text:
    Velma M. REIGER, Appellant, v. Richard DeWYLF, d/b/a Alvin Plumbing and Heating, Appellee.
    No. 8085.
    Court of Civil Appeals of Texas, Beaumont.
    April 13, 1978.
    Rehearing Denied May 4, 1978.
    Thomas M. Harlan, Alvin, for appellant.
    James E. Coate, Alvin, for appellee.
   CLAYTON, Justice.

Plaintiff, a licensed plumber, filed suit against defendant seeking damages in quantum meruit for labor done and materials furnished in certain plumbing work in connection with remodeling work to defendant’s home. Defendant filed a cross-action seeking damages under the Texas Deceptive Trade Practices Act, Tex.Bus. & Comm. Code Ann. § 17.41, et seq. (Supp.1978). Trial was to a jury which found the reasonable value of the labor and materials furnished by plaintiff to be $1,000, that plaintiff “engaged in unconscionable action in his business dealings with [defendant]”, but that defendant sustained no damages as a result thereof. Based upon this verdict, judgment was entered for plaintiff for $700 (the trial court gave defendant credit for $300 which she had previously paid) and attorney’s fees in the sum of $1,450, which sum was stipulated by the parties as being the reasonable and proper amount if attorney’s fees were legally recoverable, and the damages sought by defendant were denied, from which judgment both parties have appealed.

In defendant’s first point complaint is made of error by the trial court in not submitting her requested special issue on damages. The requested issue inquired as to damages sustained by defendant for the unconscionable acts or course of action engaged in by plaintiff, and the issue contained the following:

“You may consider the following:
A. Mental anguish in the past.
B. Mental anguish in the future.
C. Damage to Mrs. Reiger’s [defendant’s] reputation.”

Defendant did not allege any elements of damages in her pleadings, and we have carefully reviewed the record and find no evidence of any proof of such elements of damages. Having failed to plead and prove the elements of damages contained in the requested issue, the issue was properly refused. This point is overruled. See Johnson v. Karam, 466 S.W.2d 806, 811 (Tex.Civ.App.-El Paso 1971, writ ref’d n. r. e.); City of Austin v. Seiter, 415 S.W.2d 489, 496 (Tex.Civ.App.-Austin 1967, writ ref’d n. r. e.); Tex.R.Civ.P. 277, 279.

Defendant’s second point complains that the trial court “erred in not disregarding the jury’s answer to [defendant’s] damage special issue and finding nominal damages for [defendant].” The jury found that plaintiff was entitled to receive $1,000 for his labor performed and materials furnished. Under this finding and the evidence showing no element of damages sustained by defendant, the jury reasonably concluded defendant sustained no damages. We are of the opinion the Texas Deceptive Practices Act, in a case seeking damages, requires actual damages to be incurred before recovery can be obtained under this Act. The jury having found no actual damages, this point is overruled. See Cordrey v. Armstrong, 553 S.W.2d 798, 799 (Tex.Civ.App.-Beaumont 1977, no writ).

Defendant’s third point complains of error “in not awarding [defendant] attorney’s fees.” This point is without merit. Under the jury’s findings defendant did not sustain any actual damages, and therefore is not entitled to recover attorney’s fees. Cordrey v. Armstrong, supra at 799.

Defendant’s fourth point urges error “in awarding Appellee . . . attorney’s fees.” The amount of attorney’s fees awarded to plaintiff was stipulated by the parties as being the proper amount if attorney’s fees were legally recoverable. Plaintiff filed suit to recover the “reasonable worth” of certain “goods, wares, merchandise, services, labor done, and materials furnished.” The issue submitted, without objection, inquired as to the “reasonable value of the services and labor rendered and performed, and the material delivered. . Attorney’s fees are specifically allowed for this type of cause of action under Tex.Rev.Civ.Stat.Ann. art. 2226 (Supp.1978). Barcheers v. Braswell, 548 S.W.2d 76, 79 (Tex.Civ.App.—El Paso 1977, no writ); Boysen v. Security Lumber Co., 531 S.W.2d 454, 456-57 (Tex.Civ.App.-Houston [14th Dist.] 1975, no writ). This point is overruled.

Plaintiff contends that the trial court erred in allowing defendant to amend her pleadings by trial amendment to include a sworn denial. Plaintiff’s suit was on a sworn account. Defendant’s original answer contained a defective sworn denial. Defendant affirmed a denial and, following her signature, was an acknowledgment taken by a notary. This was not in proper form as an affidavit. See and compare Perkins v. Crittenden, 462 S.W.2d 565, 567 (Tex.1970).

Plaintiff did not, at any time prior to the date of trial, point out the defect in defendant’s sworn denial. At the time the case was called for trial and after both parties announced ready, he immediately proceeded to prove up his cause of action. During the course of the testimony given by plaintiff himself, plaintiff admitted some of the statements contained in his affidavit were not true. He admitted that he had not performed some of the work for which he had charged defendant and for which he was attempting to recover. After this admission, and after plaintiff had rested, defendant began to offer testimony; and, for the first time, plaintiff made the objection and pointed out the defect in defendant’s verified denial. The trial court then permitted defendant to file a trial amendment curing the defect.

The trial court is vested with discretion in allowing a defendant’s trial amendment in a sworn account action. See Parham v. Grace, 341 S.W.2d 503 (Tex.Civ.App.—Fort Worth 1960, no writ); Moore v. McKinney, 151 S.W.2d 255, 258-9 (Tex.Civ.App.—Dallas 1941, no writ). See also Century Rental Equipment, Inc. v. Neo-Flasher Manufacturing Co., 378 S.W.2d 957 (Tex.Civ.App.—Houston 1964, no writ). The court’s order in allowing a trial amendment will not be set aside in absence of a clear showing that the court has abused its discretion. Ka-Hugh Enterprises, Inc. v. Fort Worth Pipe & Supply Co., 524 S.W.2d 418, 422 (Tex.Civ.App.—Fort Worth 1975, writ ref’d n. r. e.); Tuck v. Tuck, 509 S.W.2d 656, 658 (Tex.Civ.App.—Austin 1974, writ ref’d n. r. e.). See also Pigg v. International Hospitals, Inc., 421 S.W.2d 169, 172 (Tex.Civ.App.—Dallas 1967, writ ref’d n. r. e.).

Under the facts of this case, the trial court did not abuse its discretion in allowing defendant to file the trial amendment to correct defects in the form of defendant’s verified denial. This point is overruled.

Other points presented by plaintiff in his appeal are not supported by argument or authority and are therefore waived. See Pacific Employers Insurance Co. v. Solomon, 488 S.W.2d 189, 190 (Tex.Civ.App.-Texarkana 1972, writ ref’d n. r. e.); West Texas Utilities Co. v. Bergstrom, 458 S.W.2d 548, 551 (Tex.Civ.App.-Eastland 1970, writ ref’d n. r. e.).

Even though plaintiff admitted that he had not performed some of the work for which he had charged defendant, the evidence presented by plaintiff supported the jury’s finding that $1,000 was the reasonable value of the labor performed and materials furnished.

There being no error in the trial below, the judgment of the trial court is affirmed.

AFFIRMED.


source: Caselaw Access Project

author: CORNELIUS, Chief Justice.

license: Public Domain

text:
    Guy R. PIERCE, Appellant, v. TERRA MAR CONSULTANTS, INC. and Enserch Exploration, Inc., Appellees.
    No. 8520.
    Court of Civil Appeals of Texas, Texarkana.
    April 18, 1978.
    Rehearing Denied May 23, 1978.

      Paul F. Waldner, Houston, for appellant.
    Mike Joplin, David K. Meyercord, Stras-burger, Price, Kelton, Martin & Unis, Dallas, for Terra Mar Consultants, Inc.
    Joe N. McClendon, Dallas, for Enserch Explorations, Inc.
   CORNELIUS, Chief Justice.

Appellant, Dr. Guy Pierce, a consulting geologist, was retained by Lone Star Producing Company (now Enserch) to perform certain services in Iran. In March of 1973, Lone Star terminated his contract because of alleged nonperformance, and in response he filed suit for breach of contract. Upon learning that his contract had been terminated as a result of an investigation ordered by Lone Star and conducted by Terra Mar Consultants, Inc., appellant filed another suit against Terra Mar and others for libel and slander and for tortious interference with his contract of employment. During the pendency of the suits, appellant moved to Mexico, and while living there he learned that his attorney, without his consent, had taken a non-suit in each case. Some seven months after the non-suits were taken and when time for motion for new trial or appeal had expired, appellant secured new counsel who filed the instant action as a proceeding in the nature of a bill of review. It involves the Terra Mar case only and seeks to have the non-suit entered in that proceeding set aside and the action reinstated.

Appellees filed special exceptions to the petition for bill of review, alleging that it was insufficient to state a claim for equitable relief because it failed to allege that the non-suit was in any way attributable to an act or omission of the appellees or their attorneys, and the allegations themselves revealed that the non-suit was the voluntary act of appellant himself or his attorney and that appellant failed to act with diligence to prevent the entry of the non-suit or to move to set it aside after discovering that it had been entered. The district court sustained the special exceptions, and upon appellant’s failure to amend, dismissed the bill of review.

Reduced to their essentials, the contentions on appeal are: Appellant asserts that the act of his former attorney in taking the non-suit without his knowledge or consent is a valid ground for having the case reinstated, and that he has sufficiently alleged a meritorious cause of action and diligence on his part which entitle him, on proof thereof, to equitable relief from the prior dismissal. Appellees insist that, in order to máintain the bill of review, appellant must allege some act or fault on the part of appellees which contributed to the entry of the non-suit, and further that appellant’s petition shows on its face that he was lacking in diligence in seeking relief.

It has often been stated that to successfully maintain a bill of review"to set aside a former judgment, the moving party must allege and prove (1) a meritorious claim or defense in the original action in which the judgment was entered; (2) which he was prevented from asserting by fraud, accident or the wrongful act of the opposite party; (3) unmixed with any fault or negligence of his own. Alexander v. Hagedorn, 148 Tex. 565, 226 S.W.2d 996 (1950); Gracey v. West, 422 S.W.2d 913 (Tex.1963); 4 McDonald’s, Texas Civil Practice, Sec. 18.27.1, pp. 318, 319; 34 Tex.Jur.2d, Judgments, Sec. 198, p. 38, and cases there cited. But in reality, that is a narrow statement of the rule as it applies to certain types of fact situations, and it is not intended to be an all inclusive categorization of the cases where equitable relief may be obtained from a final judgment. As stated by Justice Walker in Petro-Chemical Transport, Inc. v. Carroll, 514 S.W.2d 240 (Tex.1974):

“This rule is entirely sound as applied to a defendant who suffered a default judgment after proper personal service of citation, but it does not govern the disposition of all bill of review cases.”

There are several situations which do not come strictly within the accepted definitions of “fraud, accident or the wrongful act of the opposite party” which nevertheless permit the exercise of the equitable powers of the court to grant relief from a previous judgment. As stated by Professor McDonald:

“In some situations, relief is given though the complainant does not bring himself strictly within the foregoing rules as to fraud, accident or mistake. The proceeding being equitable in nature, the court may properly give consideration to any circumstance which, being wholly beyond the control of the petitioner, presents a compelling factual reason for re-examining the judgment.” 4 McDonald’s, Texas Civil Practice, Sec. 18.27.4, p. 327.

