of facts is available on liability for liquidated damages. Of course what is above stated does not relate to the Sheppard award of attorney’s fees. A demand for reasonable and necessary attorney’s fees is for unliquidated damages. The award of such must be upon evidence in support of pleadings.

However, Watson claims that the damages in this case are unliquidated. We do not agree. The amount of the note is $5,790.00. The amount alleged by Sheppard to be due and owing thereon, as of October 18, 1977 is $2,339.12 plus interest as provided by the note on that amount from October 18, 1977. Assuming as existent questions about how the indebtedness alleged was calculated and whether all payments, credits, and offsets were allowed we nevertheless consider such questions immaterial. The Supreme Court in Dallas County State Bank v. Thiess, 575 S.W.2d 20 (Tex.1978) honored its prior opinion in Southwestern Fire & Casualty Company v. Larue, 367 S.W.2d 162 (Tex.1963) that a difference between the amount of indebtedness alleged to be due and the face amount of the note does not create an ambiguity or raise an issue of fact regarding payments credited. We conclude the allegation of indebtedness in the Sheppard pleadings to be upon a liquidated demand and that evidence was not necessary to support the default judgment granted by the trial court for anything other than proper attorney’s fees.

There might be a different approach which, nevertheless, would lead to the same result. Should the plaintiff in such a case be penalized because willing to confess credits as proper to be made upon the face amount of the note? We think not. Here, if Sheppard had said nothing about any Watson entitlement which would reduce the original note amount, and had by its pleadings declared upon the full amount with nothing said to reduce the Watson liability, with Watson having said nothing by an answer filed, there would be no question but that it was entitled to a default judgment on that original amount. Here Sheppard, recognizing that it was not truly entitled to such original amount because Watson should have the benefit of proper credits, set out the fact that Watson should have credit and announced the amount (in that it stated facts which either directly stated the amount of the Watson entitlement or facts by which such entitlement might easily be calculated from its pleading). All of this was to the benefit of Watson and in no manner to his detriment, in effect relieving him of the responsibility to plead affirmatively, as a defense, the payment or entitlement to credit upon the original indebtedness by note.

Upon the proposition of the foregoing paragraph there would be proper application of Tex.R.Civ.P. 434, the Texas “harmless error rule”. Watson could not be heard to complain of a benefit received. If a detriment was involved it would be to Sheppard’s case and not Watson’s defense. Under the circumstances the presumption to be made would be that if Sheppard had not by its pleading given Watson proper credit for payments, etc., the latter would have answered and filed a pleading showing his entitlement as an affirmative defense.

We affirm that portion of the trial court judgment which provides Sheppard’s recovery of and from Watson $2,539.64 (balance alleged as due and owing plus interest). We reverse and remand for a new trial the portion of the judgment which awards attorney’s fees.

SPURLOCK, J., dissents.

SPURLOCK, Justice,

dissenting.

I respectfully dissent from that portion of the majority opinion which affirms the judgment of the trial court as to the amount due on the note. The basis for the dissent is that the indebtedness alleged in the plaintiff’s petition cannot be readily calculated solely from the allegations in the petition. Therefore, I would conclude that the demand made is for unliquidated damages.

The pertinent allegations in the petition are as follows:

“The note provides that if the maker defaults in the payment of any installment that has become due, the entire unpaid principal amount of the note shall, at the option of the Plaintiff, become immediately due. Defendant defaulted on said note and Plaintiff elected to mature and accelerate said note after duly notifying Defendant of such acceleration and after the allowance of all just and lawful offsets, payments and credits to Defendant, the balance thereon of $2,339.12 as of October 18, 1977 plus interest thereon at the rate of 10% per annum from such date, is past due and unpaid and Defendant, though often requested to do so has heretofore failed and refused and still fails and refuses to pay same or any part thereof.”

Attached to the petition and made a part thereof by reference was the note made the basis of this suit. Its pertinent parts are that it was dated March 8, 1977 in the sum of $5,790.00, payable in 42 installments of $169.52 and one installment of $32.38. It further provides “which includes principal and interest on the unpaid balances at the rate of 1 percent per month, both before and after maturity, the installments to be paid monthly” beginning April 20,1977. It also provides for the payment of reasonable attorney’s fees as a part of the collection expense.

The judgment awarded the plaintiff $850.00 attorney’s fees.

Tex.R.Civ.P. 241 states that where a judgment by default is rendered against the defendant, if the claim is liquidated and proved by an instrument in writing, the damages shall be assessed by the court. Tex.R.Civ.P. 243 provides that if the action is for an unliquidated demand the court shall hear evidence of damages. The test of whether a demand is liquidated or unliqui-dated is whether the amount of damages can be accurately calculated by the court from the instrument in writing and the allegations in the petition. Here the indebtedness alleged is less than the amount appearing on the face of the note. From the general allegation of the petition quoted above it is impossible to calculate the amount of the indebtedness with certainty. There is no allegation of what payments were made, when they were made and the amounts thereof. Further, the dates of default and acceleration are not alleged with specificity.

The allegations in this case are even more general than the allegations in Burrows v. Bowden, 564 S.W.2d 474 (Tex.Civ.App.—Corpus Christi 1978, no writ). There the court held that where the principal balance due on a note could not be calculated solely from the note and the pleadings because the pleadings were conclusory rather than factual, the demand was unliquidated and prevented the court from properly awarding damages upon default.

In Southwestern Fire & Casualty Company v. Larue, 367 S.W.2d 162, 167 (Tex.1963), a summary judgment case, in a majority opinion the judgment of the trial court granting the summary judgment was affirmed.

The majority affirmed the judgment because the defendant failed to assign a point of error on the grounds that the case should be reversed because the original of the note was not attached to the pleadings or to an affidavit in support of the motion.

In the dissenting opinion written by Chief Justice Calvert, he stated: “Thus, if Larue had defaulted in this case, the trial court could not have rendered the judgment it did render absent production in evidence of the note and testimony showing payments and credits supporting the judgment.” He states that Tex.R.Civ.P. 241 applies.

He further stated that: “While all other elements of the plaintiff’s claim are taken as confessed as alleged, the amount of the plaintiff’s damages is not taken as confessed as alleged.” Four justices dissented from the majority opinion.

It should be noted that in the rules governing summary judgments and default judgments there are differences apparent from an examination of the rules.

The trial court could not examine plaintiff’s petition and determine the exact amount of damages. It follows that the petition did not state a liquidated demand and the court therefore could not assess damages under Tex.R.Civ.P. 241.

