text:
    NATIONAL FARMERS ORGANIZATION, Appellant, v. J. O. SMITH, Appellee.
    No. 989.
    Court of Civil Appeals of Texas, Corpus Christi.
    Aug. 29, 1975.

      R. D. Cullen, Cullen, Carsner & Williams, Victoria, for appellant.
    W. S. Fly, Fly, Moeller & Stevenson, Victoria, for appellee.
   OPINION

NYE, Chief Justice.

This is a suit for damages based on a breach of contract between farmer J. 0. Smith and the National Farmers Organization (called NFO hereafter). The farmer agreed to sell his milo grain to NFO and intentionally failed to deliver a substantial portion of the grain. The NFO sought damages from the farmer (as an offset to an amount NFO owed the farmer). NFO appeals from a portion of the trial court’s judgment which held adversely to NFO’s contentions.

The NFO is an agricultural cooperative organization organized under the Capper-Volstead Act. (See U.S.C. Title 7, Section 291) The Act provides for an association of persons engaged in theo production of agricultural products to collectively process, handle and market such products in interstate and foreign commerce. It also engages in collective bargaining to protect farm prices. Smith, the farmer, had engaged in farming for a number of years and had not been a member of NFO until 1973.

On January 9, 1973, Smith signed a contract labeled “Bill of Sale”. It is commonly referred to as a “forwarding contract”. Its purpose is to assure the farmer of a fixed price for his grain to be delivered at a future date after it has been harvested. The pertinent portions of the contract were as follows:

“BILL OF SALE

New Member

KNOW ALL MEN BY THESE PRESENTS: That this contract is entered into on the date shown below between National Farmers Organization, hereinafter called NFO, and J. 0. Smith of Victoria Texas, 3602 Meadow Lane, a member of NFO.

In consideration of their mutual promises and the mutual promises of other NFO members, the undersigned member and NFO agreed that NFO on behalf of its members has entered or will enter into a contract and has sold or will sell to NFO Negotiated Buyers and that the member has sold or agrees to sell under this contract as of this date the following production:

KIND CLASS OR VARIETY QUANTITY APPROXIMATE DELIVERY DATE

Milo #2 1,200,000 lbs Juiy-Aug.

The member shall not dispose of his production thus committed, contrary to this agreement. For failure to deliver under this contract, member agrees that such act will damage NFO in an amount that is and will be impracticable and very difficult to determine and fix and, therefore, the member agrees to pay NFO 25 percent of the gross value of the production so committed as liquidated damages for all the production that is disposed of contrary to this agreement. Said damages may be recovered by NFO in any court of competent jurisdiction. In any suit based on this agreement, the NFO, if the prevailing party, shall be entitled to reasonable attorney fees and all costs of any such suit.”

The agreement was executed on the 9th day of January, 1973, and was signed by Smith and an official of NFO.

On January 10,1973, NFO entered into a contract with Goodpasture, Inc. wherein Goodpasture was to purchase from NFO 33 million pounds of # 2 milo grain at $3.00 per hundred weight to be delivered at Corpus Christi or Houston, Texas, sometime between July 1 through August 31. This contract was numbered AU7050FG.

On January 17,1973, NFO notified Smith that it had committed Smith’s grain to Goodpasture, Inc. The contract notifying Smith of such arrangement in pertinent portion reads as follows:

“SUBJECT: Official Contractual Notification
Dear NFO Member,
On 1-9-73 you committed for NFO Block Sale on the Bill of Sale, 1,200,000 lbs of milo. A sale has been made on all of your grain on this Grain Contract for Sale, and you are expected to deliver 1,200,000 lbs of milo grain to Goodpas-ture, Corpus Christi or Houston, Texas.
CONTRACT TERMS: Delivery period: July/Aug./Sept. 1973; Delivery point: By May 1st this office must be notified as to whether you ship to Corpus Christi or Houston.
Sale Basis:
$3.00 cwt .
The contract number for your grain is AU 7050 FG ...”