For example, in Hanks v. Rosser, 378 S.W.2d 31 (Tex.1964), our Supreme Court ruled that where an officer of the court gave erroneous information which prevented a party from filing a motion for new trial, that party in a bill of review was excused from complying with requirement (2) as enunciated in Alexander v. Hagedorn, supra. For other cases recognizing the propriety of setting aside a dismissal or adverse judgment on equitable grounds, even though its entry was not attributable to an act or omission of the opposite party, see Petro-Chemical Transport, Inc. v. Carroll, supra; Bridgman v. Moore, 143 Tex. 250, 183 S.W.2d 705 (1944); Love v. State Bank & Trust Co. of San Antonio, 126 Tex. 591, 90 S.W.2d 819 (1936); Nachant v. Monteith, 117 Tex. 214, 299 S.W. 888 (1927); Kelly Moore Paint Co. v. Northeast National Bank, 426 S.W.2d 591 (Tex.Civ.App. Fort Worth 1968, no writ); Vogel v. Vogel, 405 S.W.2d 87 (Tex.Civ.App. San Antonio 1966, no writ); Texas State Board of Examiners In Optometry v. Lane, 358 S.W.2d 636 (Tex.Civ.App. Fort Worth 1962, writ ref’d n. r. e.); Smith v. Rawlins, 25 S.W.2d 622 (Tex.Civ.App. Dallas 1930, writ ref’d); Stanley v. Spann, 21 S.W.2d 305 (Tex.Civ.App. Amarillo 1929, writ dism’d); Eddingston v. Acom, 287 S.W. 96 (Tex.Civ.App. Beaumont 1926, writ ref’d); Elstun v. Scanlan, 202 S.W. 762 (Tex.Civ.App. San Antonio 1918, no writ); and Lindsley v. Sparks, 20 Tex.Civ.App. 56, 48 S.W. 204 (1898, writ ref’d). A particularly well recognized example is where a party’s attorney dismisses or compromises the litigation without the party’s knowledge or consent. United States v. Beebe, 180 U.S. 343, 21 S.Ct. 371, 45 L.Ed. 563 (1901); Burnaman v. Heaton, 150 Tex. 333, 240 S.W.2d 288 (1951); Federal Underwriters Exchange v. Read, 142 S.W.2d 440 (Tex.Civ.App. Beaumont 1940), rev’d on other grounds, 138 Tex. 271, 158 S.W.2d 767 (1942); Watson v. T & P Ry. Co., 73 S.W. 830 (Tex.Civ.App.1903, no writ); Engelhardt v. Bell & Howell Company, 299 F.2d 480 (8th Cir. 1962); see also Annot., 30 A.L.R.2d 944 and 56 A.L.R.2d 1290. An attorney employed to prosecute or defend a claim has no authority, contrary to his client’s wishes or without his knowledge or acquiescence, to dismiss the case or to compromise it or enter a retraxit. United States v. Beebe, supra; Burnaman v. Heaton, supra; Federal Underwriters Exchange v. Read, supra; Watson v. T & P Ry. Co., supra; Nothem v. Vonderharr, 189 Iowa 43, 175 N.W. 967 (1920); State v. Lewis, 140 Fla. 86, 191 So. 295 (1939); Long v. Kirby-Smith, 40 Tenn.App. 446, 292 S.W.2d 216 (1956); 7 C.J.S. Attorney and Client § 87, p. 909; Annot., 56 A.L.R.2d 1290. Compare Dunlap v. Villareal, 91 S.W.2d 1124 (Tex.Civ.App. San Antonio 1936, no writ). If such an act is done, the judgment will be set aside and the case will be reinstated upon timely application of the aggrieved party which shows a meritorious claim or defense and diligence on his part in seeking relief. United States v. Beebe, supra; Engelhardt v. Bell & Howell Company, supra; State v. Lewis, supra. The result in such a case does not violate the general rule that a litigant is bound by the acts of his attorney even if those acts are negligent. That rule is well settled and grounded in sound reason, for to allow a new trial because of an attorney’s negligent conduct of the litigation would open the door to a flood of claims seeking relief from adverse results in litigation and would practically destroy the finality of judgments. But the compromise or the dismissal of a cause by an attorney without his client’s knowledge or consent, which has the effect of depriving the client of his day in court, is an entirely different matter. It is a deliberate betrayal, by means of an unauthorized act, of the litigant by his attorney. Not only is it a betrayal of the client; it is a fraud upon the court as well. See Nothem v. Vonderharr, supra. We have found no decision of our Supreme Court exactly in point, but that such an act is ground for relief when the other requirements of a bill of review are present seems to be recognized by language in some of its opinions. See Alexander v. Hagedorn, supra, and Gracey v. West, supra.

If a case is dismissed by an attorney without the consent or knowledge of the litigant, and the litigant discovers the dismissal during the time when a motion for new trial may be filed or an appeal taken, he must avail himself of those remedies or he will be barred from seeking other equitable relief. Shook v. Shook, 145 S.W. 699 (Tex.Civ.App. Dallas 1912, writ ref’d); Dunlap v. Villareal, supra; Mercer v. Campbell, 86 S.W.2d 811 (Tex.Civ.App. Eastland 1935, no writ); Trigg v. Trigg, 83 S.W.2d 1066 (Tex.Civ.App. Fort Worth 1935, writ dism’d); 4 McDonald’s, Texas Civil Practice, Sec. 17.19, p. 102. If he does not discover the fact until after the time for a motion for new trial or appeal has expired, his remedy is by bill of review. Gracey v. West, supra; Stuart v. City of Houston, 419 S.W.2d 702 (Tex.Civ.App. Houston-14th Dist. 1967, writ ref’d n. r. e.); Love v. State Bank & Trust Co. of San Antonio, supra; 4 McDonald’s, Texas Civil Practice, Sec. 17.19, p. 102. To sustain his bill of review in such a case, he must allege and prove (1) that the dismissal was entered against him without his knowledge or consent and through no fault or negligence of his own; (2) he has a meritorious claim; and, (3) that he used reasonable diligence in filing the bill of review after becoming aware of the adverse action. Osborn v. Younger, 235 S.W. 558 (Tex.Com.App.1921, judgmt. adopted); Smith v. Brown & Root, Inc., 430 S.W.2d 549 (Tex.Civ.App. Houston-14th Dist. 1968, no writ); Texas State Board of Examiners In Optometry v. Lane, supra.

The district court sustained special exceptions and dismissed appellant’s bill of review on the basis that his petition did not state valid grounds for relief because it failed to allege some wrongful act or omission of appellees or their attorneys. The petition and certain affidavits incorporated therein alleged that appellant’s attorney “sold out to the oil interest” and fraudulently non-suited his case without his knowledge or consent; that in the exercise of due diligence he did not learn of the non-suit in his contract interference case against Terra Mar until February 5, 1976, only nineteen (19) days before he filed his petition for bill of review; and that he had a meritorious claim for tortious interference with his contract of employment in that Terra Mar and Lone Star conspired together to procure and deliver to Lone Star a fictitious and fraudulent report concerning his standing and position with the Shah of Iran and other parties, and prepared a report which was entirely fabricated to the effect that he had no standing with the officials in Iran and was unable to carry out or perform the work he was required to do under his contract, thus resulting in the wrongful termination of such contract. He further alleged that unless his cause is reinstated, he will be unable to present his meritorious claim because the statute of limitations will bar the refiling of it.

It remains to be seen whether, in a trial on the merits, appellant can sustain his allegations by proof, but for the reasons stated heretofore, we conclude that the alie-’ gations of the petition are sufficient to state a claim for equitable relief to set aside the non-suit and reinstate the case on the docket of the court.

It is true, as appellees argue, that some of the facts and circumstances alleged in affidavits which appellant incorporated into his petition, isolated and considered alone, could possibly be construed as indicating that he knew or should have known of the non-suit several months before he filed his bill of review, thus casting doubt upon his diligence in seeking relief. But a judgment of dismissal for failure of the pleadings to state grounds for relief can be sustained only if the allegations of the pleadings, taken as true and construed most favorably in behalf of the pleader, do not state a cause of action. Homewright Company v. Exchange Warehouses, Inc., 526 S.W.2d 241 (Tex.Civ.App. Tyler 1975, writ ref’d n. r. e.); Farias v. Besteiro, 453 S.W.2d 314 (Tex.Civ.App. Corpus Christi 1970, writ ref’d n. r. e.); 3 McDonald’s, Texas Civil Practice, Sec. 10.14.2, p. 16. It is not proper in such a case to weigh the relative credibility of the allegations or to speculate upon whether the allegations are or can be supported by evidence. In Re H_ D_, 511 S.W.2d 615 (Tex.Civ.App. Amarillo 1974, no writ); Torres v. Aransas County Navigation Dist. No. 1, 346 S.W.2d 903 (Tex.Civ.App. San Antonio 1961, no writ); 45 Tex.Jur.2d, Pleading, Sec. 116, p. 575. It cannot be said that the allegations of appellant’s petition show, as a matter of law, that he was lacking in diligence. Compare Griffith v. Conard, 536 S.W.2d 658 (Tex.Civ.App. Corpus Christi 1976, no writ).

Taking appellant’s allegations as true, as we must in a case of this nature, we hold that his petition states a case for equitable relief. The judgment sustaining special exceptions and dismissing the suit is therefore reversed and the cause is remanded to the district court for consideration of the merits.

      . Lone Star was also joined in the suit against Terra Mar.

      . Relief can be obtained in criminal cases, of course, on a showing of ineffective counsel which is of such gravity as to amount to a denial of the right to counsel.

      . Such a fact is given great weight by the courts in granting relief. See cases cited at 20 Tex.Jur.2d, Dismissal, Etc., Sec. 47, p. 241.


author: ROBERTSON, Justice.

text:
    Ralph WILLIAMS, Individually and Ralph Williams, Inc., Appellant, v. The STATE OF WASHINGTON, Appellee.
    No. 19452.
    Court of Civil Appeals of Texas, Dallas.
    April 19, 1978.
    Rehearing Denied May 2, 1978.

      Jerry N. Jordan, Turner, Rodgers, Sailers, Jordan & Calloway, Dallas, for appellant.
    David R. Snodgrass, Wynne & Jaffe, Dallas, for appellee.
   ROBERTSON, Justice.

On Motion for Rehearing, our original opinion is withdrawn and the following opinion substituted therefor.

The State of Washington sued Ralph Williams, individually and Ralph Williams, Inc. seeking to enforce a judgment rendered in the State of Washington under the Washington Consumer Protection Act. The judgment provided for the recovery of civil penalties and attorney’s fees in favor of the state. Both parties filed motions for summary judgment in the Texas trial court, and the court granted the State of Washington’s motion and rendered summary judgment against Williams. Williams now appeals from that judgment. Since we conclude that the Washington judgment is not final for the purpose of Full Faith and Credit under the United States Constitution, we reverse and render.

