text:
    In re ESTATE of J. Roger DeWITT. Mary M. De WITT, Executor, Appellant, v. STATE of Missouri, Respondent.
    No. WD30753.
    Missouri Court of Appeals, Western District.
    Dec. 3, 1979.
    Rufus Burrus, W. Raleigh Gough, Independence, for appellant.
    John Ashcroft, Atty. Gen., Richard L. Wieler, Asst. Atty. Gen., Jefferson City, for respondent.
    Before DIXON, P. J., and TURNAGE and KENNEDY, JJ.
   DIXON, Presiding Judge.

This appeal involves the assessment of inheritance tax.

The Circuit Court of Cole County affirmed the order of the Probate Court which approved the Report of the Inheritance Tax Appraiser in the estate of J. Roger DeWitt and assessed a total tax of $22,756.07. The appraiser had determined that the entire marital trust, as set up in decedent’s will, should be subject to inheritance tax against the widow because of her right to receive the income from the trust for life, along with a general power of appointment to dispose of the assets of the trust on her death by will. In addition, the appraiser assumed, for purposes of assessment of inheritance tax, that the residuary estate set up in the decedent’s will was not sufficient to pay various bequests. This affected the amount of his assessments by elimination of a charitable bequest. Exceptions were filed by the Executrix who claimed that the tax assessment should only amount to $16,028.34.

Both the appellant, Executrix Mary DeWitt, and the respondent, State of Missouri, agree that the issues raised herein require the construction of the provisions of Chapter 145 of the Revised Statutes of Missouri, specifically: §§ 145.010; 145.020; 145.030; and 145.200 RSMo 1978. For that reason, the instant appeal was filed in the Supreme Court of Missouri pursuant to Article V, § 3 of the Constitution of Missouri placing exclusive appellate jurisdiction in that court where construction of revenue laws is involved. However, this cause was transferred by order of the Supreme Court to the Court of Appeals, Western District, on February 16, 1979.

The threshold issue to be determined by this court is whether this case is one which requires the construction of revenue laws so as to invoke the exclusive appellate jurisdiction of the Supreme Court, or whether it is a question of application of those statutes to the facts thus vesting jurisdiction of the issues in this court.

J. Roger DeWitt was a resident of Jackson County who died on November 20,1968. His will divided his estate into two trusts, a “marital trust” and a “residuary trust.” Under the “marital trust,” his widow, Mary M. DeWitt (the executrix) was given a life estate beneficial interest in that proportion of his entire estate which, with other provisions for his wife by will or otherwise, would constitute one-half of his entire estate for federal estate tax purposes. In addition, the will provided that upon his wife’s death, the trustee should pay over and distribute the principal of the trust, with all undistributed net income “to or for the benefit of such person or persons or corporation or corporations, or the estate of my wife, in such amounts or proportions, and in such lawful interests or estates, whether absolute or in trust, as my said wife may appoint by her last will and testament.”

. The will further provided that, if for any reason such power of appointment is not effectively exercised by his wife, then such estate shall be added to his “residuary” estate and distributed according to Article V of his will.

As to the “residuary” trust, the will provides in Article V that all the income from that trust be paid to his wife as long as she lives; upon her death all such income be paid to his brother, Robert A. DeWitt, for his life; and upon the death of his brother, the principal and all undistributed income be paid and distributed to numerous charitable institutions and individuals, including the “Ruby E. Simmons Trust” and the “DeWitt Family Trust;” and a bequest to a “Cemetery Maintenance Fund,” the income from which was to be used for flowers on the graves of the DeWitt and Mercer families.

Article XI of the Will provides for invasions of principal to be made first from the “marital trust” estate or, if that is not sufficient, out of the “residuary trust” estate. The power to. invade is limited to sums in the discretion of the trustee for the wife’s care, comfort, and maintenance considering her previous standard of living.

The inheritance tax report listed total assets of $1,764,040.62, deductions of $332,-859.04, and a net estate of $1,431,181.58. Of this amount, the sum of $1,005,946.76 was assessed as the value of the widow’s interest and after allowing exemptions, a tax of $5,900.57 was assessed against the net amount thereof. This amount of her taxable interest was arrived at by adding the full amount of the “marital trust” estate to the appraised value of the widow’s life estate in the “residuary trust” estate, and adding thereto the value of the club membership in the amount of $600.00.

The report further found that the “residuary trust” estate would not be sufficient to pay all the bequests enumerated under Article V of the Will, hence, instead of receiving the amounts named in the Will, each of these beneficiaries would receive an “abated amount,” approximately 64% of the amounts named in the Will. On the basis of this finding, the report found that there would be nothing left for the ultimate residuary bequest to the City of Independence for a community building to be known as “DeWitt Memorial Hall.”

It has long been the rule in Missouri that the first duty of a court of appeals is to determine whether or not it has jurisdiction, even if its jurisdiction has not been challenged. Kansas City v. Howe, 416 S.W.2d 683, 686 (Mo.App.1967), and In Re Estate of Youngblood, 447 S.W.2d 824, 826 (Mo.App.1969). It is also the rule that a transfer ordered from the Supreme Court to the Court of Appeals is not an adjudication, and the Court of Appeals is not precluded from reexamining the issue of jurisdiction and retransferring the case back to the Supreme Court if it determines that a substantial quéstion of constitutional construction is presented. Schmidt v. Morival Farms, 240 S.W.2d 952, 955 (Mo.1951); Collector of Revenue for City of St. Louis v. Parcels of Land Encumbered With Delinquent Tax Liens, 566 S.W.2d 475, 476 (Mo.1978).

The court in Ewing v. City of Springfield, 449 S.W.2d 681, 684 (Mo.App.1970) defined the task of “construction” as including a •determination of the “meaning and proper effect” of the United States and Missouri Constitutions when it determined that the alleged constitutional issue presented was really nothing more than a contention that the zoning law in question had been incorrectly applied. Other writers have elaborated on this principle:

“ ‘Construction’ may be technically distinguished from ‘interpretation’ but in practice the courts use these terms interchangeably. To the courts, ‘ “ ‘the term [construction] signifies determining the meaning and proper effect of language by a consideration of the subject-matter and attendant circumstances in connection with the words employed.’ ” ’ Therefore, the process of construction includes but does not end with the interpretation of the express language of a provision, since the court looks to the accompanying circumstances as well as the express language. This subtle distinction has been made in dicta but has never been the basis for a transfer to the court of appeals.
The courts have attempted to distinguish an application from a construction of the constitution; when the conclusion is reached that only the former is involved, the supreme court has no jurisdiction. ‘Construction’ may be defined as the ascertainment of the meaning attached by the drafters to the provision, while ‘application’ is the determination whether the facts of a case are within the scope of this meaning. However, it is not always easy to distinguish between the ascertainment of the drafters’ intent and the application of the constitutional provision.” (Footnotes omitted). 1964 Wash.U.L.Q. 425, 442-43.

The problems concerning revenue law jurisdiction revolve around two basic propositions articulated in State ex rel. Attorney General v. Adkins, 221 Mo. 112, 118-19, 119 S.W. 1091, 1093 (1909), transf’d from 119 Mo.App. 396, 100 S.W. 661 (1906):

“[1] [T]hat the revenue Paw] must be directly and primarily concerned, not merely indirectly or as an incident; . [2] where the question in the case is merely one relating to the general practice in circuit courts or before justices of the peace, although the case may pertain to the collection of taxes, yet . the revenue laws are not involved in a constitutional sense.”

Adkins also provides insight into which laws have been characterized as revenue laws:

“[I]t makes no difference where the law is to be found, whether under the title of ‘revenue’ or any other title, so long as it relates to the subject-matter of revenue; . the term ‘revenue law’ covers and includes laws relating to the disbursement of the revenue and its preservation, as well as provisions relating to assessment, levy, and collection of it . . Id. at 118 and 119 S.W. at 1093.

Estate of Osterloh v. Carpenter, 337 S.W.2d 942 (Mo.1960) involved the question of whether securities, purchased by the decedent within two years prior to her death and issued jointly in her name and the names of her sister, niece and nephews, were subject to taxation as being a transfer made in contemplation of death pursuant to § 145.020, subd. 1(3) RSMo 1949. The court determined that it had jurisdiction of the appeal because a construction of the revenue laws of Missouri was involved.

Osterloh provides not only precedent for categorizing § 145.020 as a revenue law but also provides an example for the two other considerations expressed in Adkins, supra: whether the revenue law is directly involved in the resolution of the case and whether it is necessary for the court to “construe” that statute in order to reach the resolution of the litigation.

As to the issue of “directness,” Judge Wasserstrom recently wrote for the court in Robb v. Estate of Brown, 518 S.W.2d 729, 732 (Mo.App.1974) that the issue in that case concerned primarily the question of costs in criminal cases where the accused was acquitted by reason of mental disease or defect and the impact upon the revenue laws was only an indirect consequence. Accordingly, jurisdiction was in the court of appeals.

Where the meanings of certain terms in the statutory provision were disputed, the Supreme Court has assumed jurisdiction. Transport Rentals, Inc. v. Carpenter, 325 S.W.2d 745 (Mo.1959). This is also the issue in Osterloh. . It was necessary to determine whether the securities in issue were within the definitions provided in § 145.010. Only by a direct resolution of the meaning of the statute could the issues between the parties be resolved. Thus, the Supreme Court had jurisdiction. See also, In Re Estate of Hough, 457 S.W.2d 687 (Mo.1970); In re Estate of Armack v. State, 561 S.W.2d 109 (Mo.banc 1978). The issue that must be resolved, then, is whether the facts of this case and the contentions made raise an issue of construction.

The relevant statutes in pertinent part are:

“145.010. Definitions
4. The word ‘transfer’ as used in this chapter shall be taken to include the passing of property or any interest therein, in possession or enjoyment, present or future, by inheritance, descent, devise, succession, bequest, grant, deed, bargain, sale, gift or appointment in the manner herein described.
145.020. Property subject to tax — exemptions
1. A tax is hereby imposed upon the transfer of any property, real, personal, or mixed, or any interest therein or income therefrom in trust or otherwise, to persons, institutions, associations or corporations, not herein exempted, in the following cases:
(1) When the transfer, by will or the intestate laws, is from any person who is a resident of this state at the time of his death.
2. Such tax shall be imposed when any person, association, institution or corporation actually comes into the possession and enjoyment of the property, interest therein or income therefrom.
145.030. Exercise of power of appointment deemed a transfer — tax determined by clear market value
Whenever any person or corporation shall exercise the power of appointment derived from any disposition of property made either before or after the passage of this law, such appointment when made shall be deemed a transfer taxable under the provisions of this law in the same manner as though the property to which said appointment relates belonged absolutely to the donee of such power and had been bequeathed or devised by the donor by will; and whenever any person or corporation possessing such power of appointment so derived shall omit or fail to exercise the same within the time provided therefor, in whole or in part, a transfer taxable under the provisions of this law shall be deemed to take place to the extent of such omission or failure, in. the same manner as though the persons or corporations thereby becoming entitled to the possession or enjoyment of the property to which such power relates had succeeded thereto by a will of the donee of the power failing to exercise such power taking effect at the time of such omission or failure. The tax so imposed shall be determined by the clear market value of such property at the rate herein prescribed and only upon the excess over the exemptions herein made.”