On January 20, 1973, Smith executed another Bill of Sale with NFO similar to the one executed on January 9,1973. This contract called for 500,000 pounds of milo grain. The damage portion of the contract was different, however. It reads as follows:

“It is understood that I will not dispose of my production thus committed, contrary to this agreement. It is understood by me that this is a legal and binding document and that if I start moving my production thus committed in any other manner than that defined in this agreement the NFO, its elected officials, representatives, or members shall and will seek a court injunction to prevent any violation of this agreement or its intent and I agree to stand and be responsible for any and all court costs, attorney fees, or any other costs involved in this action. I also understand I will be liable for any damages caused by my failure to comply with this contract.”

On January 30, 1973, NFO again notified Smith that his prior commitment on the grain contract for sale of 500,000 pounds of milo was to be delivered to Goodpasture, Inc. to either Corpus Christi or Houston, Texas, at $3.20 cwt.

Later, presumably before May 1st, Smith ratified the two contracts by notifying NFO that he would be delivering the grain in accordance with the contracts to Corpus Christi rather than Houston, Texas. This agreement reads as follows:

“Delivery Point Intentions

I have the following milo contracted for sale through NFO to Goodpasture:

Contract Price Amount Must be delivered by
AU7050FG $3.00 1,200,000 lbs August 31,1973
AU7148FG $3.20 500,000 lbs September 30,1973
Total 1,700,000 lbs

As per our contract arrangements, I am hereby notifying you that I plan to ship' 1,700,000 pounds to Houston and/or Corpus Christi pounds to Corpus Christi Public Elevator.

/s/ J. O. Smith_ J. O. Smith”

Smith produced enough grain during the year 1973 to fulfill both contracts and he still had a substantial amount of grain left to market individually. The record shows that prior to Smith’s joining the NFO in 1973, he had never sold his grain production for more than $2.20 per hundred weight. However, in 1973, the grain market went up at the most rapid pace in its history. Smith decided that he wanted out of his contracts. He consulted his attorney and decided to breach the first contract calling for delivery of 1,200,000 pounds of milo grain, at $3.00 per hundred weight, and to fulfill the January 20, 1973 contract for 500,000 pounds of grain at $3.20 per hundred weight. In his deposition, Smith was asked about the signing of the two contracts:

“Q So that in January of ’73 $3.00 and $3.20 looked awfully good because you didn’t know what was going to happen in ’73, is that not correct, sir?
A Well, it looked good, yes, sir.
Q But it got so high that you decided that you would be better off not to deliver under this contract for $3.00, right, sir?
A I would say that I decided to pay my damages.
Q Whatever they may be. Or however we calculate them, or however the Court calculates them, right?
A Yes, sir.”

It was not until after Smith had sold all of his grain that NFO learned that Smith was not going to fulfill his contract. NFO then refused to pay Smith the amount due Smith under his January 20, 1973 contract contending that the amount NFO owed Smith was offsetted by the damage caused by Smith’s breach of his January 9, 1973 contract. Whereupon Smith brought suit against NFO for the amount due and owing. NFO admitted owing Smith $13,744.00 due under its January 20th contract, but claimed as an offset therefrom of $12,600.00 as damages, that being 25% of the gross value of the production committed under Smith’s contract of January 9,1973. Smith sold his grain for $4.20 per hundred weight which was the amount determined by the trial court as “gross value of the production”.

After NFO answered Smith’s suit which claimed the offset, Smith filed an amended petition in which he made a judicial admission, which we discuss later:

“Plaintiff thereupon elected not to fulfill the contract dated January 9,1973, but to pay the penalty provided for in the contract, and elected further to fulfill the contract dated January 20, 1973.”

At another place in his amended petition, he stated:

“V
The Defendant knew that Plaintiff had elected not to fulfill the contract of January 9, 1973, and that he stood ready to pay the penalty. In fact, on September 25, 1973 the General Counsel of Defendant advised, ‘Today I instructed our office at Seguin to pay J. 0. Smith for the grain delivered and to bill Mr. Smith for the amount of the loss. caused by his failure to deliver the balance on the contract’.”