The crucial portion of the Washington judgment is paragraph “I,” which provides:

Jurisdiction is retained for the purpose of enabling either party to this judgment and decree to apply to the court at any time for the enforcement of compliance therewith, the punishment of violations thereof, or modification or clarification thereof. [Emphasis added]

This section follows the various dispositive paragraphs of the judgment, which (1) enjoin the defendants from engaging in certain categories of consumer violations (2) order restitution of monies or property to consumers under such “further orders and judgments” as the court deems necessary (3) establish penalties against each defendant for $279,000, together with further penalties of $10,250 against each party, and (4) award costs, including attorney’s fees of $389,258.20.

As we read paragraph “I,” the Washington trial court retains jurisdiction to modify any or all of the dispositions set forth above. It is true that a trial court’s retention of jurisdiction to modify its in-junctive relief does not normally affect the finality of the decree, Stovall v. Banks, 10 Wall. 583, 19 L.Ed. 1036 (1870); City of Tyler v. St. Louis Southwestern Ry. Co. of Texas, 405 S.W.2d 330 (Tex.1966); however, the jurisdictional retention in this case is not limited to the injunctive portions of the judgment. From its positioning in the judgment (following all the dispositive sections) paragraph “I” appears to relate to all of the foregoing sections. Moreover, in view of the large penalties and attorneys’ fee imposed on the defendants, it would be reasonable for the Washington trial court to retain jurisdiction to modify the penalty sums so as to insure the effectiveness of its restitutionary orders. If all of the defendants’ assets were exhausted by payment of penalties and attorney’s fees to the State of Washington, the court’s orders regarding restitution to individual consumers would be useless. Since we have determined that the Washington trial court has retained jurisdiction to modify any or all portions of its judgment, we must next decide whether such a judgment is final for the purposes of Full Faith and Credit.

It is established that Full Faith and Credit is not required when a decree is subject to modification under the law of the rendering state. Sistare v. Sistare, 218 U.S. 183, 187, 30 S.Ct. 682, 54 L.Ed. 905 (1910); Hicks v. Hefner, 210 Kan. 79, 499 P.2d 1147, 1151 (1972); Robertson v. Cason, 203 So.2d 742, 745 (La.App.1967); cf. Barber v. Barber, 323 U.S. 77, 65 S.Ct. 137, 89 L.Ed. 82 (1944) (holding that judgment was “final” under laws of rendering state and this entitled to Full Faith and Credit). As we have noted above, the face of this judgment indicates that it is subject to modification. The State of Washington argues, however, that this judgment has been “finalized” through affirmance on appeal in that state. We cannot accept this contention. We recognize that, as a general rule under Washington law, appellate affirmance operates to make the trial court’s judgment the judgment of the appellate court, and the trial court thus cannot modify or vacate its judgment in contravention of the appellate court’s mandate, In re Shilshole Ave. in City of Seattle, 101 Wash. 136, 172 P. 338 (1918); however, this is not a principle of “finalization,” for affirmance only effectuates the original judgment. Stated another way, affirmance places the parties in exactly the same position as if there had been no appeal, and the trial court retains all powers originally reserved in its judgment. See Texas Trunk R. R. v. Jackson, 85 Tex. 605, 22 S.W. 1030, 1031 (1898); McWilliams v. McWilliams, 531 S.W.2d 392, 394 (Tex.Civ.App.-Houston [14th Dist.] 1975, no writ). Thus, affirmance does not preclude the trial court from modifying its judgment, so long as modification is allowed under the terms of the original judgment. We have found no Washington authorities that indicate a contrary interpretation of this rule applies in that jurisdiction. The cases cited by the State of Washington either deal with situations where the trial court had rendered a non-modifiable judgment, see Rajewski v. Dart, 51 Wash.2d 52, 315 P.2d 636 (Wash.App.1957), or- simply enunciate the general rule that a trial court is bound by the appellate court’s mandate. See In re Shilshole Ave. in City of Seattle, supra. Therefore, we must presume that the laws of Washington and Texas are in accord on this point, Commonwealth of Mass. v. Davis, 140 Tex. 398, 168 S.W.2d 216 (1942); Harris v. Harris, 403 S.W.2d 445, 447 (Tex.Civ.App.-Houston 1966, writ ref’d n. r. e.) and hold that the judgment of the Washington trial court remains subject to modification, and is hence not entitled to Full Faith and Credit.

The State of Washington next urges that, under Washington law, an appellate court is presumed to determine its jurisdiction before it decides the merits of the appeal. According to this argument, we should presume that the Washington appellate courts held this judgment to be final before they rendered their judgments. We cannot agree, for this contention incorrectly presumes that a judgment which is final for the purposes of appeal in the rendering state is necessarily final for the purposes of Full Faith and Credit. Finality for the purpose of Full Faith and Credit is not determined by whether the judgment is final for appellate purposes; rather, the question under Full Faith and Credit is whether the judgment is subject to modification under the law of the rendering state. See Sistare v. Sistare, supra; Robertson v. Cason, supra; Hicks v. Hefner, supra. Accordingly, even assuming that a modifiable judgment may be final for appeal purposes under Washington law, it is not final for the purposes of Full Faith and Credit.

Although the State of Washington also urges that the judgment should be enforced on the basis of “comity” between states, we decline to do so. In Texas, even domestic judgments cannot be enforced by execution unless they dispose of all claims and parties involved in the litigation, Trigg v. Royal Indemnity Company of New York, 468 S.W.2d 468, 469 (Tex.Civ.App.-Austin 1971, no writ); McMillan v. McMillan, 67 S.W.2d 342 (Tex.Civ.App.-Dallas 1933, no writ). A foreign judgment cannot be accorded greater dignity than a similar Texas judgment.

Reversed and rendered.


author: NYE, Chief Justice.

text:
    Roque GARZA and Alicia Garza, Appellants, v. ALLIED FINANCE COMPANY, Appellee.
    No. 1251.
    Court of Civil Appeals of Texas, Corpus Christi.
    April 20, 1978.
    Rehearing Denied May 10, 1978.

      Clyde Farrell, Texas Rural Legal Aid, Inc., Brownsville, for appellants.
    Carlos I. Miro, Dallas, H. H. Rankin, Jr., William E. Corcoran, Rankin & Kern, Inc., McAllen, for appellee.
   OPINION

NYE, Chief Justice.

This is an appeal from a summary judgment rendered in the County Court at Law of Cameron County which sustained plaintiff Allied Finance Company’s motion for summary judgment and denied defendants Roque and Alicia Garza’s cross motion for partial summary judgment. Defendants have perfected their appeal to this Court.

Plaintiff, Allied Finance Company, filed suit against Roque and Alicia Garza seeking to recover $936.60, the balance due on a promissory note executed by the defendants and payable to plaintiff in installments. The plaintiff alleged that the defendants had executed the note in the original amount of $1,937.60 on June 12, 1973, and that the defendants defaulted on the note on August 27,1974, after making payments totaling $1,001.00. Plaintiff prayed for a joint and several judgment against defendants for the sum of $936.60 plus interest from the date of judgment and reasonable attorney’s fees. A copy of the note and a copy of the security agreement which granted a security interest in certain described personal property were attached to plaintiff’s sworn petition.

The defendants alleged two “affirmative defense(s) of set off”, one under the Federal Truth-in-Lending Act, and the other under the Texas Consumer Credit Act. In accordance with the alleged enumerated violations, the defendants prayed for a judgment awarding them a set off under each Act in the amount of $682.34 for the alleged violations, plus costs and reasonable attorney’s fees.

Plaintiff’s motion for summary judgment stated that there was no genuine issue of fact to be decided. The motion was supported by an affidavit of its manager swearing to the truth of all the facts alleged in plaintiff’s original petition as well as to the exhibits attached which were a copy of the promissory note, “Federal Disclosure Statement”, and the security agreement, all of which were the basis of plaintiff’s suit.

At the hearing on plaintiff’s motion the trial court had before it the pleadings of both plaintiff and defendants; plaintiff’s motion, affidavit and exhibits; and defendants’ reply in opposition and supporting affidavit. Defendants’ reply in opposition to plaintiff’s motion asserted that plaintiff had failed to meet its burden to prove that defendants owed plaintiff $936.60. The attached affidavit stated as follows:

“Comes now Roque Garza and Alicia Garza, being duly sworn upon their oath, deposes (sic) and states (sic):
1.They are the defendants in the above entitled and numbered cause.
2. That of their personal knowledge they have never possessed a green vinyl couch, two large chairs covered with gold fabric or a three piece oak bedroom suite as itemized in plaintiff’s exhibit A.
3. That they have made payments to plaintiff since August 27, 1974 on the promissory note subject to this cause.
4. They do not owe $930.70 (sic) to Plaintiff Allied Finance Company.
/s/ Roque Garza”.

The record indicates that at the hearing on plaintiff’s motion the trial court took the case under advisement and granted defendants’ request to file a cross motion for partial summary judgment. This cross motion for partial summary judgment was based on the alleged violation of the Truth-in-Lending Act contained in defendants’ amended original answer. The motion stated that the summary judgment should be granted as a matter of law based on disclosure violations evidenced in plaintiff’s Federal Disclosure Statement. The defendants filed an affidavit in support of their motion.

On April 11, 1977, the trial court denied defendants’ motion, granted plaintiff’s motion, and entered a final judgment awarding plaintiff $936.60 plus interest and costs and foreclosing plaintiff’s security lien. Defendants bring forward on appeal points of error complaining of the trial court’s action in granting plaintiff’s motion for summary judgment, in entering a judgment of judicial foreclosure, and in failing to grant defendants’ cross motion for partial summary judgment.

In passing upon the points raised on this appeal, we are guided by the familiar rules concerning summary judgments established by our Supreme Court. Rule 166-A, Texas Rules of Civil Procedure provides that summary judgments shall be rendered where the record shows that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. The burden of proof is on the movant, and all doubts as to the existence of a material fact issue are resolved against him. Great American Reserve Insurance Company v. San Antonio Plumbing Supply Company, 391 S.W.2d 41 (Tex.Sup.1965). It is our duty to determine if there are any genuine issues of a material fact to be tried, and not to weigh the evidence or determine its credibility and thus try the case on the affidavits. Parrott v. Garcia, 436 S.W.2d 897 (Tex.Sup.1969); Gaines v. Hamman, 163 Tex. 618, 358 S.W.2d 557 (1962); Gulbenkian v. Penn, 151 Tex. 412, 252 S.W.2d 929 (1952). Affidavits supporting or opposing the motion must set forth such facts as would be admissible in evidence. They must be factual; conclusions of affiant are not considered to have any probative value. Hidalgo v. Surety Savings and Loan Association, 487 S.W.2d 702 (Tex.Sup.1972); Crain v. Davis, 417 S.W.2d 53 (Tex.Sup.1967); Travis County Water Control & Improvement District No. 12 v. McMillen, 414 S.W.2d 450 (Tex.Sup.1966); Box v. Bates, 162 Tex. 184, 346 S.W.2d 317 (1961).

Defendants first complain that the trial court erred in granting plaintiff’s motion for summary judgment because plaintiff had not carried the burden of proving that there was no genuine issue of any material fact because defendants, by affidavit, raised an issue of whether the amount of the debt claimed by plaintiff was correct. Plaintiff argue, on the other hand, that defendants’ statements contained in the affidavit are mere conclusions which are insufficient to create a factual issue and that defendants’ affidavit is fatally defective because it was not properly sworn to on personal knowledge.