First, Mary DeWitt, the executrix, argues that the testamentary power of appointment given to her as the widow of the deceased Roger DeWitt should not have been taxed in the estate of the grantor because the statutes cited above do not authorize it. More specifically she argues that § 145.010 implies an “appointment” is something distinct from a devise, bequest, deed, etc. and § 145.030 exclusively deals with appointments and can be read as referring only to the exercise of a power of appointment and not its creation. In order words, when the statute says “such appointment (the exercise of the power) when made shall be deemed a transfer” it implies that until the power is exercised, there is no transfer and, therefore, there can be no tax until there is a transfer.

Further, she argues that by the use of the words “as though” in § 145.030, the legislature manifested its intent to impose a tax on the theory that the appointee (the person finally deriving beneficial enjoyment) does not take from the original owner, but takes from the exercise of the power by the donee of the power and, therefore, such a transfer is only taxable in the estate of the donee of the power.

Thus, the mere possession of a power of appointment is not taxable as against the “donee” of the power because § 145.020(2) implies an intent to tax only a beneficial interest which would lie with the presently unknown appointees.

The second argument made relates to § 145.200 which reads as follows:

“145.200. Valuation of life estates — tax due when — election by beneficiary— bond
When any property, interest therein or income therefrom belonging to any estate in course of administration, shall pass or be limited for the life of another or for a term of years, or to terminate on expiration of a certain period, the value of property at the date of death so passing shall be determined by appraisal for the purpose of taxes under this chapter immediately after the death of the decedent and the value of said life estate, term of years or period of limitation, shall be valued according to mortality tables, using the interest rate or income rate of five per cent, and the value of the remainder in said property so limited shall be ascertained by deducting the value of the life estate, term of years or period of limitation from the clear market value of the property so limited and the tax on the transfer of the separate estate or estates, remainder or remainders or interest shall be immediately due and payable, to the director of revenue together with interest thereon and said tax shall accrue as provided in section 145.110 and remain a lien upon the entire property until paid;

Mary DeWitt argues that this statute says the valuation of the remainder of the “residuary trust” estate is to be determined by deducting the value of the preceding life estates so the remainder is to be valued at $550,878.55 (the amount of the residuary trust) less the value of Mrs. DeWitt’s life estate which is $179,613.94 and the value of the testator’s brother’s life estate which is $97,946.21 leaving a present value of $273,-318.40. This, she argues, is the present value of the right to receive an estate of $550,878.55 at some time in the future; and the legacies of Roger Dewitt’s estate should not be taxed on the basis of the amounts they will ultimately receive, but on the basis of their present value, at the date of death of Mr. DeWitt. This would leave an amount great enough to cover a portion of the charitable bequest to the City of Independence for “DeWitt Memorial Hall” and reduce the total taxes.

As to the method of assessment under § 145.200, the attorney general argues that the statute requires the appraiser to determine the life estate on the basis of the interest or income rate of 5% and mortality tables. Once this is done, it is subtracted from the balance in order to determine the value of the remainder which will pass after the expiration of the life interests. There is no provision in the statutes for basing the tax on the present value of the future estates. According to the attorney general and without citation of authority, the state assumes that the provisions of the will are to be applied to the taxable value to exclude the bequest to the City of Independence.

The case of In Re Estate of Tompkins v. Carpenter, 341 S.W.2d 866 (Mo.1960) is. a case which comes close to dealing with the first issue raised by the Executrix here, but there are some significant differences. The facts in Tompkins are different from the instant case in that the timing of the suit in relation to the course of events raises an issue which is not directly dealt with in Tompkins.

The Tompkins court held that paying taxes as a contingent remainderman is not the same thing as paying a tax for the privilege of receiving the same property in a different capacity. The ultimate beneficiaries received the property as appointees of the donee of the power of appointment and not from the donor of the power.

In the instant case, plaintiff in effect construes the statutes in question and the holding in Tompkins to mean that in a situation where the exercise of a power of appointment is at a time after the death of the donor of the power but before the exercise of the power by the donee, § 145.030 controls exclusively and provides for taxation only in the estate of the donee at a time when the power is exercised (which in this case would be at the death of Mrs. DeWitt since the power is testamentary).

Thus, the first issue raised requires a determination initially whether § 145.020 is applicable in light of the facts so as to justify the imposition of the tax in J. Roger DeWitt’s estate. If § 145.020 is controlling, then the questions raised by the executrix as to § 145.030 will be rendered moot. The issue ultimately is whether a general power of appointment is an interest in property coming into the possession and enjoyment of Mrs. DeWitt under § 145.020 or whether the legislature intended for § 145.030 to exclusively control taxation of powers of appointment.

There does not appear to be a direct answer to the question posed, but the following general rules are applicable. The Missouri inheritance tax is considered a tax on the right to transfer property after death, In re Barnay’s Estate, 344 Mo. 135, 126 S.W.2d 209 (1939) and, therefore, the incidence of the tax falls upon the recipient of the property. In re Rosling’s Estate, 337 Mo. 544, 85 S.W.2d 495 (banc 1935); In Re Costello’s Estate, 338 Mo. 673, 92 S.W.2d 723 (banc 1936).

The case of In Re Costello’s Estate provides precedent for the proposition that even though the legatee dies before distribution, the property bequeathed to her was subject to the inheritance tax both on transfer from the original testator and on transfer from the deceased legatee (This case was decided under § 570 RS 1929, a predecessor to § 145.020. It still contains, however, the critical language of “an interest therein” although it was the language of “possession and enjoyment” of subsection 2 which was really in question in Costello). It was in Costello that the court construed the words “possession and enjoyment” to mean “control” when it justified imposition of the tax in this manner:

“Mrs. Robison had a vested interest in her share of James Costello’s property, subject to administration and lawful charges. She shared in any income from the property. Furthermore, she enjoyed the privilege of transferring the property by will to her daughters. We think she actually came into the enjoyment of the property within the meaning of the act.” Id. at 678-679 and 92 S.W.2d at 726.

The court in Tompkins, supra at 873, infers that a power of appointment is taxable to the widow in this case at this time in that the court recognizes that §§ 145.010 et seq. and 145.030 RSMo refer to two different “decedents” and that it is not only the donor of the power of appointment who is included in the statute.

Based on this authority, a question is presented concerning the construction of the statutes. If this were the only issue in the instant case, the question of proper jurisdiction would be a close one. The second issue raised as to the computation of the tax, however, raises an issue of construction that resolves the issue of jurisdiction.

Some reiteration of the facts will bring the issue into focus. The issue arises under the provisions of the nonmarital trust. The executrix had a life estate in this trust, and Roger DeWitt’s brother had a succeeding life estate. After the death of the second life tenant, the remaining trust estate was to be distributed to specified legatees in specified amounts. After the payment of these specific legacies, the residue and remainder of the property was to be paid to the City of Independence for the purpose of building a community service building to be known as the DeWitt Memorial Hall.

The parties do not disagree with respect to determining the amount of money to which the inheritance tax is to apply, nor to the calculations of value of the successive life estates. They agree that the value to be attributed to Mary DeWitt’s life estate is $179,613.94, and the value to be attributed to the successive life estate is $97,946.21. They likewise agree that the net taxable value of the nonmarital trust is $550,878.55, leaving $273,318.40 to be taxed to the remainder interests.

When the inheritance tax was calculated, the appraiser applied the provisions of the will to the remaining value to be taxed by calculating the total value of the specific bequests of some $400,000. The appraiser then concluded that no amount would be remaining for the nonspecific remainder interest bequeathed to the City of Independence. Since the specific bequests exceeded the $273,318.40 remaining value to be taxed in the DeWitt estate, the inheritance tax appraiser reduced proportionately the interests of each of the specific legatees and then applied to that reduced interest the applicable rate for each of the beneficiaries. This resulted in an increased tax to the beneficiaries because no portion of the remaining value of the estate taxed to the beneficiaries after the life estates was attributed to the charitable gift to the City of Independence.

The position of the executrix is that although the amount to be taxed is the $273,-318.40 remaining after the taxation to the successive life beneficiaries of the present value of their life estates, the appraiser erred in excluding any assignment of present value to the gift to Independence. The executrix does not agree that the provisions of the will should be applied literally to the $273,318.40 to provide for no payment to the charitable beneficiary. It is argued with some force that a determination of the amount to be received by the beneficiaries by this method is wholly artificial since, assuming a normal income to the trust estate, the life estates will not exhaust the corpus of the estate and, absent some extreme deflation of the values, it is entirely possible that the charitable gift to the City of Independence may constitute well in excess of $100,000 when it is actually distributed. As best the argument of the executrix may be understood as to her approach to this scheme of taxation, it is that the present value should be calculated as to each bequest specific in nature and thus leave funds which would be paid to the City of Independence and also reduce the amount of the tax.

This is not, however, the only alternative available to determine the tax due. The provisions of the trust could be applied to the gross amount of the estate to determine the amount each legatee would be entitled to at this time if the life estates did not intervene. This amount would then be translated to a percentage of the total amount distributed under such an assumption and then the tax levied to each beneficiary on the assumption that the taxable value of the interest would be the percentage of the total estate received times the taxable value of $273,318.40 times the applicable percentage rate. This would, of course, result in a portion of the $273,318.40 being exempt from taxation and would result in a lessening of the inheritance tax falling upon the other beneficiaries to the estate.

There is no specific and direct language in § 145.200 which addresses the peculiar problem posed by the circumstances of this case. Nor has there been any case law in Missouri construing and applying the statute in such circumstances.