Smith admitted executing all of the agreements hereinbefore set out. However, as a defense, he claimed that on January 12, 1973, he entered into a “Partnership Agreement” with NFO which by its terms limited his damages to 10% of the gross sale of his production. It is this figure that Smith contends is the correct damage figure rather than the 25% which is stated in the January 9, 1973 contract.

Smith argues on appeal and the trial court agreed and found that the contract of January 9, 1973 was superseded by the membership agreement of January 12th. In Section 2 of Article VII of the agreement is the following:

“Sec. 2-When a contract has been consummated in accordance with the terms of this agreement covering a member’s commodity, and he sells this commodity to a processor other than the one specified by the agreement, the member shall be assessed 10% of the gross sale of the commodity for liquidated damages.”

We disagree with the trial court’s holding and reverse and render a portion of its judgment.

The original contract of January 9th and the subsequent confirmation and ratification agreements made up one transaction, separate and apart from the membership agreement. NFO, in reliance upon the January 9th agreement, committed the 1,200,-000 pounds to Goodpasture, Inc. Goodpas-ture, Inc. agreed to purchase the grain for $3.00 cwt on its contract number “AU7050FG”. NFO notified Smith that the price of its grain previously committed on January 9, 1973 was sold for $3.00 and that it was to be delivered to Goodpasture, Inc. It referred to the Goodpasture contract by number “AU7050FG”. Thereafter, Smith ratified the January 9th agreement at $3.00 per cwt of 1,200,000 pounds and agreed to deliver the grain to Goodpasture. Smith made reference to NFO and Good-pasture’s contract commitment number “AU705QFG”. This completely tied all of the contracts and agreements together and bound Smith to the January 9th agreement.

There are other reasons that bound Smith to the January 9th contract. The membership agreement which was dated January 12,1973 exempted prior marketing contracts. The agreement under Article I “Authorization” states in part that:

“I authorize the National Farmers Organization (hereinafter referred to as the N.F.O.) its agents or representatives to act for me as my exclusive representative in collective bargaining in respect to all commodities marketed from my farm, with the exception of those commodities presently covered by other marketing contracts. . . . ”

Section 1 of Article VII of the membership agreement permits the farmer to market his grain as he chooses until such time as certain prerequisites have taken place. Section 1 reads as follows:

“Sec. 1-Until such time as a contract has been consummated with the processor for a commodity I own or control in accordance with the provisions of this agreement; or until a marketing procedure has been established for a commodity and ratified in accordance with the terms of this agreement, a member shall be free to market his commodity as he chooses

There was no evidence in the record that these conditions had been fulfilled or complied with.

In Articles IV, V, and VII of the membership agreement, there were other prerequisites before the membership agreement was to go into effect. There was no evidence by either party that Smith or the NFO had complied with these conditions precedent. In Article VII, for instance, Smith was required to show that he had a contract which had been consummated in accordance with the membership agreement. Since the membership agreement was executed after the contract had been made, this condition could not be fulfilled.

The contracts of January 9th and 20th do not incorporate any of the terms of the membership agreement nor do these contracts make reference to such agreement. These contracts stand on their own. The membership agreement makes no reference to the January 9th contract, but specifically excludes it since it was a prior agreement. The Federal Act provides that either a member or nonmember may sell its farm products through the cooperative marketing organization, so that Smith’s membership or his nonmembership was immaterial to the first contract which Smith signed on January 9, 1973.

It is true if there has been a true modification of an original contract, then the terms of the latest contract prevail. 13 Tex.Jur.2d, page 496. However, the modification of an existing contract (membership agreement in this case) must be based on a sufficient consideration. There was no evidence of any consideration for the execution of the January 12th membership agreement. We hold that Smith was bound by the January 9th agreement and was required to pay the liquidated damages as provided therein.