The general rule is that when a motion for summary judgment is supported by affidavits, depositions, stipulations or other extrinsic evidence sufficient on its face to establish a fact, which if proven at trial would entitle the movant to an instructed verdict, the opponent must show opposing evidentiary data which will raise an issue as to a material fact, or must justify his inability to do so and seek appropriate relief under subdivision (f) of Rule 166-A. Gulf, Colorado & Santa Fe Ry. Co. v. McBride, 159 Tex. 442, 322 S.W.2d 492, 500 (1958); Fail v. Lee, 535 S.W.2d 203, 207 (Tex.Civ.App.-Fort Worth 1976, no writ); Enterprises and Contracting Co. v. Plicoflex Inc., 529 S.W.2d 805 (Tex.Civ.App.-Houston [1st Dist.] 1975, no writ).

The following statement contained in defendants’ answer in opposition to plaintiff’s motion for summary judgment in effect admits that defendants did not have any factual basis upon which to support the conclusion stated in their affidavit, but it raises the applicability of subdivision (f) of Rule 166-A.

“Defendants, not having accurate records in their possession to swear of their personal knowledge to specific facts that would controvert Plaintiff’s factually unsubstantiated allegation that $936.70 Dollars is due and owing having filed a motion for continuance in this action in order to do further discovery by interrogatories and deposition to substantiate their good faith belief they do not owe the specific amount sought by plaintiff.” (Emphasis added).

Defendants’ statements suggest that a motion for continuance as authorized by Rule 166-A(f) had been filed in this case. The record on appeal, however, does not contain any such motion nor any court order issued pursuant thereto. Defendants did not avail themselves of the means and opportunity provided under subdivision 166-A(f) to develop sufficient facts to properly controvert plaintiff’s motion if defendants in good faith believed they had made additional payments. Speculation, opinions or an expression of belief that at trial evidence can be offered to create an issue is insufficient to prevent the entry of a summary judgment. Whittenburg v. Cessna Finance Corp., 536 S.W.2d 444 (Tex.Civ.App.-Houston [14th Dist.] 1976, writ ref’d n. r. e.); Duffard v. Corpus Christi, 332 S.W.2d 447 (Tex.Civ.App.-San Antonio 1960, no writ). One of the purposes of Rule 166-A is to eliminate “patently unmeritorious claims or untenable defenses.” Swilley v. Hughes, 488 S.W.2d 64, 68 (Tex.Sup.1972); Gulbenkian v. Penn, 151 Tex. 412, 252 S.W.2d 929, 931 (1952). The defendants failed to seek the relief available under Rule 166-A(f).

Payment is an affirmative defense in the nature of a plea and avoidance, and payments not admitted in plaintiff’s petition must be specially pled by defendants. Southwestern Fire & Casualty Co. v. Larue, 367 S.W.2d 162 (Tex.Sup.1963); Commercial Inv. Trust v. Smart, 123 Tex. 180, 69 S.W.2d 35 (1934); Rules 94, 95 Texas Rules of Civil Procedure. Here defendants did not plead payment in any form. The absence of a sworn pleading is not necessarily fatal in summary judgment proceedings, however, if the proof filed in reply to the motion for summary judgment establishes facts, which if true, would constitute a defense. Womack v. Allstate Insurance Co., 156 Tex. 467, 296 S.W.2d 233 (1956); Alonzo v. Northern County Mutual Insurance Co., 561 S.W.2d 53 (Tex.Civ.App.-Houston [14th Dist.] 1978, no writ); Smith v. Crockett Production Credit Association, 372 S.W.2d 956 (Tex.Civ.App.-Houston 1963, writ ref’d n. r. e.). The statements regarding payment made in defendants’ affidavit in opposition to plaintiff’s motion for summary judgment are mere conclusions. They have no probative force and are insufficient to raise a factual issue even if the affidavit had been properly sworn to by defendants on their personal knowledge. Zock v. Bank of Southwest National Association, Houston, 464 S.W.2d 375, 377 (Tex.Civ.App.-Houston [14th Dist.] 1971, no writ); Holleman v. Halliburton Co., 450 S.W.2d 883, 887 (Tex.Civ.App.-Fort Worth 1970, no writ); Smith v. Crockett Production Credit Association, 372 S.W.2d 956, 959 (Tex.Civ.App.-Houston 1963, writ ref’d n. r. e.); accord, Harrison v. Leasing Associates, Inc., 454 S.W.2d 808 (Tex.Civ.App.-Houston [14th Dist.] 1970, no writ); S.K.Y. Investment Corp. v. H. E. Butt Grocery Co., 440 S.W.2d 885 (Tex.Civ.App.-Corpus Christi 1969, no writ); Schindler v. Thomas, 434 S.W.2d 187 (Tex.Civ.App.-Corpus Christi 1968, no writ). See also Hidalgo v. Surety Savings & Loan Association, supra at 703; Crane v. Davis, supra. We hold that plaintiff’s pleadings, motion for summary judgment and summary judgment evidence (the manager’s affidavit and copy of the note and security agreement) present evidence establishing a prima facie case in a suit on a promissory note which supports the trial court’s summary judgment in favor of the plaintiff. Defendants’ point of error is overruled.

In point of error ten, defendants complain that the trial court erred in ordering the foreclosure of plaintiff’s security interest because plaintiff did not specifically plead or pray for such foreclosure and therefore, the trial court’s judgment did not conform to the pleadings pursuant to Rule 301 of the Texas Rules of Civil Procedure. Plaintiff contends that his combination prayer requesting special as well as general relief was sufficient to authorize the trial court to enter a judgment decreeing judicial foreclosure of the security interest.

The scope of remedies available to a secured party are largely governed by the terms of the security agreement. The security agreement contains two provisions relevant to plaintiff’s remedies in this instance. The first provision expressly reserved to the holder (plaintiff) the right to elect to enforce the defendants’ obligation on the underlying debt without prior resort to the property securing the debt. The second provision reserves to plaintiff all of the remedies available to a secured party under the Uniform Commercial Code (U.C.C.), Tex.Bus. & Comm.Code Ann. § 9.501 et seq. (1968), including non-judicial foreclosure of the security interest. In addition to creditor remedies governed by U.C.C. provisions, the U.C.C. permits a secured party upon default, “[to] reduce his claim to judgment, foreclosure, or otherwise enforce the security interest by any available judicial procedure”. Tex.Bus. & Comm.Code Ann. § 9.501(a).

The holder of a secured note is not required to exhaust his remedies against the security before enforcing the debt against the original maker, but he may proceed to judgment against the maker without reference to such security whether the security is in the form of a pledge of collateral or a mortgage on real or personal property. Maupin v. Chaney, 139 Tex. 426, 163 S.W.2d 380 (1942); Weatherby v. Townes, 42 Tex. 83 (Tex.Sup.1875); Melcer v. Warren, 550 S.W.2d 760 (Tex.Civ.App.-Austin 1977, writ ref’d n. r. e.); Wallace v. Briers, 405 S.W.2d 95 (Tex.Civ.App.-Eastland 1966, no writ); Loughney v. Texas City National Bank, 252 S.W.2d 954 (Tex.Civ.App.-Galveston 1952, no writ); Harper v. First State Bank, 3 S.W.2d 552 (Tex.Civ.App.-Waco 1928, error ref’d); Borschow v. Stephenson, 166 S.W. 121 (Tex.Civ.App.-Austin 1914, no writ). In Texas, if a personal judgment against the debtor is obtained on the underlying debt, then the secured party may enforce that judgment against the collateral by a writ of execution. See Rules 621, et seq., Texas Rules of Civil Procedure. A judicial sale pursuant to such execution is a foreclosure of the security interest by judicial procedure within the meaning of Section 9.501. Tex.Bus. & Comm.Code Ann. § 9.501(e). See Rules 649, 650, Texas Rules of Civil Procedure. The U.C.C. explicitly makes the lien obtained through levy of execution relate back to the date of the perfection of the security interest and also provides that a judicial sale, pursuant to such execution, is a foreclosure of the security interest by judicial procedure within the meaning of that section. Tex.Bus. & Comm.Code Ann. § 9.501(e).

In this case, the plaintiff did not seek judicial foreclosure but limited its suit to one on the underlying obligation. The question remains whether the trial court could properly enter an order granting judicial foreclosure when the plaintiff had prayed for a specific money judgment combined with a general prayer.

Rule 301 of the Texas Rules of Civil Procedure provides that: “[T]he judgment of the court shall conform to the pleadings, the nature of the case proved and the verdict, if any, and shall be so framed as to give the party all the relief to which he may be entitled either in law or equity.” Judicial foreclosure, however, is an additional remedy to that of seeking a personal judgment against the debtor. A judgment of foreclosure of a chattel mortgage should not be granted unless it has been specifically requested; a general prayer is not sufficient. See First Baptist Church of Paris v. Fort, 93 Tex. 215, 54 S.W. 892 (1900). We, therefore, sustain defendants’ point of error number ten and do not reach the question of whether defendants’ affidavit raised an issue of fact regarding the existence of the collateral. The existence of the collateral would be immaterial to a suit for a judgment on the debt.

Before considering defendants’ points of error complaining of the trial court’s failure to grant their cross motion for summary judgment, we will first address plaintiff’s third counterpoint which states that defendants’ Truth-in-Lending claims are barred by limitations. Allied Finance Company argues that defendants’ “affirmative defense” under the Federal Truth-in-Lending Act is barred by Section 1640(e) because appellants did not allege their “affirmative defense of offset” until January 18, 1977, when their first amended answer was filed. Defendants concede that their Truth-in-Lending claim would have been barred by Section 1640(e) had it been brought as an original action at the time it was pled in this case. Appellants contend, however, the Truth-in-Lending Act claim is not barred because it is an action in the nature of a recoupment which arises out of .the same transaction as appellee’s claim. We agree.

Recoupment, one form of a counterclaim, is a “demand arising from the same transaction as the plaintiff’s claim”, while an offset arises out of a transaction different than the one forming the basis of plaintiff’s claim. 3 Moore’s Federal Practice ¶ 13.02 n. 1, p. 13-54 (2d ed. 1974). Regarding the applicability of statutes of limitations to a demand in the nature of a recoupment, both the Texas and Federal courts follow the general rule that a re-coupment, when pled only to defeat plaintiff’s claim, is not barred by the statute of limitations so long as the plaintiff’s main action itself is timely. The defense of re-coupment may be asserted even though the same claim asserted as an independent cause of action would be barred by limitations. United States v. Western Pacific Railway Co., 352 U.S. 59, 62, 77 S.Ct. 161, 1 L.Ed.2d 126 (1956); Bull v. United States, 295 U.S. 247, 262, 55 S.Ct. 695, 79 L.Ed. 1421 (1935); Morriss-Buick Co. v. Davis, 127 Tex. 41, 91 S.W.2d 313, 314 (1936); 37 Tex.Jur.2d Section 18 (1962); 51 Am.Jur.2d Section 77, p. 656 (1970).