The applicable language of the statute is as follows: “[T]he tax on the transfer of the separate estate or estates, remainder or remainders or interest shall be immediately due and payable, to the director of revenue together with interest thereon . . .” The method employed by the inheritance tax appraiser and supported by the attorney general in this court has implicit within it an assumption that nowhere appears in the statutory language. That assumption is that the language of the will will be applied to the artificially contrived amount available for tax to determine the value of the interests to be taxed. One of the patent difficulties with this approach to the construction of the statute can be demonstrated by assuming all of the facts of the instant case except to assume that the final residuary bequest was not to a charitable organization but to an individual who would ordinarily be liable for inheritance tax. If that were the case, then a person who is plainly a transferee under the provisions of the will and the statute would pay no tax.

On the other hand, if the construction argued by the executrix were adopted in such an assumed instance, the tax would be ratably borne by all who owed a transfer tax. So, too, if it be assumed that a will provided for a large specific bequest to a charity and the residue of the estate to a person who was subject to the inheritance tax, then in those circumstances a tax again might be avoided by a person who is subject to the inheritance tax. To illustrate this latter case, if it be assumed that the present value of a decedent’s estate before subtraction of the life estate was $500,000, the life estate were valued at $100,000, and the remaining value to be taxed in the decedent’s estate to the beneficiaries thereof is thus $400,000, and the will provided for a $400,000 specific legacy to the charitable institution and residue to an individual, there would then be distributable at the death of the life tenant $100,000 to a beneficiary subject to the inheritance tax. But this beneficiary would have paid no tax, for, under the theory adopted by the attorney general, the specific legacy to the charity would exhaust the fund available for a taxation, and no fund would be assessed against the residuary beneficiary who is subject to tax.

The critical language “tax on the transfer” must be construed with the language, “separate estate or estates, remainder or remainders or interest,” to determine the statutory intent in the computation of the tax. Where computation of a tax requires construction of a revenue law, the jurisdiction of the appeal is in the Supreme Court. In Re Estate of Armack, supra at 111-12. The language of the specific statute, § 145.200 RSMo 1978, gives no clear or even partial answer to the dilemma posed by these facts. The construction of the language in the light of the facts of this case will require judicial construction of the statute in the light of the whole statutory scheme of inheritance taxation. In that connection, the fact that § 145.240(2) provides for tax at the lowest rate where contingencies affect the remainder interest and which provides for collection at a later date if the contingencies when occurring create a situation where a higher tax is due, may by implication provide a basis for a construction which would adopt a method of computation different than the appraiser used in the instant case.

The issue presented requires specific interpretation and construction of § 145.200 RSMo 1978. The jurisdiction of this appeal is clearly lodged in the Supreme Court of Missouri, and the cause is therefore transferred to the Supreme Court of Missouri.

All concur.

      . Citing E. B. Jones Motor Co. v. Industrial Commission, 298 S.W.2d 407, 410 (Mo.1957), and City of Olivette v. Graeler, 329 S.W.2d 275, 279 (Mo.App.1959).

      . 12 CSR 10-8.110, the applicable regulation, does not cover the issue nor do the examples for the calculation of the tax found in Section 12.46 Missouri Estate Administration, 2nd Ed.


source: Caselaw Access Project

author: FLANIGAN, Chief Judge.

license: Public Domain

text:
    W. D. LLOYD, Jr., and Clariece Lloyd, as statutory trustees of Noel Furniture Manufacturing Company, a Missouri dissolved corporation, Plaintiffs-Appellants, v. McDONALD COUNTY BANK, a Missouri Banking Corporation, Defendant-Respondent.
    No. 10807.
    Missouri Court of Appeals, Southern District, Division One.
    Dec. 4, 1979.

      Herbert Douglas, Douglas, Douglas & Douglas, Neosho, for plaintiffs-appellants.
    C. Ross Rhoades, Robert W. Evenson, Pineville, for defendant-respondent.
   FLANIGAN, Chief Judge.

Plaintiffs W. D. Lloyd, Jr. and Clariece Lloyd are statutory trustees of Noel Manufacturing Co. (“Noel Co.”), a dissolved Missouri corporation.

The U.S. corporation income tax return of Noel Co. for the fiscal year ending September 30, 1972, was due to be filed on or before December 15, 1972, unless an extension was obtained. The return was not filed until February 1974 and the tax ($35,-122.46) was then paid. By reason of the late filing and the late payment Noel Co. paid $13,869.54 to the government as interest and. penalties.

Acting on behalf of Noel Co. plaintiffs brought this action against defendant McDonald County Bank, seeking recovery of .$13,869.54, plus interest, based upon alternative theories of breach of contract and negligence.

The petition pleaded that Noel Co. deposited $125,000 with defendant pursuant to a written agreement entered into on June 19, 1972, the terms of which were incorporated in the petition. The petition further alleged that on December 15, 1972, defendant “by its agent and employee H. D. Armstrong” mailed to the Internal Revenue Service Form 7004, “Application for Automatic Extension of Time to File Corporation Income Tax Return”; that the form, which was sent on behalf of Noel Co., should have been accompanied by a check in the amount of $36,000 in payment of income tax then owed by Noel Co.; that the accountant for Noel Co., one Brink “for and on behalf of Noel Co. directed defendant by written instruction to H. D. Armstrong to forwárd a check for $36,000 along with Form 7004 to the Internal Revenue Service so as to prevent penalty for failure to pay the tax on time; that defendant breached its escrow agreement by failure to remit the $36,000 to the Internal Revenue Service or in the alternative that defendant by its agent negligently failed to remit the $36,000 as directed from the escrow fund.”

The trial court, sitting without a jury, made findings of fact pursuant to Rule 73.01, V.A.M.R., and entered judgment in favor of the defendant. Plaintiffs appeal. Appellate review of this action is governed by Rule 73.01, par. 3, as construed in Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976). The judgment of the trial court must be sustained unless there is no substantial evidence to support it, unless it is against the weight of the evidence, or unless it erroneously declares or applies the law.

Plaintiffs contend that they were entitled to the relief requested by the petition for the following independent reasons:

1. Under the terms of the agreement of June 19, 1972 (“the June agreement”), it was the duty of the bank, on December 15, 1972, to withdraw $36,000 from the escrow fund and to remit that amount, along with Form 7004, to the Internal Revenue Service. The bank’s failure to do so constituted a breach of its obligation under the June agreement.

2. Form 7004 itself constituted a written instruction to defendant to remit $36,000 to the Internal Revenue Service, along with the form, and the bank was negligent in not heeding that instruction.

The only portion of the June agreement quoted and relied upon in plaintiffs’ brief is the following: “For purpose of this agreement, ‘claim’ shall include, but shall not be limited to any and all undisclosed and/or contingent liabilities of Noel Co., including all tax liabilities. . . . ”

Plaintiffs do not point to any other provision of the June agreement to support their argument that a duty was imposed upon defendant to withdraw $36,000 from the escrow fund and send that amount, with Form 7004, to the Internal Revenue Service on December 15, 1972.

Prior to the execution of the June agreement Noel Co. had contracted to sell certain assets to Noel Products, Inc. (“Products”). The parties to the June agreement were Noel Co., Products, and defendant bank. Pursuant to the June agreement $125,000 was deposited by Noel Co. in the bank as “the escrow fund.”

Material portions of the June agreement are set forth marginally.

After the initial deposit of $125,000 there was no deposit to or withdrawal from the escrow fund until December 24,1972, when the first withdrawal was made.

The principal events giving rise to the lawsuit took place on December 15, 1972, during a conversation at the bank. Present at that conversation were H. D. Armstrong, K. H. Brink, and Robert Foster.

At all material times Armstrong was the president of defendant bank and was also the assistant secretary of Noel Co. It was Armstrong’s testimony, undisputed by the plaintiffs, that he “functioned as assistant secretary in the preparation of various forms to pay taxes.”

Brink, a public accountant, and Foster, a certified public accountant, were accountants for Noel Co. Brink “handled the tax matters” of Noel Co.

For several days prior to December 15, 1972, Foster had been working with Brink on matters pertinent to, and preliminary to, the preparation of Noel Co.’s tax return. On that date the two accountants went to the bank. They had in their possession Form 7004 which had been prepared by Foster. Form 7004 is published by the Internal Revenue Service and is entitled “Application for Automatic Extension of Time to File Corporation Income Tax Return.”

As a result of the conversation between Armstrong and the two accountants Armstrong signed Form 7004 in his capacity as assistant secretary for Noei Co. and the form was mailed that day to the Internal Revenue Service.

The basic factual dispute was whether or not, during the conversation at the bank, Brink instructed Armstrong to mail a check in the amount of $36,000, together with Form 7004, to the Internal Revenue Service and to do so on that day. According to the two accountants, such were the instructions given Armstrong by Brink but Armstrong, so they later determined, failed to send the $36,000 check.

Defendant’s evidence, through Armstrong, was that Brink’s instructions to him were to sign Form 7004, in his capacity as assistant secretary for Noel Co., and to mail it that day to the Internal Revenue Service. These instructions, as delineated by Armstrong, were obeyed. According to Armstrong he received no instructions with regard to sending a $36,000 check or withdrawing $36,000 from the escrow fund in order to do so.

The trial court in its findings of fact adopted Armstrong’s version of the conversation. This court agrees with the finding of the trial court on that issue.

Plaintiffs’ first contention is that the June agreement imposed a duty on the bank to withdraw $36,000 from the escrow fund and send a check in that amount, along with Form 7004, to the Internal Revenue Service.

The June agreement is not a carefully drafted document. Under paragraph 2 the bank was instructed to hold the escrow fund until December 29, 1972, and then to deliver same to Noel Co., “if during that period no claims are made as hereinafter set forth.” The word “claim” is defined to include all tax liabilities of Noel Co. Paragraph 2 concerns itself basically with claims made against Products for which Noel Co. was primarily responsible. With respect to claims of that nature, the bank was under a duty to pay the claim if Noel Co. consented to the payment. Noel Co. was under a duty to give the bank written notice of the validity or invalidity of the claim. If Noel Co. disputed the claim, the bank had a duty to notify Products and a further duty not to make any withdrawal from the escrow fund until Products and Noel Co. agreed to that disposition.

There is nothing in paragraph 2 of the June agreement which imposed upon the bank a duty to pay a claim on its own initiative, that is, without express direction. Indeed the only provision in paragraph 2 expressly imposing a duty on the bank to pay a claim is conditioned upon Noel Co. first giving the bank written notice that the claim is valid and due.