In this default judgment case liability is confessed. But because an unliquidated demand was made evidence of damages was required for the court to award damages under Tex.R.Civ.P. 243. The same is also true concerning “reasonable attorney’s fees” since no fixed amount of attorney’s fees was provided for in the note.

Because no record was made of the hearing and therefore no statement of facts is available, this case should be affirmed on the issue of liability and reversed and remanded for a trial on the issue of damages which includes the amount due on the note and the assessing of reasonable attorney’s fees.

I agree with the majority that this cause should be reversed and remanded for a new trial on that portion of the judgment which awards attorney’s fees.

I respectfully dissent.


author: ROBERTSON, Justice.

text:
    Charles FLOWERS, Relator, v. Margaret Morin FLOWERS, Respondent.
    No. 20177.
    Court of Civil Appeals of Texas, Dallas.
    Oct. 2, 1979.

      Stanley E. Latman, Dallas, Larry Bach, Forney, for relator.
    William E. Fullingim, Dallas, for respondent.
    Before GUITTARD, C. J., and ROBERTSON and CARVER, JJ.
   ROBERTSON, Justice.

This is an original application for writ of prohibition filed by relator, Charles Flowers, to prevent respondent, Margaret Morin Flowers, from prosecuting a motion of contempt against relator based on an order modifying a support order, the modification order now having been reversed by this court. Flowers v. Flowers, 585 S.W.2d 334 (Tex.Civ.App.—Dallas 1979, no writ). Relator also has prayed that the trial judge be directed to cease entertaining such suits. We grant the writ of prohibition.

The contempt proceedings grew out of a modification order entered by the 254th Judicial District Court of Dallas County on April 13,1979, increasing child support payments to be paid by the relator. Relator duly perfected his appeal to this court. On June 5, 1979, the trial court sustained a motion for contempt, based on its modification order, commanding relator to appear on August 10, 1979, to report that he had paid certain arrearages or to be confined. The modification order was reversed by this court on July 11, 1979.

Under these facts, the trial court’s authority to enter a contempt order is found in section 11.19(c) of the Texas Family Code. This subsection provides as follows:

An appeal from an order, judgment, or decree, with or without a supersedeas bond, does not suspend the order, decree or judgment unless suspension is ordered by the court entering the order, decree or judgment. The appellate court, on a proper showing, may permit the order, decree or judgment to be suspended.

Tex.Fam.Code Ann. § 11.19(c) (Vernon 1975). In this case the trial court made no provision for suspension of its judgment, and this court was not requested to permit suspension.

Relator contends that since the original order to modify has been reversed, the respondent should not be allowed to prosecute the motion for contempt based thereon. There is no dispute that while an order is on appeal the trial court may enforce it by contempt if no suspension has been ordered. Ex parte Rutherford, 556 S.W.2d 853, 854 (Tex.Civ.App.—San Antonio 1977, no writ); Ex parte Henderson, 512 S.W.2d 37, 39 (Tex.Civ.App.—El Paso 1974, no writ); Ex parte Allen, 477 S.W.2d 297, 298 (Tex.Civ.App.—Houston [14th Dist.] 1972, no writ); see Tex.Fam.Code Ann. § 11.19(c) (Vernon Supp.1978-1979). The question raised by this action is whether a contempt order, based on an order to modify, that has been entered prior to reversal of the order to modify, can be enforced after the order to modify is reversed. Generally, reversal of a judgment or order completely nullifies it, leaving it as if it had never been rendered other than as to further rights of appeal. See Ex parte Rutherford, 556 S.W.2d at 854; Gonzalez v. Texas Employers Ins. Assoc., 509 S.W.2d 423, 426 (Tex.Civ.App.— Dallas 1974, writ ref’d n. r. e.). See generally 5B C.J.S. Appeal and Error § 1950 (1958).

In Rutherford the San Antonio Court of Civil Appeals was required to pass on the validity of a contempt order entered after the custody order, upon a violation of which it was based, had been reversed. The court found the contempt order invalid. It reasoned that if the custody order had been suspended under section 11.19(c), the contempt order would have been invalid. Therefore, it was unreasonable to suppose reversal of a custody order should have less effect than suspension of it. 556 S.W.2d at 855.

Respondent attempts to distinguish the instant case from Rutherford on the ground that here both the performance of the contumacious acts and the entry of the contempt order occurred before the reversal of the modification order; in Rutherford both occurred after reversal. Thus, respondent would have us hold that if a contempt order is entered while the original judgment or order is being appealed, the contempt order should be enforced even if the original judgment or order is reversed before enforcement can be had.

This argument runs counter to the reasoning stated in Rutherford as indicated above. Additionally, once a judgment or order is reversed, all dependent causes of action are simultaneously defeated. E. g., Busby v. Jones, 134 Tex. 241, 133 S.W.2d 566, 571 (1939) (reversal of vendor’s lien judgment against defendant reverses defendant’s dependent judgment against code-fendants); Thurmond v. Kleberg First National Bank, 481 S.W.2d 164, 165 (Tex.Civ.App.—Corpus Christi 1972, writ ref’d n. r. e.) (garnishment proceeding fails upon reversal of main judgment); K. T. Lease Service, Inc. v. Alamo Welding and Boiler Works, Inc., 431 S.W.2d 58, 62-63 (Tex.Civ. App.—San Antonio 1968, no writ) (reversal of order overruling plea of privilege results in reversal of judgment against party who filed plea). We therefore hold that a contempt order that is based on acts violative of an original judgment or order becomes invalid simultaneously with a subsequent reversal of the original judgment or order. Accordingly, the application of Charles Flowers for writ of prohibition is granted.


author: GUITTARD, Chief Justice.

text:
    Charles HOWARD, Margie Howard, Joe Langfitt, Barbara Langfitt, David Bolton, Gayle Dunn, Robert Dunn, Frank Robertson, Betty Pryon, David Mitchell, Janet Mitchell, Jim Thornhill, and Helene Thornhill, Relators, v. Charles CLACK, George Drum, Corky Crowder, Larry Holley, Charles Palmore, Joe Regian, Gwen Smale, Dale Stringfellow, and Martin Suber, as Members of the City Council of the City of Garland, Texas, Respondents.
    No. 20196.
    Court of Civil Appeals of Texas, Dallas.
    Oct. 3, 1979.

      John W. Bryant, Bryant & Beaty, Dallas, for relators.
    John F. Boyle, Jr., Dallas, for respondents.
    Before GUITTARD, C. J., and CARVER and STOREY, JJ.
   GUITTARD, Chief Justice.