We hold that the principles of re-coupment apply here even though defendants called their claim an “off set”. Defendants’ Truth-in-Lending Act claim involves the same transaction which resulted in the note upon which the plaintiff now seeks to recover. See Wood Acceptance Co. v. King, 18 Ill.App.3d 149, 309 N.E.2d 403 (1974); Reliable Credit Service, Inc. v. Bernard, 339 So.2d 952 (La.App.1976), cert. denied, 342 So.2d 215 (La.Sup.1977) (no error of law); Termplan Mid-City, Inc. v. Laughlin, 333 So.2d 738 (La.App.1976); Continental Acceptance Corp. v. Rivera, 50 Ohio App.2d 338, 363 N.E.2d 772 (1976), cert. denied, 434 U.S. 857, 98 S.Ct. 180, 54 L.Ed.2d 129 (1977). But see, Hewlett v. John Blue Employees Federal Credit Union, 344 So.2d 505 (Ala.App.1976); Hodges v. Community Loan & Investment Corp., 234 Ga. 427, 216 S.E.2d 274 (1975), affirming, 133 Ga.App. 336, 210 S.E.2d 826 (1974). In Black’s Law Dictionary, they say: “. While there is a well-defined distinction between set-off and recoupment, they are each, in a sense, set-offs”, citing authority.

Next we consider the merits of defendants’ contention that the trial court erred in failing to grant its motion for partial summary judgment. Defendants’ amended original answer and cross motion for partial summary judgment were predicated upon the following alleged violations of the provisions of the Truth-in-Lending Act, 15 U.S. C.A. § 1601 et seq., and of the regulations promulgated pursuant thereto, 12 C.F.R. 226 et seq. (Regulation Z):

“(a) By failing to properly disclose on the Disclosure Statement clearly, conspicuously and in a meaningful sequence the terms of the note in violation of Regulation Z 226.6(a).
(b) By failing to disclose that a security interest in after acquired property of the same character does not attach as against household goods acquired more than ten (10) days after the date of the note’s execution in violation of 12 C.F.R. 226.-8(b)(5), and 12 C.F.R. 226.6(c) of Regulation Z.”

In support of their cross motion for partial summary judgment, defendants attached as exhibits a copy of the note, the “Federal Disclosure Statement” and the security agreement as well as an affidavit.

It is plaintiff’s position that the trial court correctly denied defendants’ motion because the defendants’ affidavit is fatally defective. We do not reach this contention because the essential issue in a Truth-in-Lending action is whether or not the contract complies with the law. This can be determined in a summary judgment proceeding once the disclosure statement is properly in the record with a motion for summary judgment. See Ives v. W. T. Grant Company, 522 F.2d 749 (2nd Cir.1975); Bartlett v. Commercial Federal Savings & Loan Association of Omaha, Nebraska, 433 F.Supp. 284 (D.Neb.1977); McDonald v. Savoy, 501 S.W.2d 400 (Tex.Civ.App.-San Antonio 1973, no writ). The disclosure statements contained in the contract between the parties were properly before the trial court as exhibits attached to both plaintiff’s and defendants’ motions for summary judgment.

The Federal Truth-in-Lending Act is codified in 15 U.S.C.A. §§ 1601-1681t. The regulations pertaining thereto, commonly known as “Regulation Z”, are set out in 12 C.F.R., § 226 et seq. (1977). A creditor is defined in 15 U.S.C.A. § 1602(f) as being one,

. . who regularly extends, or arranges for the extension of, credit for which the payment of á finance charge is required, whether in connection with loans, sales of property or services, or otherwise. . . . ”

The provision of Regulation Z relating to disclosure of security interests, § 226.8(b)(5) provides in pertinent part as follows:

“(b) Disclosures in sale and nonsale credit. In any transaction subject to this section, the following items, as applicable, shall be disclosed:
. (5) A description or identification of the type of any security interest held or to be retained or acquired by the creditor in connection with extension of credit, and a clear identification of the property to which the security interest relates or, if such property is not identifiable, an explanation of the manner in which the creditor retains or may acquire a security interest in such property which the creditor is unable to identify . If after-acquired property will be subject to the security interest, or if other or future indebtedness is or may be secured by any such property, this fact shall be clearly set forth in conjunction with the description or identification of the type of security interest held, retained or acquired.” (Emphasis added).

The agreement between the parties discloses that it is clearly within the purview of the Truth-in-Lending Act. One portion of the agreement is entitled “Disclosure Statement Under Federal Law.” The plaintiff (the secured party) is a creditor as defined in Regulation Z and has executed the agreement which states in several particulars it complies with the Texas Consumr er Credit Code. The finance charge, in addition to these references, brings the transaction within the scope of the Truth-in-Lending Act and the Texas Consumer Code.

At the top of The Federal Disclosure Statement, the property subject to be secured for this loan, is checked as “Household goods” which are more specifically described immediately below. In conjunction with the description of the property to be held as security for the loan, defendants complain of the language appearing near the bottom of the disclosure statement under number “18” which states: “This security agreement will secure future or other indebtedness and will cover after-acquired property.” Defendants contend this statement violated § 226.8(b)(5) of Regulation Z because it failed to disclose that a security interest in after-acquired property will not attach as against household and consumer goods acquired after ten (10) days of the date of the execution of the note in accordance with § 9.204(d)(2), Tex.Bus. & Comm. Code Ann. (1968). That Section provides as follows:

“(d) No security interest attaches under an after-acquired property clause
#: ‡ ⅜ ⅜ ⅝ *
“(2) to consumer goods other than accessions (Section 9.314) when given as additional security unless the debtor acquires rights in them within ten days after the secured party gives value.”

The reference to after-acquired property contained in the disclosure statement ignores this 10-day limitation and it purports to secure for the creditor all of defendants’ after-acquired consumer goods.

Although our Texas courts have not considered this precise question, other courts have consistently ruled that disclosure of an after-acquired property clause without further explanation of the 10-day limitation on personal property subject to the security interest fails to comply with 12 C.F.R. § 226.8(b)(5). The Act calls for a “clear identification of the property” securing the loan and requires that references to after-acquired property “be clearly set forth in conjunction with the description or identification of the type of security interest”. See Pollock v. General Finance Corp., 535 F.2d 295, 299 (5th Cir. 1976), aff’d on rehearing, 552 F.2d 1142, 1144-1145 (5th Cir. 1977); Tinsman v. Moline Beneficial Finance Co., 531 F.2d 815, 818-819 (7th Cir. 1976); Williams v. Great Western Finance Co., Civil Action No. 75-C-104 (S.D.Tex., June 10, 1977); cf. Ecenrode v. Household Finance Corp. of South Dover, 422 F.Supp. 1327, 1330-31 (D.Del.1976); Willis v. Town Finance Corp. of Atlanta, 416 F.Supp. 10, 11-13 (N.D.Ga.1976); In re Dunne, 407 F.Supp. 308, 310-11 (D.R.I.1976); Woods v. Beneficial Finance Co. of Eugene, 395 F.Supp. 9, 14-15 (D.Or.1975); Johnson v. Associates Finance, Inc., 369 F.Supp. 1121, 1122-23 (S.D.Ill.1974); Kenney v. Landis Financial Group, Inc., 349 F.Supp. 939, 950-51 (N.D.Iowa 1972).

We therefore hold that the disclosure statement concerning the security interest retained in after-acquired property did not comply with the requirement of the regulations that after-acquired property subject to the security interest “shall be clearly set forth in conjunction with the description or identification of the types of security interest held . . . ” The reference to after-acquired property contained in the disclosure statement is located at the bottom of the page and not “in conjunction with” the identification of the property subject to the security interest which is located near the top of the page. In addition, this portion of the regulation requires a lender to explain the 10-day limitation of U.C.C. 9-204(4)(b) so that the borrower is informed that any consumer goods that he may acquire within ten days of the loan transaction are subject to the security interest and that any consumer goods acquired after that date are not. Pollock v. General Finance Corp., supra. Since the plaintiff failed to disclose the nature of the security interest retained in after-acquired property, it violated § 226.8(b)(5) as a matter of law.

Our holding on this violation of the Truth-in-Lending Act makes it unnecessary to address the other alleged violations contained in defendants’ motion for summary judgment, as the Act authorizes but one recovery for a given credit transaction regardless of the number of infractions compounded in it. Carney v. Worthmore Furniture, Inc., 561 F.2d 1100, 1103 (4th Cir. 1977); Mirabal v. General Motors Acceptance Corp., 537 F.2d 871, 880 (7th Cir. 1976); Tinsman v. Moline Beneficial Finance Co., supra at 819; Southwestern Investment Co. v. Mannix, 557 S.W.2d 755, 766, 770 (Tex.Sup.1977); 15 U.S.C.A. § 1640(g).

We conclude that the trial court improperly failed to grant defendants’ cross motion for partial summary judgment based on the violations of the Truth-in-Lending Act which appear on the face of the disclosure statement. It necessarily follows that the trial court also erred in failing to award defendants a monetary recoupment equal to the amount of penalties provided in the Act but not greater than the outstanding indebtedness defendants owe to plaintiff.

Defendants’ cross motion for summary judgment sought statutory damages for the failure of plaintiff to properly disclose the terms of credit. The applicable statute, 15 U.S.C.A. § 1640(a)(2)(A), provides that any creditor who fails to disclose information as required by the Act shall be liable to that person in an amount equal to twice the amount of the finance charge in connection with the transaction provided that such liability shall not be less than One Hundred Dollars ($100.00) nor greater than One Thousand Dollars ($1,000.00). Defendants, therefore, are entitled to receive a recoupment of Six Hundred Eighty Two Dollars and Thirty-Four Cents ($682.34) which represents twice the finance charge of Three Hundred and Forty-One Dollars and Seventeen Cents ($341.17) evidenced on the face of the disclosure statement.

The Act also specifically provides that a creditor who fails to comply is liable for costs and attorney’s fees to a successful litigant under the Act in addition to the statutory damages provided in the Act. 15 U.S.C.A. § 1640(a)(2). Defendants’ counsel in this case, Texas Rural Legal Aid, Inc., is authorized to receive attorney’s fees in Truth-in-Lending cases the same as private counsel. See Manning v. Princeton Consumer Discount Co., 533 F.2d 102 (3rd Cir. 1976); Sellers v. Wollman, 510 F.2d 119 (5th Cir. 1975).

The portion of defendants’ claim relating to attorney’s fees is therefore severed from the remainder of the case and is remanded to the trial court for the purpose of determining the amount which would constitute reasonable attorney’s fees under the facts and circumstances of this case.

That portion of the trial court’s judgment granting plaintiff’s motion for summary judgment and awarding plaintiff $936.60, the outstanding indebtedness due on the note plus interest is affirmed.

The trial court’s judgment granting judicial foreclosure is reversed and the judgment is here modified to exclude all references to foreclosure.

That portion of the trial court’s judgment denying defendants’ cross motion for partial summary judgment is reversed and judgment is here rendered in favor of defendants for a recoupment of $682.34 to be deducted from the amount defendants owe plaintiff under the note. The costs shall be assessed 50% to plaintiff and 50% to defendants.

The judgment is AFFIRMED IN PART; REVERSED, MODIFIED, AND RENDERED IN PART; AND REVERSED AND REMANDED IN PART.