Under paragraph 4 of the June agreement the bank was relieved from any obligation “to determine the amount or validity of any claim made against Noel Co.’s business.” The bank’s answer pleaded that language of paragraph 4 as justification for the bank not sending the $36,000 check and defendant’s brief in this court renews that argument. Even if the determination of Noel Co.’s income tax liability to the Internal Revenue Service was possible by resorting to construction of the contents of Form 7004, a topic for later discussion, plaintiffs make no attempt to refute defendant’s argument that paragraph 4 of the June agreement relieved the bank from making that determination.

Form 7004 was presented to Armstrong for his signature as assistant secretary of Noel Co. It was Armstrong’s testimony that he complied with all of the instructions given him by Brink. That testimony justified the trial court in concluding that the conversation of December 15 involved a task assigned by Brink to Armstrong solely in his capacity as an officer of Noel Co. and that the conversation was totally unrelated to Armstrong’s capacity as president of the bank.

Paragraph 7 of the June agreement imposed upon Noel Co. a duty to pay “all debts attributable to its business . to the end that all claims are paid without resort to the use of the escrow fund.” That language serves to weaken any argument that there was an implied duty on the part of the bank to pay a claim on its own initiative and without a specific request. There is merit in the bank’s argument that it was entitled to assume, at least until informed to the contrary, that Noel Co. would pay a claim, including a tax liability, by means other than resorting to the escrow fund.

Whether or not paragraph 2 of the June agreement authorized the bank to make withdrawals from the escrow fund on the unilateral instruction of Noel Co. need not be decided. If paragraph 2 is subject to that construction, it appears that Products derived little protection from the arrangement. Be that as it may, plaintiffs’ evidence was to the effect that the bank was authorized to make withdrawals from the escrow fund on the specific instructions of Brink. It was Brink’s testimony that he had control “of advising Armstrong regarding certain bills for payment — what I submitted to Armstrong, Armstrong paid.” Brink admitted that in February 1973 he, Brink, instructed Armstrong by letter to make two withdrawals from the escrow fund for the purpose of paying the personal income taxes of the plaintiffs and that Armstrong did so.

Plaintiffs’ evidence showed that, in the actual handling of the escrow fund, withdrawals were made by the bank only after specific instructions had been received. In no instance was a withdrawal made on the bank’s own initiative. Armstrong also testified that on each occasion when there was a disbursement from the escrow fund, it was pursuant to written or verbal instructions previously received. It is true that these withdrawals were made after December 15, 1972, but it is also true that they were made before the instant controversy arose.

This court concludes that neither the language of the June agreement nor the conduct of the parties in execution of it supports plaintiffs’ contention that the bank, in the absence of a specific instruction, had a duty to withdraw $36,000 from the escrow fund and to remit that sum to the Internal Revenue Service.

Plaintiffs’ second contention is that, aside from the factual issue of whether Brink gave specific oral instructions to the bank to send the $36,000 check, Form 7004 itself constituted a written instruction to the bank to do so.

The original Form 7004 which was signed by Armstrong and mailed to the Internal Revenue Service on December 15,1972, was not introduced in evidence for the reason that it was in the possession of the Internal Revenue Service. At the trial plaintiffs introduced into evidence Exhibit B which was, purportedly, a certified copy of the original Form 7004. Exhibit B bears the certificate of the Service Center Director of the Internal Revenue Service to the effect that it is a true copy.

This court has examined Exhibit B. It is clear that Exhibit B is not a true copy of the original form. This is so because Exhibit B, a one-page document, contains on its face the following: “See instructions for depositary method of payment see Instruction. 9.” There are no such instructions on Exhibit B and the inference is inescapable that Form 7004 had a reverse side or a second sheet containing the missing instructions.

Significantly Exhibit B does not contain any language requiring a remittance of a check to the Internal Revenue Service.

Exhibit B was prepared by the accountant of Noel Co. Line 3(d) on that Form 7004 reads: “Amount required to be deposited — at least 50 percent of line 3(c).” The blank opposite line 3(d) contains the typewritten figure $36,000.. Significantly line 3(c) reads, “Balance due . . . ” and line 3(c) is left blank.

Line 3(d) is at least open to the construction that the amount required to be deposited is satisfied if it is at least 50 percent of line 3(c). Since line 3(c) contains no amount it is arguable that no deposit was required. In any event it would be necessary to place some construction upon Exhibit B, and particularly line 3(d) thereof, and the trial court could properly have found that the bank was relieved from any duty to construe by reason of paragraph 4 of the June agreement.

Even plaintiffs’ brief acknowledges that Exhibit B is less than a clear instruction. Plaintiffs’ brief says: “Examination of Exhibit B does raise questions concerning the advisability of mailing a check with the form to the Internal Revenue Service.”

Certified public accountant Seideman, one of defendant’s expert witnesses, testified that, with respect to the use of Form 7004, the proper procedure was not to remit any payment to the Internal Revenue Service. The correct procedure was the “depositary method of payment,” which entails the use of an additional form, Form 503. Plaintiffs’ accountants had not prepared Form 503 and even they did not claim that Armstrong had received any instructions with regard to the depositary method of payment. No such instructions are on Exhibit B. Witness Seideman testified that it “would be a gross mistake to hand Form 7004 to a taxpayer without instructions on what to do.” Seideman also testified that there were so many irregularities on Exhibit B that he was not certain the Internal Revenue Service would have accepted the form even if it had been accompanied by a $36,000 check.

Certified public accountant Michael Cu-sack, a witness for the plaintiffs, testified that line 3(c) on Exhibit B should not have been left blank. Cusack also testified that if he had prepared Form 7004 and given it to a client Cusack would have given the client written instructions with regard to the depositary method of payment. Cusack said he could not be positive that even if Exhibit B had been accompanied by the $36,000 check, Noel Co. would have received credit and been relieved from interest and penalties. Cusack said that sending a $36,-000 check with Form 7004 “is going in an irregular manner.”

Although Exhibit B contains the deficiencies enumerated, plaintiffs’ position is further weakened by the fact that, in an answer to an interrogatory propounded to them by defendant, they attached “Form 7004 as presented to H. D. Armstrong.” The attachment to the interrogatory answer, which was introduced into evidence by defendant, is not a copy of Exhibit B.

On the attachment, line 3(c) is left blank and line 3(d) contains only a barely legible handwritten figure which appears to be $48.

Accountants for both sides testified that even if Form 7004 had been properly filled out and sent to the Internal Revenue Service on December 15, 1972, that step alone would not extend the deadline for Noel Co. .to file its return and pay its income tax. The latter result would be achieved only if the depositary method had been properly followed and only if at least $18,000 was paid in that fashion on that date.

The interrogatory attachment is subject to the construction that a payment in the amount of $48 would have complied with it. Such a payment, had it been made, would not have relieved Noel Co. from the interest and penalties it subsequently incurred.

The essence of this case is that defendant, acting as a depositary under the June 1972 agreement, breached no duty imposed upon it by that agreement. In December 1972 accountants, acting for Noel Co., presented Form 7004 to Armstrong in his capacity as assistant secretary of Noel Co. The accountants had not prepared the form properly. The accountants gave Armstrong certain instructions in his capacity as an officer of Noel Co., and the trial court was justified in finding that those instructions were obeyed.

The trial court, after hearing the evidence, rejected plaintiffs’ alternative theories of recovery — negligence and breach of contract. The record fully supports that disposition.

The judgment is affirmed.

All concur.

      . “The term ‘escrow’ is generally applied to a written instrument so deposited, but the term has been applied, although technically somewhat inaptly, to money deposited to be held until the performance of a condition. 30 C.J.S. Escrows § 3, pp. 1193, 1194. We think of no real reason, in the instant case, to pursue a more apt term to be applied to money thus specially deposited.” Nash v. Normandy State Bank, 201 S.W.2d 299, 301[4] (Mo.1947).

      . “2. Disposition of Fund. The escrow fund shall be held by the bank until December 29, 1972, in a non-interest bearing account separate and apart from the personal funds of the bank. If during that period no claims are made, as hereinafter set forth, the escrow fund shall be delivered to Noel Co.; if any claim is made against Products during that period or if within such time Products should discover any unpaid debt or missing asset chargeable to Noel Co., the nature and amount of such claim shall be communicated to Noel Co. in writing. Noel Co. shall notify the bank in writing within three days after receipt of such notice whether or not the claim or debt is valid and due. If Noel Co. consents to payment, the bank shall pay the claim or debt and obtain a receipt therefor. If Noel Co. disputes the claim or debt, the bank shall notify Products and shall not disburse any of the escrow fund in connection with the disputed item until such time as the bank receives written directions with respect to such disputed claim or debt signed by both Products and Noel Co. If any disputed claim or debt is unresolved at the time of the expiration of this escrow agreement, the bank shall continue to hold the escrow fund until such time as such claim or debt is disposed of to the satisfaction of Products and Noel Co.
      “For purpose of this agreement, the term ‘claim’ shall include, but shall not be limited to, any and all undisclosed and/or contingent liabilities of Noel Co., including all tax liabilities. . . .”

      “4. Liability of Bank. The bank shall not be bound by any agreement between Products and Noel Co. whether it has knowledge of the existence of such agreement or not, nor shall it be required to determine the amount or validity of any claim made against Noel Co.’s business, nor shall the bank be responsible for the sufficiency of any agreement for the payment of any claim or debt which may be made by Products and Noel Co. for such payment. . ...”

      “7. Duty of Noel Co. Noel Co. shall take reasonable steps to pay all debts attributable to its business in accordance with the terms of the contract of sale to the end that all claims are paid without resort to the use of the escrow fund.”


author: PREWITT, Judge.

text:
    Janece WILSON, Plaintiff-Appellant, v. WHEELER FARMS, INC., a corporation, and Wilbur Wheeler, Defendants-Respondents.
    No. 11032.
    Missouri Court of Appeals, Southern District, Division Three.
    Dec. 4, 1979.
    William F. Ringer, Powell, Ringer & Ringer, Dexter, for plaintiff-appellant.
    Joe Welborn, Briney, Welborn & Spain, Bloomfield, for defendants-respondents.
   PREWITT, Judge.

Plaintiff appeals from a judgment denying her request to quiet title in her to a tract of land approximately 35 X 350 feet in Grayridge, Missouri.