Relators in this original petition for mandamus are voters in the city of Garland who have sought to invoke the provisions of the city charter for recall of one of the members of the city council. Their petition for recall was certified by the city secretary as containing the names of the requisite number of voters, but the city council has refused to call an election after making its own examination of the petition and determining that some of the purported signatures are not genuine and that others are of persons who have sought to withdraw their names. Relators seek a writ of mandamus under article 1735a, Tex.Rev.Civ.Stat.Ann. (Vernon Supp. 1978-1979), on the ground that after the city secretary certified the petition as containing the requisite number of names, the city council had no discretion to review the sufficiency of the petition and had only a ministerial duty to call an election. We agree with this interpretation of the charter. Accordingly, we grant the writ.

Jurisdiction

Before discussing the merits of the petition for mandamus, we must consider respondents’ objection that we have no jurisdiction under article 1735a because duties imposed by the charter are not duties imposed by “the laws of this state.” We disagree. The statute gives us jurisdiction to issue the writ against public officers “to compel the performance, in accordance with the laws of this state, of any duty imposed upon them, respectively, by law, in connection with the holding of any general, special, or primary election . . . .” This statute cannot properly be interpreted as limiting our jurisdiction to enforcement of duties imposed by laws of statewide scope. A city with a charter adopted under the Home Rule Amendment, Tex.Const. art. XI § 5, has legislative powers not dependent on the general laws of the state. Lower Colorado River Authority v. City of San Marcos, 523 S.W.2d 641, 643-44 (Tex.1975); City of Beaumont v. Bond, 546 S.W.2d 407, 409 (Tex.Civ.App.—Beaumont 1977, writ ref’d n.r.e.). Such a charter is declared by statute to be a “public act,” and all courts are required to take judicial notice of it. Tex.Rev.Civ.Stat.Ann. art. 1174 (Vernon 1963); City of Dallas v. Megginson, 222 S.W.2d 349, 351 (Tex.Civ.App.—Dallas 1949, writ ref’d n.r.e.). Consequently, a duty imposed by such a charter is a duty “imposed by law” within article 1735a, on which our jurisdiction rests. Nelson v. Welch, 499 S.W.2d 927, 928 (Tex.Civ.App.—Houston [14th Dist.] 1973, no writ) (appellate court had jurisdiction, but denied mandamus on merits).

Merits

Having determined that we have jurisdiction, we must consider the principal question, that is, whether the city council has authority and discretion to review the sufficiency of the petition for recall and decline to call an election if it determines that the petition does not have the requisite number of genuine signatures. We conclude that it has no such authority.

The pertinent provision of the charter is section 93, which provides:

Any member or all members of the council (including the mayor) may be recalled and removed from office by the electors qualified to vote for a successor of such incumbent by the following procedure: A petition signed by qualified voters entitled to vote for a successor to each member sought to be removed, equal in number to twenty-five (25) per cent of the number of votes cast at the last regular municipal election for that office which is the subject of the petition, shall be filed with the city secretary; provided that not less then eight hundred (800) signatures shall be required in the case of council members and not less than two thousand (2,000) signatures shall be required in the case of the mayor. Such petition shall contain a general statement of the ground for which the removal is sought. The signatures to the petition need not all be appended to one paper, but each signer shall add to his signature his place of residence, giving the street and number. One of the signers to each paper shall make oath before an officer competent to administer oaths that each signature is that of the person whose name it purports to be. Within ten (10) days from the filing of such petition, the city secretary shall examine the same and, from the list of qualified voters, ascertain whether or not the petition is signed by the requisite number of qualified voters, and, if requested to do so, the council shall allow him/her extra help for that purpose. He/she shall attach to said petition a certificate showing the results of such examination. If by the city secretary’s certificate, the petition is shown to be insufficient, it may be amended within ten (10) days from the date of such certificate by obtaining additional signatures. The city secretary shall, within ten (10) days after such amendment is filed, in case one is filed with him/her, make like examination of the said amended petition and, if his/her certificate shall show same to be insufficient, shall be returned to the person filing same and shall not be subject to amendment.
If the petition be found sufficient, the city secretary shall submit the same to the council without delay and the council, in the event the mayor or council member named in said petition fails to resign, shall order and fix a date for holding the election . . . . [Emphasis added]

Respondents contend that this provision limits the city secretary’s authority to the purely ministerial task of comparing the names appearing in the petition with the list of qualified voters to ascertain whether the requisite number of qualified names appear and that she has no authority to decide whether any of the purported signatures are genuine. Further, respondents argue that in order to prevent fraud, some agency of the city must have authority before the election is called to determine whether the signatures are genuine, and that only the city council is in a position to make such a determination since it is authorized by section 21(i) of the charter to “[s]ummons and compel the attendance of witnesses and the production of books and papers before it whenever it may deem necessary for the more effective discharge of its duties.”

We cannot agree with respondents because we find nothing in the charter expressly authorizing the city council to take any action with respect to a recall election other than that provided in section 93, which requires the council to order the election whenever the city secretary presents a certificate stating that the petition has been examined and found sufficient. Neither do we find any implied authority for the council to make its own investigation and determination of the sufficiency of the petition. Respondents point to no general language of the charter from which such authority can be implied as incidental. They rely on the council’s authority in section 21(i) to compel the attendance of witnesses and the production of books and papers. This authority is limited to situations in which such action is deemed “necessary for the more effective discharge of its duties.” We find no duties imposed on the council concerning a recall election that would make appropriate the exercise of such powers.

With respect to respondents’ argument concerning protection against fraud, we need not consider whether the city secretary has authority to determine whether any of the signatures are fraudulent. Even if the charter fails to confer such authority on any agency of the city, that circumstance would not justify judicial recognition of authority in the council that cannot be found, either expressly or impliedly, in the provisions of the charter. Fraud, if it exists, may be dealt with as such. If discovered in time, it may be made an issue in the recall election. Criminal penalties are also available.

Our holding on this point is supported by the decision of the Supreme Court in Weatherly v. Fulgham, 153 Tex. 481, 271 S.W.2d 938, 940 (1954), in the analogous situation of a petition by an independent candidate for a place on the general election ballot. The court held that the Secretary of State, who had the statutory duty to examine the petition and certify the candidate for a place on the ballot, had no authority to inquire into facts outside the record for the purpose of determining whether any of the signatures were forged or procured by fraud. The court pointed out that if forgery or fraud was committed, criminal penalties were available.