      . Rule 166-A(f) provides as follows: “Should it appear from the affidavits of a party opposing the motion [for summary judgment] that he cannot for reasons stated present by affidavit facts essential to justify his opposition, the court may refuse the application for judgment or may order a continuance to permit affidavits to be obtained or depositions to be taken or discovery to be had or may make such other order as is just.”

      . 15 U.S.C.A. § 1640(e) (1974) provides as follows: “Any action under this section may be brought in any United States district court, or in any other court of competent jurisdiction, within one year from the date of the occurrence of the violation.”


text:
    LANDSCAPE DESIGN AND CONSTRUCTION, INC. and Maintain, Inc., Appellant, v. Thomas E. WARREN, III, Appellee.
    No. 19534.
    Court of Civil Appeals of Texas, Dallas.
    April 20, 1978.

      John A. George, Dallas, for appellant.
    Victor C. McCrea, Jr., Dallas, for appel-lee.
   ROBERTSON, Justice.

Thomas E. Warren, III, sued Landscape Design and Construction, Inc. and Maintain, Inc. to collect the balance due on a promissory note. After the defendants answered, Warren moved for summary judgment, attaching a copy of the note and the affidavit of his attorney. The trial court granted the motion, and the defendants now appeal. We reverse and remand.

Defendants argue that the affidavit is deficient because it does not reflect whether Warren’s attorney, as affiant, had personal knowledge of the facts recited in .the motion for summary judgment. We agree. The affidavit attached to the motion for summary judgment merely states that the affiant is the “attorney of record for Plaintiff, that he is duly authorized and qualified to make the affidavits and that the foregoing pleadings, statements and allegations contained in Plaintiff’s Motion for ■Summary Judgment are true and correct.” The affidavit does not state that the attorney has personal knowledge of the facts, nor does it recite facts which personal knowledge might be inferred. See Youngstown Sheet & Tube Co. v. Penn, 363 S.W.2d 230 (Tex.1963); Jones v. McSpedden, 560 S.W.2d 177, 180 (Tex.Civ.App.-Dallas 1978, no writ). Affidavits supporting a motion for summary judgment must be based upon the personal knowledge of the affiant. Woods Exploration & Producing Co., Inc. v. Arkla Equipment Co., 528 S.W.2d 568 (Tex.1975). While Rule 14 of the Texas Rules of Civil Procedure permits an affidavit to be made by a party’s attorney or agent, this rule does not obviate the necessity of showing that the attorney has personal knowledge of the facts, as distinguished from information obtained from the client. Ordinarily, an attorney’s knowledge of the facts of a case is obtained from the client. Consequently, if the attorney must act as affi-ant, the better practice is to state explicitly how the information stated in the affidavit was obtained.

Although Warren urges that this deficiency was a mere formal defect which was waived by the defendants failure to object in the trial court, we cannot accept this argument. A defect is rendered “formal” only when it fairly appears from the record that, despite the deficiency, there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Youngstown Sheet & Tube Co. v. Penn, supra. In Youngstown, our supreme court held that the affiant’s failure to specifically state that he had personal knowledge is a waive-able “formal” defect when the information set out in the affidavit indicates that the affiant probably has personal knowledge of the recited facts. See also Jones v. McSpedden, supra at 180. In the present case, however, the affidavit does not recite facts from which the affiant’s personal knowledge may be inferred. Thus, we conclude that this defect is substantive, rather than formal, and that no objection to the affidavit on this basis was necessary in order to preserve the point for appeal.

Reversed and remanded.

      . The summary judgment in this case was rendered before the 1977 amendment to Rule 166-A.


author: CLAYTON, Justice.

text:
    MOBILE HOME BROKERS, INC., Appellant, v. Andy COLVIN, Jr., d/b/a Lazy Oaks Mobile Home Park, Appellee.
    No. 8096.
    Court of Civil Appeals of Texas, Beaumont.
    April 20, 1978.
    Dale Felton, Houston, for appellant.
    T. Kent Cochran, Houston, for appellee.
   CLAYTON, Justice.

This is a suit for actual and exemplary damages as a result of a conversion. Plaintiff sold a mobile home to Mr. and Mrs. J. T. Dillard and retained a security interest in the mobile home until the entire balance of the purchase price was paid. The Dil-lards placed the home in a mobile home park owned by the defendant. Upon default in payment by the Dillards, plaintiff attempted to repossess the home pursuant to its security interest in the home but was refused possession of the home by defendant. Defendant would not release the home to plaintiff unless plaintiff paid rent and utility charges which were owing to defendant by the Dillards.

Trial was to a jury, but the trial court instructed a verdict in favor of plaintiff holding that defendant had committed the tort of conversion and awarded plaintiff the sum of $4,500, the same being the undisputed fair market value of the home at the time of the conversion. The trial court refused to submit requested special issues on malice and exemplary damages. Because of such refusal, the plaintiff appeals.

The only point of error urged by plaintiff is the error of the trial court in refusing to submit issues to the jury on malice and exemplary damages.

The act of conversion is apparently conceded by defendant. His only contention was that he believed he had the right to require plaintiff to pay him the amount of rentals and utility charges owed him by the Dillards; and, because of his belief in this regard, there was no malice shown by his acts, and therefore exemplary damages could not be recovered against him because of his refusal to permit plaintiff to gain possession of the mobile home.

Defendant testified that before he would permit plaintiff to take possession of the mobile home, plaintiff “had to pay me some rent.” He knew that plaintiff was coming out to his place to repossess the home because Dillard had so advised him, that he, defendant, “did not question the authority of [plaintiff] to get the home,” and that plaintiff “couldn’t get [the home] without [his] permission.”

When one sequesters property when he knows or should have known that he has no right to title or possession of the property so taken, such action will authorize the recovery of the property so taken, and such action will authorize the recovery of exemplary damages. First Security Bank & Trust Co. v. Roach, 493 S.W.2d 612, 618 (Tex.Civ.App.—Tyler 1973, writ ref’d n. r. e.); Commercial Credit Equipment Corp. v. Elliott, 414 S.W.2d 35 (Tex.Civ.App.—Eastland 1967, writ ref’d n. r. e.); Wright Titus, Inc. v. Swafford, 133 S.W.2d 287, 293-94 (Tex.Civ.App.-Austin 1939, writ dism’d judgmt. cor.).

The evidence in this case is undisputed that the plaintiff had the legal right to possession of the mobile home and that the defendant knew and recognized such rights to possession. The defendant had no legal right to possession, and defendant’s acts in failing and refusing to permit plaintiff to repossess the home were willful and showed a gross indifference to the rights of plaintiff. The issue of malice and exemplary damages were raised by this evidence. See Brown v. Grice, 357 S.W.2d 620, 621 (Tex.Civ.App.-Austin 1962, no writ). The trial court erred in not submitting these issues to the jury.

The judgment of the trial court is reversed, and this cause is remanded.

REVERSED and REMANDED.


text:
    D. M. CHAMBERS, Appellant, v. Charles R. LEE and Emmett Frank Lee, Jr., Appellees.
    No. 8540.
    Court of Civil Appeals of Texas, Texarkana.
    April 25, 1978.

      Gary B. Hall, Dallas, for appellant.
    Warren C. Lyon, Dallas, for appellees.
   CORNELIUS, Chief Justice.

Appellees were the owners and holders of a vendor’s lien note executed by appellant as payor and which was secured by a deed of trust covering a house and lot in Dallas County. Upon default in the payment of the note, the house and lot were sold pursuant to the power of sale contained in the deed of trust. Appellees purchased the property at the sale for the sum of $2,000.00 and then filed this suit against appellant to recover the deficiency, being the amount due on the note plus expenses and attorney’s fees less the amount received from the sale. Appellant answered by general denial and also filed a counter-claim for damages. Trial was to a jury which found that appellant owed appellees certain sums for taxes, attorney’s fees and trustee’s fees, but that no balance was due on the note. They also found that appellees were indebted to appellant in the sum of $214.00 representing certain escrow fees. Finding the undisputed evidence to be otherwise, the trial court rendered judgment non obstante veredicto in appellees’ favor for the sum of $2,978.78.

Appellant contends that he is entitled to a reversal of the judgment because the trial court erred in refusing his motions for continuance and in failing to grant a new trial on the ground of newly discovered evidence.

On the day of trial appellant filed a motion for a continuance based upon the withdrawal of his attorney and the absence of Mrs. Linda Washington, a potential witness. From statements in the briefs and matters contained in the record, it appears that appellant was represented by counsel from the time the suit was filed in November of 1975, until October 27,1976, when his attorney notified him that he was asking the court for permission to withdraw. Permission to withdraw was granted by the court on November 12, 1976. Appellant had not secured new counsel on November 18, 1976, when the court required him to proceed to trial. As concerns the absent witness, the record reveals that she was named as purchaser in a contract of sale with appellant which covered the property in question. Appellant contended in his counter-claim for damages that appellees had tortiously interferred with Mrs. Washington’s consummation of the contract of sale, and he urges that the absence of Mrs. Washington was fatal to his proof on the counter-claim.

The action of the trial court in denying a motion for continuance will not be reversed except upon a showing that the denial constituted a clear abuse of discretion. 13 Tex.Jur.2d, Continuance, Sec. 137, pp. 75, 76. If the motion for continuance does not meet the minimum requirements for such motions as prescribed by the rules of civil procedure, it will be presumed that the trial judge did not abuse his discretion in overruling it. Watson v. Godwin, 425 S.W.2d 424 (Tex.Civ.App. Amarillo 1968, writ ref’d n.r.e.); Panhandle Broadcasting Company v. Cercy, 363 S.W.2d 792 (Tex.Civ.App. Amarillo 1962, no writ); Jinks v. Jinks, 205 S.W.2d 816 (Tex.Civ.App. Texarkana 1947, no writ). Appellant’s motion for continuance did not meet those requirements. It was not sworn to, was not supported by an affidavit, made no allegations of diligence in either seeking substitute counsel or in securing the attendance of the absent witness, and did not apprise the court of the nature or materiality of the testimony which the witness would be expected to give. See Tex.R.Civ.P. 247, 251, 252, 253. In those circumstances, the trial court did not abuse its discretion in denying the motion. Moreover, had the motion complied with the rules, facts apparent from the record would compel a conclusion that the trial judge acted within his discretion in overruling it. Although appellant’s counsel was officially allowed to withdraw on November 12th, some six days prior to trial, appellant was apprised of the termination of the representation some three weeks before the trial setting. If he could not in that time have secured counsel who could go to trial on November 18th, the exercise of reasonable diligence surely would have enabled him to prepare and file a proper authenticated motion for a delay. And, appellant knew at least as early as March of 1976, when his counter-claim was filed, that Mrs. Washington would be needed as a witness; yet no subpoena was issued nor was any attempt made to secure'her testimony by other means.

Appellant’s point concerning newly discovered evidence is based upon his discovery, after the trial, that one of the notices of sale had been posted on a utility pole in the town of Highland Park when the town had an ordinance prohibiting the posting of any form of advertising on, among other things, “. . . telephone or electric light poles, or other public property . ”. It is contended that, had appellant known of the ordinance and presented the same to the jury, the jury would not have found, as they did, that appellees “. . . posted proper legal notice prior to the foreclosure sale . . . . Explaining his failure to produce the ordinance at the time of trial, appellant points to the fact that in affidavits attached to their motion for summary judgment the appel-lees stated that the notice was posted on a bulletin board in the Highland Park Fire Station; whereas, at the trial their witness testified that the bulletin board had been removed and that the notice was posted instead on a utility pole across the street from the fire station.