The land in question was included in the legal description of a deed dated July 13, 1957 from Ellen Wilson to the Reorganized School District No. 1 of Stoddard County, Missouri. Plaintiff and her now deceased husband acquired record title to a tract of land adjoining the disputed portion by deed dated August 3, 1957 also from Ellen Wilson. Shortly before the deed to the school district was made, the superintendent of school and a school board member made certain measurements of a portion of the land described in the deed. They measured south from existing school property. Exactly what measurements were made and their purpose is not clear from the evidence. A school employee who was with them cut a ditch at the south edge of the measurements. The ditch is approximately 35 feet north of the south line of the property as described in the deed to the school district. Plaintiff’s evidence indicates the ditch went completely across the property, but Wilbur Wheeler testified it went halfway through the property. The- school district used the property north of the ditch for a parking lot. The land south of the ditch, which is the disputed property, was not used for parking or improved by the school district. It was mowed by or for plaintiff and her husband since they acquired title to the adjoining property. After the school was closed, the school district in 1975 advertised and sold the property described in its deed to another who sold it to defendant Wheeler Farms, Inc. in 1976. In September of 1976, after a survey, Mr. Wheeler erected posts 32 or 33 feet south of the ditch. Plaintiff then brought this action. The trial court, sitting without a jury, found that defendant Wheeler Farms, Inc. was the owner of the property and denied plaintiff’s claim to it. No findings of fact were requested or made.

Plaintiff contends that the trial court’s determination was erroneous for two reasons. These are: 1. “[Bjecause . when one party, with a view of making a deed, . . . makes a physical survey of said land, giving it a boundary which is actually run and marked, and the deed is thereupon made, intending to convey the land which has been surveyed, such land that has been marked and surveyed will pass, though a different and erroneous description may appear on the face of the deed.” 2. That the school district had abandoned the public use of the land and plaintiff acquired title to it through adverse possession.

Our review of this case is to sustain the trial court’s determination unless there is no substantial evidence to support it, unless it is against the weight of the evidence, unless it erroneously declares the law, or unless it erroneously applies the law. Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976). As no findings of fact were requested or made, we presume that all facts were found in accordance with the result reached and affirm the trial judge if the judgment can be upheld upon any rea-' sonable theory. Roth v. Roth, 571 S.W.2d 659, 664 (Mo.App.1978).

We first consider plaintiff’s point I. Plaintiff admits that ordinarily the language in a deed will determine the property conveyed. However, plaintiff contends that an exception to this rule exists where a physical survey of the land has been made and the boundaries marked and the parties intended to convey the land as marked but the deed contained an erroneous description. Plaintiff cites 26 C.J.S. Deeds § 100a., p. 869 and Clarke v. Aldridge, 162 N.C. 326, 78 S.E. 216 (1913). The rule stated by those authorities requires that the parties to the deed mark the property and intend to convey the property marked rather than the land described in the deed. The evidence here does not disclose that to have occurred. There was no evidence as to any conduct of Ellen Wilson regarding the measurements. She was not present at the time the measurements were made and there is no indication that she even knew of them. The evidence does not show that the measurements were authorized by the school district nor that they were made for the purpose of establishing boundaries. The ditch was not necessarily placed on the land as a boundary marker. It could have been placed for other purposes. There was some evidence that it did help drain the land. There was also evidence that a house which had been located on the conveyed property was moved, apparently by or for Ellen Wilson, more than 35 feet south of the ditch. There was no evidence that the parties to the deed intended to convey any property other than that described.

After stating the exception upon which plaintiff relies, 26 C.J.S. Deeds § 100a. at 869 proceeds to say: “However, the exception is to be applied with caution; all the requirements necessary to bring the case within the exception must be met before it will be held applicable.” The evidence here does not show all the necessary requirements and thus plaintiff has not proven any exception to the rule that the property described in a deed will control in determining the property conveyed. Point I is ruled against plaintiff.

We now consider plaintiff’s remaining point. Plaintiff admits that school property is included in the statute excepting public lands from the statute of limitations, § 516.090, RSMo 1969, but claims that property may be abandoned so that the statute of limitations will apply. Plaintiff contends that as the school district never used the property, it in effect abandoned it, and that the evidence established title by adverse possession in plaintiff. As plaintiff is claiming abandonment, she has the bur-. den of proof to show it. Russell v. Allen, 496 S.W.2d 290, 294 (Mo.App.1973). The question of abandonment is largely one of intention. Id. 496 S.W.2d at 294. An intention to abandon must be proved, for there can be no abandonment without the intention to abandon. Cole County v. Board of Trustees of Jefferson City Free Library District, 545 S.W.2d 422, 425 (Mo.App.1976). Such an intention may be inferred only from strong and convincing evidence. Id. 545 S.W.2d at 425. The only evidence of any intention to abandon the property is that the school district never used it. Mere’ nonuse does not constitute abandonment. Russell v. Allen, supra, 496 S.W.2d at 294. As nonuse of the property was the only evidence of any intention to abandon it, and that alone is not sufficient proof, plaintiff has failed to prove abandonment. Point II is ruled against plaintiff.

The judgment is affirmed.

All concur.


author: PER CURIAM:

text:
    Lendell D. M. WALKER, Plaintiff-Respondent, v. WOOLBRIGHT MOTORS, INC., Defendant-Appellant.
    No. 11253.
    Missouri Court of Appeals, Southern District, En Banc.
    Dec. 5, 1979.

      Charles M. Wesley, Waynesville, for plaintiff-respondent.
    J. Max Price, David L. Steelman, Salem, for defendant-appellant.
   PER CURIAM:

Defendant’s predecessor, a Rolla Pontiac dealer, sold plaintiff a 1971 2-door Pontiac Trans Am automobile on January 15, 1975. Inter alia, on the reverse side of defendant’s order form was printed: “[Defendant] warrants this car to be 100 percent ‘Certified Conditioned’ and unconditionally guaranteed. For a period of 30 days or 2,000 miles from purchase, [defendant] will repair or replace any defective part of component below at no cost to the purchaser for any parts or any labor.” The day after plaintiff purchased the Trans Am he experienced unspecified mechanical difficulty with the vehicle and returned it to defendant for repairs. Defendant kept the car in its shop for about two weeks and returned it to plaintiff who immediately drove to Detroit, Michigan, where further mechanical difficulties developed. In his “Breach of Warranty” petition, plaintiff sought to recover $750.81 from defendant. The sum was what plaintiff allegedly had paid a Detroit Pontiac dealer “to replace engine, crankshaft, pistons and straighten oil pan” on the vehicle within the warranty period. A jury found for plaintiff in the full sum of his prayer and defendant appealed.

Albeit the prayer in plaintiff’s petition was limited to the recovery of the “expended $750.81 to repair said defective vehicle”, as his sole witness on the subject plaintiff was somewhat unartfully asked, through five transcript pages, for his opinion as to the difference between the actual value of the Pontiac on the date sold and what its value would have been at that time had it been as represented by defendant. Defendant’s objections to the numerous questions of plaintiff in this vein were all sustained because “its [sic] outside the scope of the pleadings” and, as volunteered by the court, “he hasn’t asked the proper question.” In any event, no allowed answer went to the jury on the subject. But in spite of an absolute dearth of evidence relating to the matter, the court, at plaintiff’s request and over defendant’s objection, gave instruction number 5: “If you find in favor of the Plaintiff, then you must award Plaintiff such sums as you believe was the difference between the actual cash value of the 1971 Pontiac Sedan on the date it was sold to Plaintiff and what it would have been on that date had the 1971 Pontiac Sedan been as represented by Defendant.” (Emphasis supplied).

As defendant urges here on appeal, since no evidence existed from which the jury could find the issues as submitted by Instruction No. 5, it was error to give the charge. “There is nothing more firmly entrenched in the law than the requirement that issues submitted in instructions to the jury be supported by evidence from which the jury could reasonably find such issue. ‘An instruction which is not supported by the evidence is erroneous in that it is misleading and confusing.’ ” Brassfield v. Sears, 421 S.W.2d 321, 323 (Mo.1967); Dickey Company, Inc. v. Kanan, 537 S.W.2d 430, 434[7] (Mo.App.1976).

Although, as above noted, the judgment nisi must be reversed because of error in giving Instruction No. 5, we shall briefly examine defendant’s point relied on (mislabeled “Points and Authorities” in disregard to Rule 84.04(d), V.A.M.R.) that the trial court erred in overruling its motion for a directed verdict and its post-judgment motion for judgment n. o. v. because plaintiff “failed to satisfy the condition precedent under the warranty in that no evidence was introduced to prove that [plaintiff] brought the 1971 Pontiac to [defendant’s] place of business for replacement or repair of any defective parts.”

Wherein and why, as required by Rule 84.04(d) it is contended that plaintiff, by not bringing the vehicle to defendant for repairs or replacement of defective parts, failed to satisfy the unspecified condition precedent under the unexplained warranty can be understood only by resorting to the transcript and argument portion of defendant’s brief, and this is something we are not required to do. Haase v. Richmond, 570 S.W.2d 341, 343-344[1] (Mo.App.1978). A point relied on should be penned so as to be self-sufficient for understanding [Barber v. M. F. A. Milling Co., 536 S.W.2d 208, 209-210[4] (Mo.App.1976)] as an appellate court is required to expend its efforts only on those points written in compliance with the mandatory rules of appellate procedure. Brown v. Wilkinson, 495 S.W.2d 678, 681[5] (Mo.App.1973). Furthermore, as previously observed, plaintiff did, in fact, return the vehicle to defendant for repairs the day after purchase and defendant, ostensibly, worked on it the ensuing two weeks. If defendant’s point refers to plaintiff’s failure to thereafter return the car to its Rolla shop rather than having the repairs or replacements performed in Detroit, Michigan, such a reference cannot be gleaned from the point as written. Moreover, an appellant on appeal is not permitted to broaden the scope of objections beyond that made to the trial court. Plumlee v. Ramsay Dry Goods Company, 451 S.W.2d 603, 605[4] (Mo.App.1970). It is enough to say that in its motions for directed verdict and judgment n. o. v., defendant nowhere referred to the warranty as limiting plaintiff’s recovery by requiring plaintiff to bring the car to defendant’s Rolla shop for repairs.

The other alleged errors relied on in defendant’s appeal herein should not occur upon retrial and need not be considered.

Judgment reversed and cause remanded for a new trial.

All concur.