Good reason exists to explain why the people of Garland granted no such power to their city council. Section 93 provides that if the secretary finds the petition insufficient, and so certifies, the petitioners are allowed ten days from the date of the certificate to amend the petition by obtaining additional signatures. Respondents concede that if the secretary’s certificate states that the certificate is sufficient, and the council rejects it as insufficient as a result of its own investigation, no such time for amendment would exist. It would be unreasonable to construe section 93 as permitting the petitioners to be thus deprived of their right to amend.

Moreover, to imply authority on the part of the council to make the ultimate determination of sufficiency of the petition would commit the decision to a body that could not be considered impartial. Every recall petition affects at least one of the council members directly, and contemporaneous petitions with respect to other members might well affect a majority, or, indeed, all members of the council. In that situation, each member of the council would be called on to vote on the sufficiency of petitions calling for recall of other members. Rather than create that possibility, the drafters of section 93 apparently intended to commit the responsibility of determining sufficiency of the petition to the city secretary, an impartial officer not subject to recall. We construe the charter in accordance with that evident intent.

This construction is directly supported by Young v. State, 87 S.W.2d 520, 522 (Tex.Civ.App.—Fort Worth 1935, writ ref’d), which held that the board of aldermen of the city of Wichita Falls had no discretion in the matter of calling a recall election because a charter provision similar to that now before us imposed the duty of determining and certifying the sufficiency of the recall petition on the city clerk rather than on the board of aldermen. Since writ of error in that case was “refused” without qualification, the decision must be regarded as authoritative. We see no conflict between Young and cases cited by appellee, such as City Commission of Pampa v. Whatley, 366 S.W.2d 620 (Tex.Civ.App.—Amarillo 1963, no writ) and Vetters v. State, 255 S.W.2d 588 (Tex.Civ.App.—San Antonio 1953, no writ). In Whatley the provisions of the charter are not quoted, and we cannot determine whether they were similar to section 93. Vetters stands for the rule that the city secretary’s duties under a charter provision similar to section 93 are ministerial, but our holding in this case is consistent with a characterization of the duties of the Garland city secretary as ministerial.

We find that section 93 imposes on the Garland City Council a mandatory, ministerial duty to order a recall election on presentation of a petition accompanied by a certificate of the city secretary that the petition is sufficient. The undisputed evidence shows that the secretary has made such a certificate and that the city council has refused to order the election. Consequently, the writ of mandamus will be issued.

Mandamus granted.


author: AKIN, Justice.

text:
    BALBOA INSURANCE COMPANY, Appellant, v. K & D AND ASSOCIATES, Appellee.
    No. 19924.
    Court of Civil Appeals of Texas, Dallas.
    Oct. 3, 1979.
    Rehearing Denied Nov. 9, 1979.

      W. Ted Minick, Alan Wilson, Winstead, McGuire, Sechrest & Trimble, Dallas, for appellant.
    James A. Knox, Vial, Hamilton, Koch, Tubb, Knox & Stradley, Dallas, for appel-lee.
    Before AKIN, ROBERTSON and CARVER, JJ.
   AKIN, Justice.

This is an appeal by Balboa Insurance Company from an adverse summary judgment rendered against it on a surety bond and in favor of the obligee on the bond, K & D and Associates. K & D and Associates, a general contractor, sued P & L Construction Enterprises, Inc., its framing and carpentry subcontractor, and P & L’s surety, Balboa, for losses sustained by K & D when P & L abandoned the job. Judgment was entered against P & L for the total amount of the loss and against Balboa to the extent of its bond. Only Balboa appeals.

On appeal, Balboa contends that the trial court erred in rendering summary judgment as to liability because: (1) the language of the bond and documents relating thereto are ambiguous with respect to the bonded obligation, thus creating a fact issue as to the intent of the parties; (2) there was a mutual mistake in the language of the bond; (3) Balboa has been discharged under its bond because of material alterations to the bonded subcontract; (4) no default occurred under the letter of intent, which K & D contends was the bonded indebtedness; and (5) Balboa has been discharged by reason of a novation arising from the execution by K & D and P & L of two subcontracts after the letter of intent which K & D asserts is the bonded indebtedness. Because we find no merit in these contentions, we affirm.

The relevant facts are undisputed. K & D had a contract with the United States Air Force to build two hundred houses at Sheppard Air Force Base. On November 22, 1974, K & D and P & L Construction Enterprises signed a document designated “Letter of Intent” by which P & L agreed to perform the carpentry subcontract work. This document consisted of five pages and set forth in some detail the work to be done. The “Letter of Intent,” contemplated another contract for the work to be executed since it provided: “It is agreed that the printed form in blank hereto attached, the printed terms and conditions of which is acceptable, is the form to be used in the preparation of the subcontract, and that special clauses will be inserted as indicated by the attached sheet or sheets.” .The sheets were a formal A.I.A. contract form. It also stated: “The undersigned agree to execute a subcontract in accordance with this proposal.”

This letter of intent also required P & L to obtain a combination payment and performance bond in the amount of $378,200. Although P & L sought a bond in this sum, it was only able to obtain a bond for $200,-000 from Balboa naming P & L as principal and K & D as obligee. This was the maximum amount permitted by Balboa to be written by the insurance agency through which P & L obtained the bond. The bond in the amount of $200,000 was issued and delivered to K & D on November 26, 1974, four days after the “Letter of Intent” was signed. With respect to its obligations, the letter stated:

That the above bound Principal (P & L) has entered into a contract with K & D and Associates dated November 22, 1974, to do framing and carpentry work in connection with Federal Contract No. F41612 75 90011.

Thereafter, on December 26,1974, K & D and P & L entered into two formal subcontracts (using the blank printed form attached to the letter of intent), each of which required P & L to perform the carpentry work on 100 units for a lump sum of $189,100. Thus, taken together, each subcontract required P & L to do the work on 200 houses for $378,200, as set forth in the “letter of intent.” P & L commenced work on the 200 houses but defaulted and left the job on July 14,1975. K & D made demand on Balboa, as P & L’s surety, to complete the performance of the obligations undertaken by Balboa in accordance with its bond on November 26,1974. Balboa refused and K & D completed the project at a loss to it in excess of $200,000, the penal limit of the bond. This litigation ensued.

AMBIGUITY

Balboa asserts that the language of the letter of intent was ambiguous, creating a material fact issue as to the intent of the parties. However, it did not raise this point in its response to K & D’s motion for summary judgment. We cannot reverse a summary judgment on issues not presented to the trial judge by written motion for summary judgment, answer or other response. Tex.R.Civ.P. 166-A.