A new trial based upon newly discovered evidence in a civil proceeding will not be granted unless admissible evidence has been discovered after the trial; the movant was not lacking in diligence in failing to discover it sooner; the evidence is not merely cumulative or impeaching; and the evidence is of such materiality that it would, if believed, likely bring about a different verdict or finding on another trial. 4 McDonald’s, Texas Civil Practice, Secs. 18.16.1, 18.16.2, 18.16.3, 18.16.4 and 18.16.5, pp. 285, et seq.

Aside from the questions of appellant’s diligence and whether he was charged with constructive notice of the ordinance, we believe its introduction at the trial would not and could not have altered the finding that the notices of sale were properly posted.

The deed of trust and Tex.Rev. Civ.Stat.Ann. art. 3810 governing foreclosure sales provide that notices of sale shall be posted at three public places in the county where the sale is to be made, one of which shall be at the courthouse door. The term “public place” is a relative, rather than an absolute, term and is generally held to mean a place where people pass, meet or have occasion to be so that a notice posted there will be likely to meet public view and attract observation. Thomas v. Martin, 166 S.W.2d 934 (Tex.Civ.App. Amarillo 1942, no writ); Hunt v. Isom, 77 S.W.2d 1095 (Tex.Civ.App. El Paso 1935, no writ); Montgomery v. Reorganized School District No. 1, 339 S.W.2d 831, 90 A.L.R.2d 1201 (Mo.1960); Lake v. Riutcel, 249 S.W.2d 450 (Mo.1952); Annot., 90 A.L.R.2d 1210; 59 C.J.S., Mortgages, Sec. 566, p. 951. In determining what is a public place for such purpose, consideration should be given to whether the posting at that place would fulfill the purpose of giving the publicity contemplated by the nature of the notice. Montgomery v. Reorganized School District No. 1, supra; Annot., 90 A.L.R.2d 1210. It has frequently been held that a posting on private property, including specifically telephone and other utility poles, is nevertheless a posting at a public place if the location of the property otherwise meets the test of susceptibility to public travel and view. McFarlane v. Whitney, 134 Tex. 394, 134 S.W.2d 1047 (1940); Thomas v. Martin, supra; Onion v. Moreland, 97 S.W.2d 726 (Tex.Civ.App. San Antonio 1936, no writ); Hunt v. Isom, supra; Mahon v. Buechel Sewer Construction District No. 1, 355 S.W.2d 683 (Ky.Ct.App.1962); and other cases cited in Annot., 90 A.L.R.2d 1210.

The undisputed evidence here revealed that the telephone pole to which the notice was nailed, which was located just outside the Highland Park Fire Station, was a public place and that many other public notices were posted there. In fact, it was the customary place to post notices such as those involved here. The fact that appellees may have subjected themselves to a fine for posting the notice on a telephone pole in violation of the city ordinance did not change such an obviously public place to something other than a public place.

It may be argued that, as the posting was in violation of an ordinance, it may be assumed that the city authorities would remove the notices, but such an argument would apply with equal force to a posting on an any utility pole or other private property, and it has consistently been rejected by the courts. Mahon v. Buechel Sewer Construction District No. 1, supra; Annot., 90 A.L.R.2d 1210, and cases there cited. If the notices are actually posted the required number of days prior to the sale, it is not essential that they remain intact and visible during every one of the intervening days. 59 C.J.S., Mortgages, Sec. 566, p. 950. The person making the sale is not required to see that the notices are kept posted, and their subsequent removal by a stranger has been held not to affect the validity of the sale. 59 C.J.S., Mortgages, Sec. 566, p. 950; Cone v. Parrish, 32 F.Supp. 412 (N.D.Tex.1940), aff’d sub nom., Scott v. Cohen, 115 F.2d 704 (5th Cir.1940). Indeed, in the absence of evidence to the contrary, it is presumed that the notice, once posted, remained in place for the required time. 59 C.J.S., Mortgages, Sec. 566, p. 950; Hotchkiss v. Darling, 130 Cal.App. 625, 20 P.2d 343 (1933).

Appellant relies on Topletz v. Thompson, 342 S.W.2d 151 (Tex.Civ.App. Dallas 1960, no writ), to support his contention that the ordinance invalidated the posting, but that case is clearly distinguishable. There, the jury found that one of the notices was not posted in a public place. In ruling there was sufficient evidence supporting the jury finding, the court pointed to evidence that the notice was posted in a residential area zoned for single family dwellings where notices were not customarily posted and where advertisements or billboards of any kind were prohibited by ordinance. In the instant case, the evidence was undisputed that the notice was posted in a public place. We do not understand the Topletz case to hold that, merely because a person violates a city ordinance in posting a notice in a public place, that such place is no longer a “public place” in contemplation of the statute.

As the uncontroverted evidence in this case showed that the notice was posted at a public place as contemplated by the terms of the deed of trust and Article 3810, the trial court was correct in denying a new trial on the ground of newly discovered evidence.

Although the jury found that no balance was due appellees on the note after sale of the property, the uncontradieted evidence showed otherwise and established the amount thereof. Therefore, the trial court correctly rendered judgment non obstante veredicto in appellees’ favor. The judgment is affirmed.

      . Judicial notice will not be taken of a city ordinance. It must be proved as any other fact. Morrison v. Buckles, 355 S.W.2d 854 (Tex.Civ.App. Amarillo 1962, no writ); 23 Tex. Jur.2d, Evidence, Sec. 12, p. 31.

      . Highland Park, although located within Dallas County, is an incorporated town, separate and distinct from the City of Dallas, where the property in question is located.

      .Subsequent to the sale here, Article 3810 was amended to require only one notice at the courthouse door.

      . The city hall and fire station of Highland Park are located in the same building.


author: CADENA, Chief Justice.

text:
    WESTERN CASUALTY & SURETY COMPANY, Appellant, v. NEWELL MANUFACTURING COMPANY, Appellee.
    No. 15858.
    Court of Civil Appeals of Texas, San Antonio.
    April 26, 1978.
    Rehearing Denied May 24, 1978.

      Richard C. Keene, Gray & Keene, San Antonio, for appellant.
    W. N. Gremillion, Jr., House, Mercer, House & Brock, San Antonio, for appellee.
   CADENA, Chief Justice.

Western Casualty & Surety Company, plaintiff, seeks reversal of a summary judgment in favor of defendant, Newell Manufacturing Company, in a suit in which plaintiff seeks recovery of $70,000.00 paid by it in settlement of a personal injury suit brought by Ernest Holub, against defendant, plaintiff’s insured under a public liability policy.

The accident which was the basis for Holub’s suit against defendant occurred on August 1, 1969, but, although defendant’s president knew of the accident on the day it occurred, no notice was given to plaintiff, the insurer, until February 23, 1971, at which time the citation and accompanying petition in the suit by Holub against defendant was delivered to insurer.

Defendant does not contend that the notice given to insurer on February 23, 1971, satisfied the requirement that insurer be notified of the occurrence of an accident “as soon as practical.” Instead, defendant insists that, under the circumstances of this ease, insurer is precluded from asserting the defense of lack of timely notice.

Insurer received the citation in the Holub suit and acknowledged receipt by letter dated February 25,1971, in which insurer stated that its records “would indicate” that receipt of the citation constituted the first notice insurer had received of the August 1, 1969, accident. After stating that it was “accepting” the citation and petition “under a strict reservation of rights,” insurer, in this letter, informed defendant:

If at any time we determine that there has been a contractual violation of the policy conditions, we reserve the right to withdraw upon proper notice to you. Further, we will instigate our initial investigation at once but our investigation is conducted under this reservation afore mentioned and any actions that we may take, either by way of investigation or by way of defense of the pending litigation, shall not be deemed an estoppel of the rights afore mentioned. Further, we must advise that we are requesting your complete cooperation during the investigation that we will hereinafter conduct. * * * Pending further notification from us in writing we will do any and all things to investigate and to protect your interests in accordance with the contractual obligation of the insurance policy.

A copy of this letter was sent to defendant’s attorney, but the record does not indicate whether defendant or his attorney replied to the letter.

The Holub suit was set for trial and counsel for insured appeared on behalf of defendant. After a jury had been selected, Holub offered to settle his claim for $70,-000.00. Insurer and defendant then entered into a written agreement, dated October 7,1971, in which reference was made to, among other things, the mailing of the reservation of rights letter of February 25, 1971, the setting of the case for trial and selection of the jury, the offer of settlement and the fact that insurer and defendant believed that acceptance of the offer would be to their mutual benefit. This preamble is followed by an agreement to the effect that any rights which insurer or defendant “may have in and under” the insurance policy and “by and under” the reservation of rights letter of February 25, 1971, are “preserved one to the other,” and that insurer’s payment of $70,000.00 to Holub in settlement of Holub’s claim against defendant “shall not be deemed a waiver, estoppel or forfeiture of any of the rights” insurer “may have by virtue of its letter of February 25, 1971.”

Insurer then paid Holub $70,000.00 in settlement of Holub’s claim against defendant and then filed this suit against defendant seeking recovery of the amount paid by it to Holub.

It is generally agreed that the defense by an insurer of an action against the insured is incompatible with a denial of liability under the policy unless the insurer has taken appropriate steps to reserve the question of its liability.

The traditional mode of reservation of rights is the non-waiver agreement. This agreement may be in the form of an instrument executed by the insurer and the insured, or it may be evidenced by an exchange of letters. But the agreement may be inferred from the failure of the insured to reject the insurer’s offer to defend with a reservation of rights. In this latter situation, the theory seems to be that, because of the relationship of the parties, the insured is under a duty to speak in response to the offer and that his silence amounts to consent.

Language can be found in some cases expressing the view that a unilateral offer by the insured to defend subject to a reservation of rights will be effective to preserve the rights of the insurer to assert policy defenses irrespective of the consent of the insured. Associated Indemnity Corporation v. Wachsmith, 2 Wash.2d 679, 99 P.2d 420 (1940). However, there are decisions stating that consent of the insured is required if the insurer is to retain control of the defense while, at the same time, reserving the right to disclaim liability under the policy. Hawkeye Cas. Co. v. Stoker, 154 Neb. 466, 48 N.W.2d 623 (1951).

To a great extent, the conflict is only apparent. It would be a strange rule which would permit an insurer, merely by notifying its insured, to take over and control the defense of an action, without relinquishing its right to assert policy defenses, over the objection of the insured. There can be no doubt that the offer to defend subject to reservation of rights can be effective to protect the insurer even in the absence of an express consent or acceptance of the offer by the insured. The consent of the insured can be inferred from his conduct after receiving notice of the insurer’s offer. If, with knowledge of the offer, the insured stands by, expressing no objection, and allows insurer to defend the action, there is no difficulty, under ordinary rules of contract law, in implying the consent of the insured to the offer. On the other hand, if the insured refuses to accept the offer of a defense under such conditions, and so notifies the insurer, insurer cannot stubbornly continue with the defense and still preserve its right to assert policy defenses. Pacific Indemnity Co. v. Acel Delivery Service, Inc., 485 F.2d 1169 (5th Cir. 1973); 7A Appleman, Insurance Law and Practice § 4694, p. 546 (1961). If it were true that the consent of the insured to the defense of the action by insurer under a reservation of rights is not required, such a result could not be reached.