      . Emphasis shows deviations from MAI 4.03 which reads: “If you find in favor of the plaintiff then you must award plaintiff such sum as you believe was the difference between the actual value of the (describe property . .) on the date it was sold to plaintiff and what its value would have been on that date had (describe property) been as represented by defendant.” Notes on Use say this form may “be used in breach of warranty cases (where supported by the evidence) if plaintiff elects this measure of damages.”


author: JUNELL, Justice.

text:
    David LAWSON, Trustee, Appellant, v. David K. GIBBS, Appellee.
    No. A2150.
    Court of Civil Appeals of Texas, Houston (14th Dist.).
    Oct. 17, 1979.
    Granted Nov. 14, 1979 with opinion.
    Second Motion on Rehearing Overruled Dec. 5, 1979.

      John W. Wheat, Wheat, Thornton & Burnett, Will G. Dickey, Houston, for appellant.
    Paul J. McConnell, III, DeLange, Hud-speth, Pitman & Katz, Houston, for appel-lee.
    Before COULSON, SALAZAR and JU-NELL, JJ.
   JUNELL, Justice.

This appeal raises the issue of the validity of a foreclosure sale under a deed of trust conducted by a substitute trustee appointed by the collateral assignee and indorsee of a real estate vendor’s lien note. The trial court granted summary judgment in favor of the property owner against the purchaser at the foreclosure sale, declaring the sale void. We reverse.

The suit was brought by David K. Gibbs, the owner of a tract of land, to quiet title in him and to declare void an attempted foreclosure sale. The property was originally owned by William H. Craig, who sold it to Wortham Investments, Inc., on April 1, 1975. The $100,000.00 first mortgage and deed of trust securing same are not in issue. Craig retained a subordinate vendor’s lien for $10,000.00 secured by a deed of trust naming John L. Buvens as trustee. On April 7, 1975, Craig executed a collateral transfer of that $10,000.00 note to Main Bank of Houston, granting the bank a security interest in the note, to secure his payment of a separate indebtedness to that bank. On the same day Craig indorsed and delivered the note to Main Bank of Houston. Craig filed a petition under Chapter XI of the Bankruptcy Act and on September 17, 1975, a stay order was entered in that proceeding. On October 14, 1975, Wortham Investments, Inc. conveyed the property to appellee Gibbs by general warranty deed retaining a vendor’s lien to secure a $10,977.20 note which the deed calls a “second lien note.” There is no mention in that deed of the preexisting $10,000.00 vendor’s lien note which Craig had collaterally assigned and indorsed to Main Bank of Houston.

On November 15, 1976, Main Bank of Houston appointed a substitute trustee of the deed of trust securing the $10,000.00 note indorsed and collaterally assigned to it by Craig. Notices of the trustee’s sale were posted as provided by the deed of trust, and on December 7,1976, Terrance Baggott, the substitute trustee, sold the subject property to David A. Lawson, Trustee, the highest bidder. Lawson is one of the defendants sued by Gibbs, and the appellant before this court.

The trial court granted plaintiff Gibbs’s motion for summary judgment against purchaser Lawson and denied Lawson’s motion for summary judgment. The court held that Craig, the collateral assignor, was the legal owner and holder of the note, and therefore the only proper party to appoint a substitute trustee. The court based its holding on the case of Merit Homes, Inc. v. Alltex Mortgage Company, 402 S.W.2d 943 (Tex.Civ.App.-Texarkana 1966, writ ref’d n.r.e.).

Appellant assigns error in the trial court’s ruling, claiming that the court incorrectly interpreted the applicable law, and alternatively that there are material fact issues in dispute. He appeals from the granting of Gibbs’s motion for summary judgment and from the overruling of his own motion for summary judgment.

When both parties have filed motions for summary judgment and one is granted, the court of civil appeals should determine all questions presented, including the propriety of the order overruling the losing party’s motion for summary judgment. Tobin v. Garcia, 159 Tex. 58, 316 S.W.2d 396 (1958). Thus, this court may consider the decision of the trial court in its review of the error claimed.

Appellee relies heavily on two cases, Merit Homes, supra and Busbice v. Hunt, 430 S.W.2d 291 (Tex.Civ.App.-Tyler 1968, writ ref’d n.r.e.). In both of those cases a note secured by a deed of trust was assigned as collateral by the holder to a third party. Upon default the collateral assignor of the note then appointed a substitute trustee under the deed of trust to institute foreclosure. In neither of those cases was the note ever indorsed by the holder to the collateral assignee. The sale by the substitute trustee in those cases was upheld on the ground that the collateral assignor was the proper party to appoint the substitute trustee.

Those cases are clearly distinguishable from the present case. The courts in Merit Homes and Busbice found the appointments proper not because the collateral assignor had that right inherently, as appellee contends. The appointments were proper because they were made by the holder of the note. In the present case it is undisputed that Craig indorsed the note in question to Main Bank of Houston; the issue then is the legal effect of that indorsement.

Negotiation of an instrument is a transfer of that instrument in such form that the transferee becomes a holder. Tex. Bus. & Com.Code Ann. § 3.302(a) (Vernon 1968). A holder is defined as a person who is in possession of an instrument drawn, issued or indorsed to him or to his order or to bearer or in blank. Tex.Bus. & Com. Code Ann. § 1.201(20) (Vernon 1968). The code states that if it is an instrument payable to order, delivery with the necessary indorsement makes the transferee a holder. Tex.Bus. & Com.Code Ann. § 3.202(a) (Vernon 1968). Thus, Main Bank of Houston became the holder of the Craig note by Craig’s indorsement and delivery. This is a status never attained by the collateral as-signee in Merit Homes and Busbice, and makes the present case distinguishable from those decisions.

According to the code, a holder may transfer, negotiate, discharge or enforce the note in his own name. Tex.Bus. & Com.Code Ann. § 3.301 (Vernon 1968). The mortgage of the property is an incident of the debt; and as long as the debt exists, the security will follow the debt. Nutt v. Anderson, 87 S.W.2d 760 (Tex.Civ.App.-Fort Worth 1935, writ dism'd). The power of non judicial foreclosure and sale must be exercised in strict compliance with the terms of the deed of trust creating that power. Slaughter v. Qualls, 139 Tex. 340, 162 S.W.2d 671 (1942). An examination of the deed of trust in this case reveals that the “legal owner and holder” of the note secured is the “beneficiary.” The deed of trust authorizes the beneficiary to appoint a substitute trustee, by designation in writing, who succeeds to all the rights and powers of the original trustee.

Appellee Gibbs argues that even if Craig’s indorsement gave Main Bank the rights of a holder, Craig remained the legal owner of the note, thus precluding the bank from becoming the “beneficiary.” We disagree. When Craig, as payee of the note, unconditionally indorsed and delivered the note to the bank, the bank acquired the ownership interest of the payee. We hold that the indorsement and delivery of the note to the bank gave it the status of “legal owner and holder.” As that is the definition given of beneficiary, and the beneficiary is entitled to appoint a substitute trustee, the appointment by Main Bank of Terrance Baggott as substitute trustee of the deed of trust was valid. Therefore, the trustee’s sale of the property under the terms of the deed of trust, at the direction of the Bank, was valid.

The opinions in the Merit Homes and Busbice cases strongly reinforce this conclusion. The Merit Homes court stated:

The promissory notes do not show any endorsement or other factor which would indicate that anyone other than appellee was the payee and the holder. The evidence of the appellee shows that at all material times it was the owner and holder of all of said notes and liens. 402 S.W.2d at 945.

In those cases had the assignors indorsed and delivered the collaterally assigned notes to the assignees, the collateral assignee would have been the proper party to appoint the substitute trustee under the terms of the deeds of trust, in the capacity of holder. Absent the indorsement the only rights of the collateral assignee in the collateral are those defined in Article 9 of the UCC, as adopted by Texas in Tex.Bus. & Com.Code Ann. § 9.101 et seq. (Vernon 1968), governing secured transaction?.

Thus, had Main Bank been only a collateral assignee of the note, its remedy upon default would be judicial foreclosure of the assigned note under Tex.Bus. & Com.Code Ann. § 9.501 (Vernon 1968). Only by taking that step could it have acquired the rights of owner and holder.

Appellee further contends that the foreclosure sale was void on the ground that it was conducted in violation of the stay order entered in the bankruptcy proceedings of William H. Craig. The record reflects that on February 4, 1977, the bankruptcy court approved the disposition of the proceeds of the foreclosure sale of Main Bank toward the secured indebtedness. Appellee cites the case of Claude Regis Vargo Enterprises v. Bacarisse, 578 S.W.2d 524 (Tex.Civ.App.-Houston [14th Dist.] 1979, writ ref’d n.r.e.) as authority to hold the sale void. That case held valid a sale conducted while a stay order was in effect on the ground that the subsequent order annulling the stay invalidated the stay ab initio. The court held that the annulling order served to validate all actions taken during the pendency of the proceedings.

We hold that the order of the bankruptcy court approving the distribution of proceeds from the foreclosure sale served to invalidate the stay order as to this sale. Thus, the sale will not be declared void on this ground.

Appellee contends that the presence of unresolved issues of material fact precludes this court from rendering judgment in favor of appellant. Appellee asserts that the lack of notice to him as the owner of the property, coupled with the allegedly grossly inadequate price obtained, raised an issue of irregularity of the sale. Appellee cites no authority, and research reveals none, to support the assertion that the landowner must be given notice of a foreclosure sale. The debtor obligated to pay the debt according to the records of the holder must be given notice of the sale according to Tex.Rev.Civ.Stat.Ann. art. 3810 (Vernon Supp. 1978-1979). In this case Wortham Investments, Inc., in the capacity of the debtor, was given such statutory notice. Had Main Bank been aware that appellee Gibbs had purchased the property, such knowledge would have imposed no legal duty to give Gibbs notice of the sale. Thus, whether or not the bank had such knowledge is not an issue of material fact.

The only evidence of grossly inadequate price is found in the summary judgment proof of the appellee. Mr. Gibbs states by affidavit his opinion that the property had a value far in excess of the amount recovered. Such an assertion, even if sufficient to raise a material fact issue, does not preclude the rendition of judgment in favor of appellant. The law is clear that proof of inadequacy of price received at a deed of trust sale will not alone support setting aside the sale. Such proof must be coupled with other factors tending to establish irregularities. Tarrant Savings Association v. Lucky Homes, Inc., 390 S.W.2d 473 (Tex.1964). Appellee has raised no other issue of material fact which could constitute such irregularity. Thus, in the absence of genuine issues of material fact, the judgment of the trial court is reversed and rendered in favor of appellant, David Lawson, Trustee.

Reversed and Rendered.

ON MOTION FOR REHEARING

Appellee’s motion for rehearing is overruled.