We are of the further opinion that the allegations contained in Smith’s first amended original petition constituted a conclusive judicial admission against Smith. He stated: “Plaintiff thereupon elected not to fulfill the contract dated January 9,1978, but to pay the penalty provided for in the contract and elected further to fulfill the contract dated January 20, 1973.” The effect of such an admission is that Smith is now bound by the liquidated damages provisions in the contract dated January 9, 1973, and cannot claim that the damages are governed by another agreement.

It is the settled law that the pleadings in a particular case, for the purpose of use as such in that case, are to be regarded as judicial admissions, rather than just ordinary admissions. Kirk v. Head, 187 Tex. 44, 152 S.W.2d 726 (1941); Hughes v. Fort Worth Nat. Bank, 164 S.W.2d 231 (Tex.Civ.App.—Fort Worth 1942, writ ref’d); McCormick v. Stowe Lumber Company, 356 S.W.2d 450 (Tex.Civ.App.—Austin 1962, writ ref’d n. r. e.); McCormick and Ray, Texas Practice, Evidence § 1144. So, as long as the admission stands unretracted, the fact alleged or admitted, for the purposes of the case, is accepted as true by the court (and jury), and is binding on the party making it, i. e., he cannot introduce evidence to contradict it. McCormick and Ray, Texas Practice, Evidence § 1127. See also Griffin v. Superior Insurance Company, 388 S.W.2d 415 (Tex.Sup.1960); Whitt v. Bussey, 387 S.W.2d 926 (Tex.Civ.App.—Austin 1965, writ ref’d n. r. e.); McMurtry v. Addington, 354 S.W.2d 655 (Tex.Civ.App.—Amarillo 1962, writ ref’d n. r. e.); Canales v. Bank of California, 316 S.W.2d 314 (Tex.Civ.App.—Eastland 1958, writ ref’d n. r. e.). Thus, with respect to those statements referred to in the above amended petition, Smith is bound by the liquidated damage provisions in the January 9th agreement.

Smith admitted in his pleadings and in his deposition that he intentionally breached the January 9th agreement with NFO. The courts have always looked with disfavor upon a party that intentionally breaches a contract. A party should not profit by his own wrong. See Jones v. Jimmerson, 302 S.W.2d 161 (Tex.Civ.App.—Texarkana 1957, writ ref’d n. r. e.); Atlantic Richfield Company v. Hilton, 437 S.W.2d 347 (Tex.Civ.App.—Tyler 1969, writ ref’d n. r. e., cert. den. 896 U.S. 905, 90 S.Ct. 221, 24 L.Ed.2d 182); Sunray DX Oil Company v. Texaco, Inc., 417 S.W.2d 424 (Tex.Civ.App.—El Paso 1967, writ ref’d n. r. e.). Appellant’s points of error are sustained.

Smith, the appellee, in what he denominates his point of error number 1, complains that the trial court erred in applying the liquidated damage loss to $4.20 per hundred weight (the price Smith sold the grain), rather than applying the liquidated clause of $8.00 per hundred weight (the price that Smith contracted to sell the grain). The trial court held that the penalty was applicable to the price for which Smith sold the grain. With this part of the judgment we agree. Gross value simply means that it is the gross value of the grain disposed of by Smith at the time of the sale. If the intention of the parties was to make the penalty of 25% applicable to the “contract price”, the contract would have so stated. We hold that the gross value as intended by the parties was the value that the grain sold on the market before any deduction and without diminution of expenses.