The provisions of a non-waiver agreement will be construed strictly against the insurer and will not be extended by implication beyond their exact terms. Employers Casualty Co. v. Tilley, 496 S.W.2d 552, 559 (Tex.1973). Thus, in U. S. Fidelity & Guaranty Co. v. Bimco Iron & Metal Corp., 464 S.W.2d 353 (Tex.1971), an agreement that no action taken by insurer in investigating the accident would preclude the subsequent assertion of policy defenses was held not to include attempts by insurer to settle or compromise the claim, since such attempts at compromise and settlement could not be considered part of the investigation.

We need not here decide whether, as defendant asserts, an insurer must, in order to prevent its being barred from asserting a policy defense when it undertakes defense of a claim against its insurer, deny liability and reserve its rights to assert such defenses. Compare Anno.: 81 A.L.R. 1326, 1327 (1932), where it is said that an insurer, by assuming and conducting the defense of a claim with knowledge of facts giving the insurer a defense, is precluded from asserting such defenses unless it disclaims liability and gives notice of its reservations of rights, with Anno.: 38 A.L.R.2d 1148, 1151 (1954), where the earlier annotation is cited in support of the statement that the right to assert policy defenses is lost if the insurer, with knowledge of facts giving rise to the defense, undertakes defense of the claim “without disclaiming liability or giving notice of a reservation of its rights.” (Emphasis added.)

In this case, the insurer reserved, according to the language of the reservation of rights letter, the right to withdraw if the insurer determined, in the future, “that there has been a contractual violation of the policy conditions.” However, the letter clearly states that the right to withdraw will be exercised only “upon proper notice to” the insured. “Proper notice to the insured” is to be given when the insurer determines that it has a policy defense and to exercise its right to withdraw. Withdrawal without such proper notice would not be in accord with the nature of the reservation.

Considering the fact that the insurer normally assumes full control of the defense, it is not unreasonable to require it to give proper notice of its decision to withdraw when it learns of the existence of a policy defense, or at least within a reasonable time thereafter, where it has assured its insured that such notice will be given. Absent such notice, the insured, who has been told that such notice will be given before withdrawal, has no reason to believe that a policy defense exists and will be asserted by the insurer. Where, as here, the right of withdrawal is, in the instrument drawn by the insurer, made dependent on the giving of proper notice, such notice should be given at a time when the insured can take proper measures to defend the suit himself, at least where the insurer, at the time it promises to give proper notice, has knowledge of all of the facts giving rise to the defense, or where it acquires such knowledge at a time sufficient to allow it to give the required notice without unduly prejudicing the rights of the insured.

This conclusion, which we limit to the situation where the insurer expressly agrees to give proper notice prior to withdrawal, is consistent with the general rule that an insurer cannot delay its decision to disclaim liability so long that the rights of the insured are prejudiced thereby. 7A Ap-pleman, Insurance Law and Practice § 4693, at 530-32 (1962).

Here, insurer at no time gave to its insured “proper notice” that it had determined that there had been a breach of a policy provision by the insured and that the insurer was exercising its reserved right to withdraw upon proper notice. Here, for seven months during which insurer had knowledge of all of the facts, no such notice was given as promised. Insurer undertook the defense, its attorneys selected a jury, and an offer of settlement was received with no indication to the insured defendant that a determination of breach of the policy had been made and that insurer elected to withdraw. It certainly would have been grossly unfair for insurer, at that time, to notify defendant that it had decided to withdraw from the defense.

It is true that the letter of reservation states that no action which plaintiff might take, either by way of investigation or by way of defense of the suit, “shall be deemed an estoppel of the rights above mentioned.” The only right “above mentioned” was the right to withdraw “upon proper notice.”

At best, the reservation of rights letter is ambiguous, in which case it must be strictly construed against the insured. The “right to withdraw” can reasonably be interpreted as referring to the “right to withdraw” from the investigation and defense of the case, rather than as a right to disclaim liability after the liability of the insured had been established. We adopt that interpretation, since any other interpretation would require that we resolve the ambiguity in favor of the insurer. Resolution of ambiguities in favor of the insurer does not comply with the requirement that so-called non-waiver agreements be strictly construed against the insurer.

If, at the time the second non-waiver agreement was made, while the jury which had been selected to hear the case was cooling its heels waiting for the presentation of evidence to begin, plaintiff had unduly delayed giving “proper notice” of the exercise of its right to “withdraw,” it was' then bound to defend the action and to pay off any judgment rendered against defendant. It was then too late to attempt to reserve its rights. The only right it had reserved had not been exercised. By that time, the insurer was bound, it had lost its rights to assert policy defenses, and, therefore, insurer had “waived” the prior “non-waiver.” The second agreement was to the effect that payment of the settlement should not be construed as a “waiver” of any of the rights which insurer might have by virtue of the reservation of rights letter of February 25, 1971. The rights reserved by insurer under such letter were lost by failure to give proper notice, not by payment of the settlement.

The judgment of the trial court is affirmed.


text:
    Samuel CARDONA, Appellant, v. TEXAS EMPLOYERS’ INSURANCE ASSOCIATION, Appellee.
    No. 1325.
    Court of Civil Appeals of Texas, Corpus Christi.
    April 27, 1978.
    Rehearing Denied May 18, 1978.

      Jack K. Dahlberg, Jr., Corpus Christi, for appellant.
    James W. Wray, Jr., Corpus Christi, for appellee.
   OPINION

NYE, Chief Justice.

Appellee has filed a motion to dismiss for want of jurisdiction in this cause on the basis that the appeal bond was filed more than 30 days after appellant’s motion for new trial was overruled. The pertinent dates involved are:

July 25,1977 judgment

July 29,1977 motion for new trial filed

August 16,1977 (a) Amended motion for new trial filed.

(b) Letter written to court coordinator stating parties agreed to extend the time for determination of the amended motion for new trial to a date certain, 1. e. October 7,1977.

August 23,1977 Above letter dated August 16, 1977 filed in clerk’s office.

October 7,1977 Second letter to court coordinator stating parties had agreed to an additional extension of time to a date certain, i. e. October 20, 1977.

October 14,1977 Above letter dated October 7, 1977 filed

November 2,1977 Order overruling motion for new trial signed (recited hearing was held October 7,1977).

November 7,1977 30th day after October 7,1977

November 14,1977 90 days after amended motion for new trial filed.

November 21,1977 (a) Order nunc pro tunc overruling motion for new trial (recites date of hearing was October 20, 1977 rather than October 7,1977 as stated in order of November 2, 1977)

(b) appeal bond filed

(c) 30th day after October 20, 1977

Appellee asserts the second agreement to extend the time for the determination of the motion for new trial was a nullity because it was filed after the expiration of the time to which the first extension was agreed; that the motion for new trial was therefore overruled by operation of law on October 7, 1977; and the appeal bond must have been filed no later than November 7, 1977 to be timely under Rule 356.

Appellant replies that the second agreement was reached October 7, 1977, and the date of filing is immaterial so long as an agreement otherwise correct is filed in the papers of the cause at some time.

Rule 329b(3), T.R.C.P. provides:

“3. All motions and amended motions for new trial must be determined within not exceeding forty-five (45) days after the original or amended motion is filed, unless by one or more successive written agreements of the parties in the case filed with the clerk of the court the decision of the motion is postponed to a day certain specifically set out in any such agreement. Any such day certain shall not be more than ninety (90) days after such original or amended motion is filed.” (Emphasis supplied)

The question to be determined is whether the letter dated October 7, 1977, by which the parties agreed to extend the time for determination of the amended motion for new trial to October 20, 1977, was effective in so extending the time. If so, the amended motion for new trial was overruled on October 20 and the appeal bond filed November 21 was timely. If not, the amended motion for new trial was overruled October 7 because the written agreement was not filed as of that date, and the appeal must be dismissed for want of jurisdiction.

Rule 329b(3) clearly requires a motion or amended motion for new trial to be determined within 45 days unless three events occur: (1) the parties agree in writing to extend the time to a date certain, which does not exceed 90 days after the amended motion for new trial is filed; (2) the written signed agreement is filed with either the clerk or the judge; and (3) that both of these events occur before the time is effectively extended. The later requirement was held mandatory by the Supreme Court in Texas Employers’ Insurance Assoc. v. Martin, 162 Tex. 376, 347 S.W.2d 916 (1961). In that ease, the written agreement was filed after the expiration of the date on which the motion for new trial was overruled by operation of law. The Court stated:

“The date it was signed is not disclosed by the record, but we will take it for granted that both attorneys executed the same within forty-five days after the amended motion for new trial was filed. . Rule 11 provides that ‘no agreement between attorneys or parties touching any suit pending will be enforced unless it be in writing, signed and filed with the papers as part of the record, or unless it be made in open court and entered of record.’ This is one of the general rules appearing in Part I of our Rules of Civil Procedure, and Rule 329-b must be read in light of its provisions. In so far as the present proceeding is concerned, the instrument signed by the attorneys could have no operative effect as an agreement until it was filed on July 15th. At the time that was done the amended motion for new trial had already been overruled by operation of law, and the parties were then without power to postpone the decision of the motion.” (emphasis original). Id. at 917, 347 S.W.2d at 917.

The question of the need to timely file the written agreement was raised in several recent cases, all of which follow the Martin case. In Hogg v. Washington National Insurance Co., 495 S.W.2d 25 (Tex.Civ.App.-Tyler 1973, no writ), the Court held the date of filing was critical, and reinstated an appeal only after affidavits were filed to show the agreement was mailed to the clerk one day prior to the date the motion for new trial would have been overruled by operation of law, and therefore the filing was timely under Rule 5, T.R.C.P. Filing was also considered critical in Pumphrey v. Pumphrey, 527 S.W.2d 216 (Tex.Civ.App.-Austin 1975, writ ref’d n. r. e.). In that case, the agreement was signed approximately three weeks before the motion for new trial would be overruled by operation of law, but the agreement was not filed until a month after the 45-day period expired. The Court quoted the rule from the Martin case and dismissed the appeal. In agreement is Hulsey v. Keel, 541 S.W.2d 656 (Tex.Civ.App.-San Antonio 1976, writ ref’d n. r. e.), wherein the Court stated, “ . . there must be a written agreement signed by the parties and timely filed with the clerk to postpone the decision. Nor can this requirement be waived by the conduct of the parties.” (emphasis added). Id. at 657-8.

We conclude that appellee’s contention has merit. The parties must not only agree to the extension of time for the determination of the motion or amended motion for new trial, but such written agreement must be timely filed with the clerk of the court. In the case at bar, the written agreement appears to be timely executed, but it was not filed until after the expiration of the time to which the first extension was validly made. Therefore, appellant’s amended motion for new trial was overruled by operation of law on October 7, 1977, and the appeal bond filed November 21, 1977, was too late. This Court has no jurisdiction to hear the appeal. The appeal is dismissed.