Moreover, as we read the letter of intent and the bond, there is no ambiguity. The letter of intent, dated November 22, 1974, sets out in tedious detail the carpentry and framing work to be performed on 200 housing units. The bond specifically refers to the contract between K & D and P & L dated November 22 and to K & D’s government contract number. It is undisputed that no agreements other than the letter of intent between K & D and P & L were executed on November 22.

The construction of an unambiguous written instrument is a question of law for the court. City of Pinehurst v. Spooner Addition Water Co., 432 S.W.2d 515 (Tex.1968). The intent of the parties is determined by applying an objective standard to the content of the writing. The supreme court in City of Pinehurst stated:

[the] standard of interpretation of an integration, except where it produces an ambiguous result, or is excluded by a rule of law establishing a definite meaning is the meaning that would be attached to the integration by a reasonably intelligent person acquainted with all operative usages and knowing all the circumstances prior to and contemporaneous with the making of the integration, other than oral statements by the parties of what they intended it to mean. 432 S.W.2d at 518. [Emphasis added].

Balboa has adduced deposition testimony as to the subjective intent of the parties in executing the bond and letter of intent. This testimony does not raise a fact issue as to the intent of the parties and, indeed, is inadmissible under the parol evidence rule. Since the writing is unambiguous, the intent of the parties is objectively determined from its content, applying the Pinehurst standard. Deposition testimony of subjective intent is irrelevant and cannot raise a fact issue as to the intent of the parties in executing the bond and letter of intent. We find no merit in Balboa’s contentions as to ambiguity. Even if meritorious, we are required to reject them because they were not presented to the trial judge in response to K & D’s motion for summary judgment.

MUTUAL MISTAKE

Balboa next contends that it raised a material fact issue on its affirmative defense of mutual mistake, precluding summary judgment. Even though it was the non-movant, Balboa, who had the burden of raising a fact issue on all elements of its affirmative defense, Torres v. Western Casu alty and Surety Co., 457 S.W.2d 50, 53 (Tex.1970), “. . .in order for the affirmative defense of mutual mistake to be sustained, the defendant must raise fact issues showing that both parties were acting under the same misunderstanding of the same material fact.” Newson v. Starkey, 541 S.W.2d 468, 472 (Tex.Civ.App.—Dallas 1976, writ ref’d n.r.e.). “A mutual mistake of fact occurs where the parties have a common intention, but the written contract erroneously reflects that intention due to a mistake on the part of both parties in writing the agreement.” Id.

Balboa’s mutual mistake defense was that the actual agreement was to bond the framing and carpentry work on 100 housing units rather than 200 units. In this respect Balboa asserts that it was only through some inadvertence that the written bond was not limited to 100 units. In order to establish this affirmative defense by proper summary judgment evidence, Balboa had to establish that the agreement between P & L and Balboa was to bond the work on 100 units and that K & D knew of this agreement. The latter element must be established because a secret understanding between the principal and the surety cannot alter the legal effect of the bond. Lloyds Casualty Insurer v. Farrar, 141 Tex. 497, 174 S.W.2d 302, 305 (1943). Balboa attempts by deposition testimony of Albert Gray, one of the insurance agents who issued the bond, to raise a fact issue as to K & D’s knowledge that the bond was to cover only 100 units. Gray testified that he talked by telephone to someone at the K & D job site who he thought was the project supervisor for K & D. Gray testified that he issued the bond only after obtaining assurance from this individual that a separate subcontract covering the first 100 units would be issued in the amount of $190,000. Even if taken as true, Gray’s testimony fails to establish knowledge on the part of K & D because it does not show that Gray had personal knowledge that the individual with whom he spoke had authority to act for K & D. In order to support or oppose a motion for summary judgment, an affidavit must be made on personal knowledge of the affiant competent to testify to matters contained therein. Tex.R.Civ.P. 166-A. Mere conclusions are insufficient to raise a fact issue that precludes summary judgment. Gaines v. Hamman, 163 Tex. 618, 358 S.W.2d 557, 562 (1962). We conclude, therefore, that Balboa has failed to raise a fact issue as to the existence of a mutual mistake in the execution of the bond.

THE BONDED OBLIGATION

Next, Balboa contends that the bonded obligation was the first subcontract covering work on 100 housing units, and that its obligation as surety was discharged by expansion of the obligation to cover 200 units. We cannot agree and hold that the bonded obligation was the framing and carpentry work on all 200 housing units, as set forth in the “letter of intent.” Thus, it is unnecessary to discuss Balboa’s contentions that it was released by material alteration to the first 100 units subcontract.

The proper standard of construction of the bond and letter of intent is the interpretation of a reasonable man with knowledge of operative usage and surrounding circumstances. City of Pinehurst, 432 S. W.2d 518. The letter of intent set out in great detail the carpentry and framing work. It also contained a provision that blank copies of the standard form subcontract to be executed were attached, thus incorporating the printed provisions of those form contracts into the letter of intent. Both parties agreed to execute the attached forms. Thus, nothing remained uncertain with respect to the contract between K & D and P & L and, indeed, it was complete and enforceable because nothing remained that was not covered by the letter of intent. The bond unequivocally refers to the agreement between K & D and P & L dated November 22,1974, the date of execution of the letter of intent, and to the contract number of K & D’s government contract. Both documents contemplate work on 200 housing units. Applying the rule of City of Pinehurst, we construe the bonded obligation to be the letter of intent rather than the first 100 units subcontract.

CONSTRUCTION OF THE LETTER OF INTENT

Balboa asserts that the letter of intent required only the execution of subcontracts, not the performance of carpentry and framing work. Since P & L in fact executed the subcontracts, Balboa claims no event of default occurred under the letter of intent and thus it is not liable to K & D on the bond. This construction of Balboa’s obligation is untenable. It flies in the face of a reasonable construction of the bond to assert that the bonded obligation was the execution of a subcontract. In considering the circumstances surrounding the execution of the bond as authorized by Pinehurst, we judicially notice that the purpose of a surety bond for a construction subcontractor is to provide for performance of the subcontractor’s construction obligation if the subcontractor defaults. If Balboa’s interpretation of the letter of intent was adopted, then Balboa’s obligation under the $200,000 surety bond was discharged when P & L signed the subcontract.. Thus, K & D would have to rely solely on the credit of P & L to perform its obligation under the subcontract and the bond would fail in its essential purpose. Construing the letter of intent and bond together, the only reasonable interpretation is that the letter of intent obligated P & L to perform carpentry and framing work and that Balboa bonded P & L’s performance. Indeed, the letter of intent was complete in that it left nothing upon which the parties had not agreed. The fact that P & L and K & D termed the obligation a letter of intent rather than a. contract does not control the legal effect of their agreement. Houston Chronicle Publishing Co. v. McNair Trucklease, Inc., 519 S.W.2d 924 (Tex.Civ.App.—Houston [1st Dist.] 1975, writ ref’d n.r.e.).