Appellant’s motion for rehearing points out that in his counterclaim he had sought to recover damages from David K. Gibbs for withholding possession of the property in question from December 7, 1976. Since this court has held that appellant was entitled to summary judgment against Gibbs on the question of title to and possession of the property, it follows that this cause should be remanded to the trial court for a determination of the damages due to Lawson, Trustee, from Gibbs.

Appellant’s motion for rehearing is granted; and the opinion of this court is modified to remand this cause to the trial court for a determination of damages due to Lawson, Trustee, on his cross-action against David K. Gibbs.


author: DOYLE, Justice.

text:
    Vernon R. YOUNG, Jr., Individually and as Trustee, and Michael D. Rembert, Trustee, Appellants, v. Richard M. DeGUERIN and wife, Ann M. DeGuerin, Appellees.
    No. 17436.
    Court of Civil Appeals of Texas, Houston (1st Dist.).
    Oct. 18, 1979.

      Morris & Campbell, Rhett G. Campbell, Preston L. Dodson, Houston, for appellants.
    Eikenburg & Stiles, Paul Leake, John F. Rhem, Jr., Houston, for appellees.
    Before COLEMAN, C. J., and DOYLE and EVANS, JJ.
   DOYLE, Justice.

Vernon R. Young, Jr. and Michael D. Rembert, appellants, appeal from a judgment in favor of Richard M. DeGuerin and wife, appellees, awarding them damages for appellants’ breach of a townhouse construction contract pursuant to the Texas Deceptive Trade Practices-Consumer Protection Act, Tex.Bus. & Com.Code Ann. § 1741, (Vernon 1978) et seq. (TDTPA). The trial court found that the cost of remedying the defects and damage to appellee’s townhouse to be at least $15,000.00, trebled; that ap-pellees were entitled to $5,000.00 for mental anguish, not trebled and $5,000.00 for attorney fees. Appellants were awarded $1,992.20 on the counterclaim, not to be offset against appellees’ recovery. We reform and affirm.

In February 1973, appellees and appellant entered into a contract for the construction of a townhouse. Appellees’ townhouse was one of six to be built by Young for several friends. Each of the friends purchased his own lot and subsequently conveyed the land to Young, as trustee, who then executed mechanic’s and materialmen’s lien contracts with each owner in order to obtain permanent financing. Cost of appellees’ townhouse was approximated to be $44,700.00 with a clause inserted in the contract allowing for necessary cost adjustments upwards or downwards. At closing, appellees were confronted with a promissory note reciting an additional $10,180.00 for construction costs. Appellees questioned this and inserted a clause in the note stating it was disputed and subject to negotiations and offset. Appellees then executed the note along with a deed of trust securing its payment. Settlement of the note could not be reached •and appellees refused to pay it. Thereafter, Rembert, trustee under the deed of trust, attempted to foreclose on the property and appellees instituted this suit for an injunction alleging non-negotiation of the note. The court granted a temporary in-, junction and appellant Young counterclaimed for the amount of the note. Appel-lees then filed an amended pleading alleging breach of an implied warranty of habitability due to defective workmanship in the townhouse and violation of the TDTPA on the part of appellant Young and praying for relief as provided in Sec. 17.50(b) of the Act.

In his appeal, appellant states 34 points of error. The record before this court includes the-transcript, statement and facts, and exhibits. Findings of fact and conclusions of law were requested and filed. (Ap-pellees bring a limited appeal from the trial court judgment claiming the damages for mental anguish must be trebled pursuant to the TDTPA).

Appellant Young’s first 12 points of error complain that the trial court erred in holding him personally liable for the improper construction of the townhouse, for failure to negotiate the disputed note, and for failing to correct any defects in the townhouse. Undisputed evidence revealed that Young was a corporate officer in several construction companies at the time ap-pellees’ townhouse was built. However, the contract Young introduced into evidence, which is the one on which both parties rely, did not disclose any corporate entity or any representative capacity on his part. The contract was executed only by Young and appellees. Appellant confirms his personal liability by his pleadings on which this case went to trial. In his first amended-answer, paragraph II he alleges:

“That VERNON R. YOUNG, JR., and the plaintiff herein closed a building transaction on or about the 16th day of October, 1973, ...”

Again in his original counterclaim in paragraph II he states:

“Counter-Plaintiff would show that he entered into certain building specifications, a copy of which is an agreement with Counter-Defendant to build a two-bedroom two story townhouse for Counter-Defendants in early January or February, 1973, which townhouse was to be built in accordance with certain building specifications, a copy of which is attached to Plaintiff’s Original Petition as Exhibit “A”. Counter-Plaintiff would further show that he did build or cause to be built said townhouse in accordance with the building specifications.”

Because of such admissions in appellants’ pleading, appellees were not required to prove such facts, and thus the trial court correctly found appellant personally liable for all of appellees’ damages. Kelso v. Hawkins, 293 S.W.2d 807 (Tex.Civ.App.-Austin 1956, writ ref’d n. r. e.); Caulk v. Anderson, 120 Tex. 253, 37 S.W.2d 1008 (1931); Red River Valley Pub. Co. v. Bridges, 254 S.W.2d 854 (Tex.Civ.App.-Dallas 1952, writ ref. n. r. e.). Appellant’s first 12 points of error are overruled.

In points of error 13 through 19, appellant argues that the trial court erred in finding that there were breaches of implied warranties in the construction of the townhouse and that such breaches constituted deceptive trade practices. Appellant also complains of the amount of damages awarded for such breaches.

To negate the existence of an implied warranty in this case, appellant contends that there was no sale of real estate, but only the sale of construction services and that the sale of services alone would not give rise to any implied warranty. As authority for this contention Humber v. Morton, 426 S.W.2d 554 (Tex.1968) is cited. In the Humber case the contractor built a house and conveyed it with a lot to the purchaser. The court held in that case that the contractor impliedly warranted that the house was constructed in a good workmanlike manner and was suitable for human habitation. The court further held at 556 of its opinion that:

“The implied warranty of fitness arises from the sale and does not spring from the conveyance.”

Cited in the Humber case is the case of Moore v. Werner, 418 S.W.2d 918 (Tex.Civ.App.-Houston [14th Dist.] 1967, no writ) holding:

Many of the authorities cited involve personalty, but we see no reason for any distinction between the sale of a new house and the sale of personalty, especially in a.suit between the original parties to the contract, one of whom constructed the house in question. It was the seller’s duty to perform the work in a good and workmanlike manner and to furnish adequate materials, and failing to do so, we believe the rule of implied warranty of fitness applies, (citations omitted)

In the recent case of Richman v. Watel, 565 S.W.2d 101 (Tex.Civ.App.-Waco 1978, writ ref’d n. r. e.), the court, citing both Humber v. Morton, supra and Moore v. Werner, supra, stated “[w]hen defendant built and sold the new house to plaintiffs he impliedly warranted the house was constructed in good workmanlike manner and was suitable for human habitation.”

Appellant argues that since the appellees purchased only construction services from appellant and not goods, chattels, or real estate, no implied warranty arose. The evidence sustains the trial court’s conclusion that the acts of appellant made the basis of appellees’ suit grew out of “promises to provide services in connection with the sale of real estate.” Actually there was a realty sale in the transaction. Appellees conveyed the land in trust to appellant to secure in the building of the townhouse. Thereafter, appellant conveyed the land with the townhouse thereon to appellees, receiving as payment one promissory note of $43,600 and another of $10,180 and retaining a lien on appellees’ realty on which the townhouse was built. However, we agree with appellees that whether or not real estate is involved in the sale should make no difference since it is the quality of the house which carries the implied warranty. It is sufficient for recovery under the TDTPA that appellees prove the implied warranty of suitability for human habitation and workmanlike construction, the breach thereof and that such breach is the proximate cause of appellees’ damages, Richman v. Watel, supra. To hold otherwise would deny recovery to a consumer who proved faulty workmanship and materials if he owned his lot and hired a contractor to build it, and would allow recovery under the same fact situation to a consumer who bought his lot and house in a package deal from the contractor.

Appellant next complains that there is no competent evidence to sustain the award of damages. Evidence adduced at this trial showed that while the building was structurally sound, but contained numerous defects. The trial court correctly held that the measure of damages for “defects which can be remedied without impairing the building as a whole is the reasonable cost of the remedying the defects.” Rogowicz v. Taylor and Gray, Inc., 498 S.W.2d 352 (Tex.Civ.App.-Tyler 1973, writ ref’d n. r. e.); Drury v. Reeves, 539 S.W.2d 390 (Tex.Civ.App.-Austin 1976, writ ref’d n. r. e.). The amount of damages upon which the court based its finding was stated by Richard Cunningham, a consulting structural . engineer. Mr. Cunningham went through appellees’ home in 1974 making notes of the problems and subsequently sent a report to appellees. The notes and report were introduced and admitted into evidence. While Mr. Cunningham is not a builder, he stated his estimate was based on experience. “I have a feel for what needs to be done and I just kind of equate that with what I think it would cost to do that.” He further explained that he was currently informed on with construction costs to a certain degree because he was involved in the building of an office and townhouse and he hears a lot of costs per square foot discussed in the field he is in. He said he had taken no bids or breakdown costs to arrive at his figure. He further stated that it was very hard to keep current on costs these days. Mr. Cunningham’s testimony gives a sufficient predicate for awarding damages. If the evidence affords a reasonable basis for estimating the loss, then the appellees should not be denied recovery simply because the exact amount is incapable of ascertainment. Hindman v. Texas Lime Company, 157 Tex. 592, 305 S.W.2d 947 (1957). It is not incumbent upon plaintiffs to prove their damages with mathematical exactness, but only to meet the test of reasonable certainty. City of San Augustine v. Roy W. Green Co., 548 S.W.2d 467 (Tex.Civ.App.-Tyler 1977, writ ref’d n. r. e.). Mr. Cunningham visited the townhouse, took notes, filed a report and then testified to an estimate of $15,000 based on his observations at the home. The trial court also had before it numerous photographs and exhibits depicting the poor workmanship, inferior materials and their effect on general habitability of the townhouse, together with the testimony of other parties, including that of the appellees, as to the extent of the defects. From such evidence, the trial court could find both the extent and reasonableness of the damage. Moren v. Pruske, 570 S.W.2d 442 (Tex.Civ.App.-San Antonio 1978, writ ref’d n. r. e.). Points of error 13 through 19 are overruled.

In point of error 20, appellant complains of the award of damages for mental anguish. Although not prayed for, the trial court awarded $5,000 actual damages for mental anguish over appellant’s objection. The appellees file one point of error complaining of the trial court’s refusal to treble the $5000.