DEFAULT UNDER THE LETTER OF INTENT

Balboa argues that the trial court erred in finding that P & L defaulted under the letter of intent and thus it is not liable on its bond. Balboa asserts that, “. . .a contract of suretyship will be strictly construed so as to impose on the surety only such burdens or obligations as clearly come within the terms of the contract, and such contract will not be extended by implication or presumption.” Standard Accident Insurance Co. v. Knox, 144 Tex. 296, 184 S.W.2d 612, 615 (1944). Although we agree with this general rule, the surety contract must be construed to carry out the purpose for which it was executed and the intention of the parties thereto as evidenced by the written language. First State Bank of Temple v. Metropolitan Casualty Insurance Company of New York, 125 Tex. 113, 79 S.W.2d 835, 840 (1935). The rule of strict construction does not require a departure from the general rules of construction with a view of relieving the surety from an onerous condition or obligation, but merely provides that the surety’s obligation shall not be extended by implication or presumption. As in other contracts, the sure-tyship agreement is interpreted to ascertain the obligation intended by the parties, gathered from the instruments as a whole. Only then does the rule of strict construction apply to prevent extension of the obligation by implication or presumption. State National Bank of Fort Worth v. Vickery, 206 S.W. 841 (Tex.Comm’n App. 1918, judgmt. adopted). Since the obligation clearly comes within the terms of the bond, the rule of Knox, preventing expansion of the surety’s obligation by implication or presumption, is inapplicable.

NOVATION

Balboa next argues that execution of the two subcontracts with essentially the same terms as the letter of intent is a novation that supersedes the letter of intent, thus releasing the surety. Balboa cites no authority to support this contention. The rule regarding supersession of a contract by a subsequent agreement is set out in Willeke v. Bailey, 144 Tex. 157, 189 S.W.2d 477, 479 (1945). If the parties to one contract execute another whose terms are so inconsistent with the first that they both cannot stand, the first agreement is conclusively presumed to have been superseded by the second. Balboa does not assert that the two subcontracts are inconsistent, but rather that they are essentially the same. Consequently, application of Willeke is precluded. We recognize that Balboa may have had a valid defense if the subcontracts had materially altered the obligation Balboa bonded under the letter of intent. Straus-Frank Co. v. Hughes, 138 Tex. 50, 156 S.W.2d 519 (1941). However, neither the summary judgment evidence nor Balboa has raised this contention.

Affirmed.

      . The parties stipulated as to damages.


text:
    Beverly CROCKETT, Appellant, v. Donald CROCKETT, Appellee.
    No. 19846.
    Court of Civil Appeals of Texas, Dallas.
    Oct. 3, 1979.
    Rehearing Denied Nov. 1, 1979.
    Christopher M. Weil, J. Kathryn Lin-dauer, Weil, Craig & Fischman, Dallas, for appellant.
    Jay S. Fichtner, Nanch Fisher Fellman, Berman, Fichtner & Mitchell, Dallas, for appellee.
    Before AKIN, -ROBERTSON and CARVER, JJ.
   ROBERTSON, Justice.

Appellant Beverly Crockett sued appellee Donald Crockett for arrearages in child support ordered by an Ohio court in its decree of divorce. She also sought to have appel-lee found in contempt of the Ohio order and to modify the Ohio decree with respect to child support and visitation rights. Appel-lee filed a special appearance under Tex.R. Civ.P. 120a on the ground that the Ohio court has continuing jurisdiction over the suit and that jurisdiction could not be exercised because sufficient contacts with Texas for due process purposes were lacking. The trial court sustained the special appearance and dismissed the case. We reverse and remand on the grounds that service upon the appellee falls within the ambit of the Texas Family Code’s long-arm statute for suits affecting the parent-child relationship and that maintenance of suit in Texas does not violate due process. Additionally, we hold that continuing jurisdiction under the Texas Family Code does not apply to foreign courts.

Beverly Crockett, appellant, and Donald Crockett, appellee, were married in Dallas, Texas, in 1963; they remained in Dallas until 1966, and their two children were both conceived and bom in Dallas. They later moved to Austin, Texas, and then to Ohio. In 1974 when the parties returned to Texas for a visit, appellee announced that he wanted a divorce. Appellant and the children remained in Texas while appellee returned to Ohio where he instituted divorce proceedings. The Ohio court rendered a final judgment of divorce setting out the respective parties’ custody, child support, and visitation rights. In 1977 appellee filed suit in Ohio for the purpose of adjusting the support payments and visitation rights. After appellant was served in Texas with process in the Ohio suit, appellee ceased making child support payments. Appellant specially appeared in Ohio for the purpose of contesting jurisdiction. In September 1978 the Ohio court overruled appellant’s special appearance holding that it had jurisdiction over her. Following the initiation of the Ohio proceeding, appellant filed suit in Dallas to hold appellee in contempt of the Ohio decree, to recover alleged arrear-ages in child support, and to modify the provisions of the decree relating to child support and visitation rights. Appellee then filed his special appearance under Tex. R.Civ.P. 120a which the trial court sustained.

We first address the question of whether the Texas court has jurisdiction over the nonresident appellee so that he is amenable to process issued by that court. In Mitchim v. Mitchim, 518 S.W.2d 362 (Tex.1975) the Texas Supreme Court adopted a two-pronged test for exercising jurisdiction over a nonresident. First, a statute of the support ordering state must authorize the acquisition of such jurisdiction in the manner used, and second, sufficient contacts between the defendant and the forum relevant to the cause of action must exist to satisfy “traditional notions of fair play and substantial justice.” 518 S.W.2d at 366. This test has been accepted by other Texas courts. See Scott v. Scott, 554 S.W.2d 274, 279 (Tex.Civ.App.—Houston [1st Dist.] 1977, no writ); Hilt v. Kirkpatrick, 538 S.W.2d 849, 851 (Tex.Civ.App.—Waco 1976, no writ).

Clearly, the first requirement of the test is met by Tex.Fam.Code Ann. § 11.051 (Vernon Supp.1978-1979). This “long-arm statute” provides as follows:

In a suit affecting the parent-child relationship, the court may exercise personal jurisdiction over a person on whom service of citation is required or over the person’s personal representative, although the person is not a resident or domiciliary of this state if:
(1) the child was conceived in this state and the person on whom service is required is a parent or an alleged or probable father of the child;
(2) the child resides in this state, as defined by section 11.04 of this code, as a result of the acts or directives or with the approval of the person on whom service is required;
(3) the person on whom service is required has resided with the child in this state; or
(4) notwithstanding subdivisions (1), (2), or (3) above, there is any basis consistent with the constitutions of this state or the United States for the exercise of the personal jurisdiction.

The second prong of the Mitchim test derives from the United States Supreme Court’s holding that even though a state may exercise jurisdiction over a cause, the assumption of personal jurisdiction over a nonresident defendant must not offend that defendant’s due process rights. International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95, 102 (1945). The test established in International Shoe was qualified by Hanson v. Denckla, 357 U.S. 235, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958), which requires that there must be some act by which the defendant purposefully avails himself of the privilege of conducting activities within the forum state, thereby invoking the benefits and protections of its laws. Id. at 253, 78 S.Ct. at 1239-40, 2 L.Ed.2d at 1298. Additionally, the Texas Supreme Court has held that the cause of action sued upon must arise from the act or transaction in the forum state. O’Brien v. Lanpar Co., 399 S.W.2d 340, 342 (Tex.1966).

In O’Brien the Texas Supreme Court adopted a statement made by the Supreme Court of Washington in the case of Tyee Construction Co. v. Dulien Steel Products, Inc., 62 Wash.2d 106, 381 P.2d 245 (1963) that consideration should be given to “the quality, nature, and extent of the activity in the forum state, the relative convenience of the parties, the benefits and protection of the laws of the forum state afforded the respective parties, and the basic equities of the situation.” 381 P.2d at 251. Because of the vagueness of the constitutional standard, each case must turn on an analysis of its particular facts. U-Anchor Advertising, Inc. v. Burt, 553 S.W.2d 760, 764 (Tex.1977), cert. denied, 434 U.S. 1063, 98 S.Ct. 1235, 55 L.Ed.2d 763 (1978).

In support of her position that there are sufficient minimum contacts to satisfy Mitchim’s second requirement, appellant relies primarily on the case of Zeisler v. Zeisler, 553 S.W.2d 927 (Tex.Civ.App.—Dallas 1977, writ dism’d). In Zeisler, a support modification case, this court was asked to exercise jurisdiction in a situation where both the father and the mother were nonresidents. We held that Texas could properly entertain the suit because the parties had been married in Texas, the child for whom support was sought was conceived and born in Texas, and Texas was the state of the last matrimonial domicile. This court also said that inconvenience of the forum was not, in and of itself, a constitutional obstacle to the assumption of personal jurisdiction over a nonresident if the requirements of due process are otherwise met.

Appellee, on the other hand, relies on the case of Kulko v. Superior Court of California, 436 U.S. 84, 98 S.Ct. 1690, 56 L.Ed.2d 132 (1978). In Kulko the issue was whether in a modification of support case, a California court could exercise in personam jurisdiction over the nonresident parent of minor children domiciled within the state. The parties, both of whom were New York domiciliaries, were married in California in 1959 while the husband was there briefly en route to overseas military duty. Immediately thereafter the wife returned to New York, as did the husband following his military service. Their two children were born in New York and the parties lived in that state as a family continuously until 1972 when they separated, at which time the wife moved to California. A written separation agreement was negotiated, finalized, and signed in New York. The agreement specified that the children were to remain with the father during most of the year and spend vacations with their mother; the father was to pay $3,000 a year as child support to the mother for those brief periods during which the children were with her. Shortly thereafter the wife procured a decree of divorce in Haiti that incorporated the terms of the separation agreement. In 1973 the parties’ daughter expressed a desire to live in California with her mother; her father acquired and purchased the one-way airplane ticket for her. In 1976 the parties’ son, without his father’s knowledge or permission, flew to California where he took up residence with his mother and sister. The mother then filed suit in California in an effort to establish the Haitian divorce decree as a California judgment, to increase child support since she was now caring for both children most of the year, and to modify the custody provisions of the judgment. The father challenged on the grounds that he was not a resident of California and that he lacked sufficient “minimum contacts” with the state under the requisites of International Shoe. The California courts found that it was both “fair and reasonable” for the defendant to be subject to personal jurisdiction in the state because the father had purposely availed himself of the benefits and protections of the laws of the state by sending his daughter to live with her mother and consented to the residence of his son in California. The United States Supreme Court reversed, holding that the exercise of in personam jurisdiction by the California courts over appellant would violate the due process clause of the fourteenth amendment. Specifically, the court held that (1) the acquiescence of the father in his daughter’s desire to live with her mother in California did not confer jurisdiction on the courts of that state in the mother’s action for increased support or custody; (2) the exercise of in personam jurisdiction was not warranted because the father derived no financial benefit as a result of his acquiescence in his daughter’s desire to live in California with her mother; and (3) basic considerations of fairness pointed to New York as a proper forum for the adjudication of the mother’s action. The court did recognize that California has an interest in protecting resident children and in facilitating child support actions on behalf of those children. The court went on, however, to hold that these interests did not make California a “fair forum” in which to require the father, who derived no personal or commercial benefits from his children’s presence in California and who lacked other “minimum contacts” with the state, either to defend a child-support suit or to suffer liability by default. 436 U.S. at 100, 98 S.Ct. at 1701, 56 L.Ed.2d at 146.

We conclude that Kulko is not controlling here since at the time suit was brought in Kulko, California could not have obtained personal jurisdiction over the defendant because, unlike Texas, California had no special long-arm statute. Indeed, the Supreme Court specifically noted this fact. Kulko is not only distinguishable on this ground, but also on its facts. Distinctions showing a lack of due process minimum contacts included neither child being born in California, the father having never resided with his children in California, the parties having never lived together as man and wife in California, and the father having never traveled to California to visit his family.

In this case there are sufficient minimum contacts to satisfy “traditional notions of fair play and substantial justice,” and thus the second requirement of Mitch-im is met. These contacts are as follows:

(1) the parties were married in Texas;
(2) the parties lived for several years as man and wife in Texas;
(3) both children were conceived in Texas;
(4) both children were born in Texas;
(5) the respondent resided with the children in Texas;
(6) the children, as well as the petitioner, continued to live in Texas after the divorce;
(7) the respondent has come to Texas to visit the children;
(8) section 11.051 provides for “long-arm” jurisdiction to the fullest extent of the limits of due process.

Additionally, the children are Texas residents and Texas has a strong interest in seeing that they are supported without resort to public funds. We conclude under these facts that appellee was amenable to process issued by the Texas court.