Several appellate cases have been decided holding that the actual damages under the TDTPA are common law damages only. Cantrell v. First Nat. Bank of Euless, 560 S.W.2d 721 (Tex.Civ.App.-Fort Worth 1977, writ ref’d n. r. e.); Dennis Weaver Chevrolet, Inc. v. Chadwick, 575 S.W.2d 619 (Tex.Civ.App.-Beaumont 1978, writ ref’d n. r. e.). These cases further held that damages for mental anguish cannot be recovered in a case under the Act in the absence of actual physical injury. In the Dennis Weaver Chevrolet case the opinion by Justice Keith thoroughly analyzes the issue of mental anguish as an element of damages under TDTPA. In summary the Beaumont court held that in the absence of physical injury there could be no recovery for mental anguish under TDTPA and that by actual damages the Act meant common law damages only. The court found no physical injury and removed the $3900 from the judgment that the trial court awarded and trebled for mental anguish.

Appellees cite Woods v. Littleton, 554 S.W.2d 662 (Tex.1977), as authority for their entitlement to treble damages for mental anguish. Whether the Texas Supreme Court in the Woods case expressly decided that damages for mental anguish are recoverable under TDTPA, if not otherwise recoverable by law, is discussed in the recent case of American Transfer and Storage Company v. Brown, 584 S.W.2d 284 (Tex.Civ.App.-Dallas 1979, no writ). This case citing Dennis Weaver Chevrolet, Inc., supra, pointed out that the question of whether damages for mental anguish under the Act were recoverable was not before the Supreme Court in the Woods case and that the net effect of its holding on this point was to affirm the civil appeals court’s judgment that the mental anguish issue as to damages was defective. It is noteworthy that the civil appeals court did not rule on mental anguish, but expressly stated in Littleton v. Woods, 538 S.W.2d 800, 802 (Tex.Civ.App.-Texarkana 1976):

Implied warranty of merchantability in a real estate transaction is not reached, neither is recovery of damages for mental anguish nor numerous other legal issues presented in the appeal.

A review of all authorities cited leads us to the conclusion that there is no provision under Sec. 17.50 of the Act for the recovery of damages for mental anguish. Clearly, the Act makes no mention of mental anguish. We are not inclined to create a new cause of action for tort under the Act and thus invade the legislative province. We hold that the trial court erred in awarding appellees damages for mental anguish.

There exists another ground for not allowing the award of damages for mental anguish to appellees. They have not proved that mental anguish was suffered. The following resume is all the evidence appel-lees offered in support of the award of mental anguish.

Mrs. DeGuerin stated that she was “trapped” in her home with the construetion workers there; the doors were open all the time; it was not very pleasant; water ruined the upstairs making it look really bad and that it was embarrassing. She further testified that water dripped on her sister’s head, and part of the ceiling fell down when her husband hit a light fixture with a broom while their families were visiting. Mrs. DeGuerin also stated that she was breastfeeding her child several times a day and she was forced to retreat to her bedroom and close the door each time to do so, as the house was full of workmen. When her attorney asked her if she were under any stress, she replied “a tremendous amount.”

At best the above summary of events reveals only inconveniences and unpleasantness attendant to any repair work upon occupied premises.

In points of error 21 through 24, appellant complains that the trial court erred in reducing the promissory note from $10,180.00 to $1,992.20. The disputed note was signed upon the condition that it would be further negotiated. DeGuerin testified he attempted to talk to Young about it asking for receipts, charges and credits to show he owed the claimed amount.

A list of items was tendered into evidence which appellee stated was the additional work he was being charged for. Appellee then proceeded to go through these items and state what should be paid, what was not done, and what he had paid for himself. At the end of his testimony appellee had credits in excess of $7,000. Appellee also stated he expected to pay about $2,000 in additional costs, but not $10,000. The trial court had ample evidence upon which to base its reduction of the note. On appeal there is a presumption that the trial court made such findings as were necessary to support the judgment. Badeaux v. Cohen, 437 S.W.2d 310 (Tex.Civ.App.-Houston [14th Dist.] 1969, no writ).

The reduction in the promissory note would not constitute a double recovery as appellant contends. The note and damages award are separate and distinct. The court found that some of the charges in amount of the note had been paid by appellees and the court reduced the note by this amount. The damages award was based on the testimony of an engineer, appellees and other parties, as well as various exhibits and photographs offered to show the breach of the implied warranty of habitability and workmanship in the construction of the townhouse.

In points of error 31 and 32, appellant complains of the award of attorney’s fees. The trial court was correct in allowing counsel to reopen his case to prove his attorney’s fees, Rule 270 T.R.C.P.; Zodiac Corp. v. General Elec. Credit Corp., 566 S.W.2d 341 (Tex.Civ.App.-Tyler 1978, no writ); Smart v. Missouri-Kansas-Texas R. Co., 560 S.W.2d 216 (Tex.Civ.App.-Tyler 1977, writ ref’d n. r. e.). The court, as the trier of fact, may decide the reasonableness of such fees. Coker v. Travelers Ins. Co., 553 S.W.2d 421 (Tex.Civ.App.-Waco 1977, writ ref’d n. r. e.).

We have examined appellants’ other points of error and find them to be without merit. They are overruled.

We reform the judgment of the trial court by denying any recovery for mental anguish and reduce the amount of the recovery by $5000. The remainder of the judgment is affirmed in every respect.

The judgment is reformed and affirmed.


author: McDONALD, Chief Justice.

text:
    Clinton MANGES et al., Appellants, v. RAGSDALE ENGINEERING COMPANY, Appellee.
    No. 6110.
    Court of Civil Appeals of Texas, Waco.
    Oct. 25, 1979.
    Rehearing Denied Dec. 6, 1979.

      Max J. Luther, III, Barnhart & Luther, Corpus Christi, for appellants.
    Curtis B. Dyer, Grose, Erck & Dyer, Alice, for appellee.
   OPINION

McDONALD, Chief Justice.

This is an appeal by defendants Manges and Duval County Ranch Company from joint and several judgment against them in suit on a note.

Plaintiff Ragsdale Engineering Company sued defendants Manges and Duval County Ranch Company on a note.

Defendants filed answer and a first amended answer.

The case was set for trial for Monday, November 27,1978, and attorneys for plaintiff and defendants appeared at the docket call. Two cases preceded this case on the docket. The court placed this case “on call” for trial. Plaintiff’s counsel stayed available, and defendants’ counsel commenced trial of a case in an adjoining county. The court’s docket developed so that on Thursday, November 30, 1978, this case was reached for trial. Plaintiff’s counsel announced ready and the court proceeded to hear plaintiff’s testimony. At the conclusion of plaintiff’s testimony the court announced defendants would be given until December 7, 1978 to present whatever evidence they had in defense; that the court would not render judgment until after that date; and noted on the docket that defendants had until December 7, 1978 to present evidence. On the night of November 30, plaintiff’s counsel telephoned defendants’ counsel at his residence and advised him of the foregoing. On December 5, 1978 defendants filed a motion for mistrial, and on January 19,1979 filed motion for a continuance; but never offered any evidence to the trial court by way of defense to plaintiff’s cause of action either before December 7, 1978 or after such date.

On January 19, 1979 the trial' court entered judgment for plaintiff for the amount of the note sued on plus accrued interest.

On January 23,1979 defendants filed motion for new trial which was heard and overruled on that date.

Defendants appeal on 7 points.

Points 1 through 6 contend the trial court erred in proceeding to trial on November 30 in the absence of defendants’ counsel; that such action deprived defendants of the right to interpose a meritorious defense to plaintiff’s suit; that their counsel was unavoidably absent; was trying a case in another county; and defendants’ counsel had not been notified of the November 30 setting by the court.

This case was set for November 27 and counsel for plaintiff and defendants were present. The case was third on the docket, and the court placed this case “on call”, and reached it on November 30. In the meantime counsel for defendants commenced the trial of another case in another county. It became evident the case would be reached for trial on November 30, and counsel for plaintiff telephoned defendants’ counsel’s office and told his secretary the case was on call and he was going to keep him in trial. The secretary told counsel for plaintiff that defendants’ counsel was set for trial in another county. Counsel for defendant did not appear, did not file motion for continuance, but tried a case in the adjoining county.

The trial court commenced trial of this case, heard plaintiff’s evidence, and then recessed the trial giving defendants to December 7, to present their evidence of defense.

Counsel for plaintiff telephoned counsel for defendants on the night of November 30 and advised him of the foregoing.

Counsel for defendants did not before or after December 7, present their evidence in defense of plaintiff's cause of action to the trial court.

Rule 247 TRCP provides: “Every suit shall be tried when it is called, unless continued or postponed to a future [date] of the term or placed at the end of the docket to be called again for trial in its regular order”.

No continuance or postponement was granted in this case. It was put “on call” on November 27 and it was defendants’ counsel’s responsibility to be available for trial.

We cannot say the trial court erred in commencing the trial on November 30. Rhodes v. Sherrod, (Eastland, Tex.Civ.App.), 389 S.W.2d 121; Plains Growers, Inc. v. Jordan, Tex., 519 S.W.2d 633.

Point 7 asserts the trial court erred in overruling defendants’ motion for new trial.

The rule applicable to motions for new trial which seek to set aside default judgments entered on failure of a defendant to file an answer and those entered on failure to appear for trial is set forth in Ivy v. Carrell, Tex., 407 S.W.2d 212 and is:

“A default judgment should be set aside and a new trial ordered in any case in which the failure of the defendant to answer before judgment was not intentional, or the result of conscious indifference on his part, but was due to a mistake or an accident; provided the motion for a new trial sets up a meritorious defense and is filed at a time when the granting thereof will occasion no delay or otherwise work an injury to the plaintiff”.

Under the record the trial court was authorized to find the failure of defendants’ counsel to appear on November 30 or December 7 was intentional or the result of conscious indifference. Murray v. Dahlem (Eastland, Tex.Civ.App.), nwh 524 S.W.2d 409.

And Ivy v. Carrell, supra, requires the motion for new trial “set up a meritorious defense” which means “The motion must allege facts which in law would constitute a defense to the cause of action asserted by plaintiff”.

Defendants have not alleged facts which in law would constitute a defense to plaintiff’s cause of action. Cate v. Beene (Waco, Tex.Civ.App.), er. ref., 440 S.W.2d 389.

All defendants’ points are overruled.

AFFIRMED.