Appellee’s motion for special appearance included another reason for contending Texas lacked jurisdiction which, though not proper for a special appearance because it concerns jurisdiction of the subject matter rather than whether defendant is “amenable to process issued by the courts of this State” under Rule 120a, may be raised again, and consequently we address it here. Appellee claims that the Ohio court which rendered the divorce decree has continuing and exclusive jurisdiction over all suits relating to the parent-child relationship, including modification of support and visitation. On the other hand, appellant argues that “continuing jurisdiction,” as defined in section 11.05 of the Texas Family Code, relates only to Texas courts and has no extraterritorial effect. Subsection (a) of this provision reads as follows:

Except as provided in Subsections (b), (c) and (d) of this section, when a court acquires jurisdiction of a suit affecting the parent-child relationship, that court retains continuing jurisdiction of all matters provided for under this subtitle in connection with the child, and no other court has jurisdiction of a suit affecting the parent-child relationship with regard to that child except on transfer as provided in Section 11.06 of this code.

Tex.Fam.Code Ann. § 11.05(a) (Vernon Supp.1978-1979) (emphasis added).

We conclude and hold that section 11.-05(a), when it mentions “continuing jurisdiction,” refers only to courts within the State of Texas and has no extraterritorial application. This is true because in viewing the Texas Family Code in its entirety we find other sections which delineate the procedures to be followed to enforce foreign support orders and foreign custody orders. For example, Subtitle B, entitled “Uniform Acts and Interstate Compacts,” deals specifically with foreign court judgments and orders in child support matters. Chapter 21 of this subtitle, known as the Uniform Reciprocal Enforcement of Support Act, specifies in detail how foreign support orders are enforced in Texas. If appellee’s contentions were correct, these sections of the Family Code would be rendered meaningless because only the foreign court would have continuing jurisdiction to the exclusion of all Texas courts.

Our holding is also supported by provisions of the Family Code, prior to its amendment in 1977, pertaining to habeas corpus. Section 14.10, which was enacted at the same time as section 11.05, provided that habeas corpus would be ordered and a cross-action for modification would be disregarded if a custody order was entered “by a court of another state' or nation” which had jurisdiction over the parties, provided the child had been within the state for less than twelve months immediately preceding the filing of the petition for the writ. Obviously, under this provision a foreign court could have lost jurisdiction for habeas corpus purposes if the children had remained in Texas for a period longer than twelve months. This shows, at the time section 11.05 was enacted, a legislative intent to limit the concept of “continuing jurisdiction” to Texas courts. To say that under the preamended version of section 14.10 that a foreign court had continuing jurisdiction with respect to all matters relating to a child, except the question of who is entitled to custody if the child had been in Texas longer than twelve months, would reach an absurd result. Indeed, as here, it would place an intolerable burden on children to require their custodial parent to return to a distant state to obtain child support.

Further examples of sections supporting our conclusion include sections 11.06 and 11.071. Section 11.06 provides, in the proper circumstances, for the transfer of proceedings from courts with continuing jurisdiction to a court in “the county where venue is proper,” Tex.Fam.Code Ann. § 11.-06(a) & (b) (Vernon 1975), “to the court where the suit for dissolution of the marriage is pending,” id. § 11.06(b), or “to the court which has acquired jurisdiction under Section 11.05(c) . . .,” id. § 11.06(d). Under these provisions, giving extraterritorial effect to the term “continuing jurisdietion” would require Texas courts to transfer suits, in the proper circumstances, to courts in other states. It is unlikely that such an unworkable system was intended by the legislature.

Furthermore, section 11.071 provides the procedure by which a court of continuing jurisdiction is to be identified. The petitioner or the court is to request from the State Department of Public Welfare (now the Texas Department of Human Resources) the identification of the court of continuing jurisdiction if a question exists whether any court has continuing jurisdiction. Obviously, the legislature did not expect the State Department of Public Welfare to maintain records on out-of-state courts having jurisdiction over every child that comes into Texas or every child that might be the subject of a suit in Texas affecting the parent-child relationship. It is ridiculous to assume that the legislature would have enacted a system which would require the courts to perform these useless acts. Thus, the only reasonable context in which the term “continuing jurisdiction” can be read is as applying exclusively to Texas courts.

In so holding we expressly disagree with Brown v. Brown, 555 S.W.2d 784 (Tex.Civ.App.—El Paso 1977, no writ) and Follack v. Brown, 530 S.W.2d 882 (Tex.Civ.App.—Beaumont 1975, writ ref’d n. r. e.) insofar as they hold that section 11.05(a) of the Texas Family Code was to be given extraterritorial effect. In Follack the court relied upon two pre-Family Code cases which recognized that out-of-state courts had continuing jurisdiction over Texas residents when those same courts had originally adjudicated suits affecting the parent-child relationship. Id. at 884; see Bull v. Wilson, 362 S.W.2d 662, 664 n.l (Tex.Civ.App.—San Antonio 1962, no writ); Dowden v. Fischer, 338 S.W.2d 534, 537 (Tex.Civ.App.—Waco 1960, no writ). These cases do not support the holding in Follack. Bull did not address the question of whether Texas courts may exercise jurisdiction over a parent-child relationship simultaneously with another state. Indeed, the Waco Court of Civil Appeals in Dowden specifically noted that a prior judgment of an out-of-state court, retaining continuing jurisdiction, does not bar subsequent proceedings in Texas. Dowden v. Fischer, 338 S.W.2d at 536-37.

We agree with Justice Keith’s concurring opinion in Follack stating that the concept of continuing jurisdiction had “no bearing on the decision” in Follack. Rather, that decision properly turned on whether the out-of-state court had jurisdiction over the Texas resident and whether full faith and credit was to be given the South Carolina judgment by the Texas court. Follack v. Brown, 530 S.W.2d at 885. The subsequent decision of Brown v. Brown cited Follack, without further analysis, for the erroneous proposition that section 11.05 of the Texas Family Code is extraterritorial in scope. Brown v. Brown, 555 S.W.2d at 787. Consequently, we do not regard Brown v. Brown or Follack v. Brown as correct in giving extraterritorial effect to section 11.05.

Accordingly, we hold that the trial court erred in sustaining appellee’s special appearance. Consequently, we reverse and remand for trial.

      . Appellant claims that she remained in Texas at the direction of appellee. Appellee has denied this claim.

      . We do not pass on the question of whether by appellee’s assertion of continuing jurisdiction in the Ohio court he waived his special appearance and made a general appearance since appellant has not raised that question on this appeal. Fox v. Fox, 559 S.W.2d 407, 408-09 (Tex.Civ.App.—Austin 1977, no writ).