Appellee’s “point of error” is without merit for another reason. He made no complaint of the trial court’s judgment and there is nothing in the trial record that indicates appellee’s dissatisfaction with the trial court’s judgment. Where an appellee does not except to the judgment, does not give notice of appeal, nor does he in any manner give notice to the trial court of his dissatisfaction with the judgment, the ap-pellee is not entitled to appellate review of his claimed error. This is especially true where the judgment is severable, as here. The appellant NFO complains only of a severed portion of the judgment concerning the percentage of penalty. The appellee complains not only of the percentage of penalty, but of its application to the price at which appellee sold the grain. We, therefore, hold that appellee has failed to perfect a cross point in this appeal. Maloney v. Strain, 410 S.W.2d 650 (Tex.Civ.App.—Eastland 1966, no writ); West Texas Utilities Company v. Irvin, 161 Tex. 5, 336 S.W.2d 609 (1960); White Stores, Inc. v. Crain, 515 S.W.2d 677 (Tex.Civ.App.—Austin 1974, no writ); Security Insurance Company v. Pioneer Casualty Company, 449 S.W.2d 158 (Tex.Civ.App.—Houston [1st Dist.] 1969, writ ref’d n. r. e.).

The trial court was, accordingly, in error in failing to offset the $13,744.00 owed by NFO to Smith by the sum of the liquidated damages Smith owes to NFO in the amount of $12,600.00. It is, therefore, ordered, adjudged and decreed that appellee J. 0. Smith have and recover of the appellant National Farmers Organization the sum of $1,144.00, with interest thereon from August 15,1973, at the legal rate, and costs in the trial court. Costs of appeal are adjudged against appellee J. 0. Smith.

The judgment of the trial court is affirmed in part and reversed and rendered in part.

      . Emphasis supplied throughout.


source: Caselaw Access Project

author: BISSETT, Justice.

license: Public Domain

text:
    Jeffrey Daniel WHITE, by his friend Diane White, Appellant, v. CORPUS CHRISTI LITTLE MISSES KICKBALL ASSOCIATION, Appellee.
    No. 991.
    Court of Civil Appeals of Texas, Corpus Christi.
    Aug. 29, 1975.

      Michael W. Williams, Corpus Christi, for appellant.

      Gerald L. Benadum, Corpus Christi, for appellee.
   OPINION

BISSETT, Justice.

This is an appeal from a judgment that denied plaintiff’s application for a permanent injunction. Jeffrey Daniel White, a ten (10) year old male child, acting by and through his mother, Diane White, as next friend, instituted suit against Corpus Christi Little Misses Kickball Association (the Association) on March 18,1975. It was alleged that plaintiff attempted to register for participation in the activities of the Association, and that he was refused registration and participation therein solely because of Ms sex. He prayed that the defendant be permanently enjoined from “refusing to allow plaintiff registration and participation” in the Association’s program on account of his sex. Trial was to the court without the aid of a jury. After hearing the evidence, the trial court rendered judgment which denied plaintiff’s application for injunctive relief.

Plaintiff’s action is based upon his contentions that defendant’s refusal to allow Mm to register and participate in the activities and program of the Association because of Ms sex was a denial of his right to equal protection of the law, guaranteed Mm by the Fourteenth Amendment to the Federal Constitution, and by the Tex.Const. art. Ill, § 8a (1972), the “Equal Rights Amendment”, and that he is entitled to injunctive relief because state action is subject to the Equal Rights Amendment, and the Fourteenth Amendment extends “to private conduct that is encouraged by, enabled by, or closely related in function with state action.” He also contends that he established a prima facie ease which was not controverted by any evidence to the contrary, and that under the uncontroverted facts he was entitled to injunctive relief as a matter of law. The contentions cannot be sustained.

The Fourteenth Amendment to the Federal Constitution has reference to state action exclusively, and not to any action of private individuals. Ex Parte, The Commonwealth of Virginia, 100 U.S. 313, 25 L.Ed. 667 (1879); United States v. Elliott, 418 F.2d 219 (Cir.Ct.App.—9th Cir. 1969). The activities and program of defendant in the instant case are not shown by the record to be connected, directly or indirectly, with “state action”. The record does not support plaintiff’s claims that his evidence established a prima facie case that entitled him to judgment as a matter of law. There is nothing before this Court which shows that plaintiff met his burden of proof, irrespective of whether plaintiff’s evidence was controverted or not.

The record consists solely of the transcript. There is neither a statement of facts prepared in accordance with Rule 377, T.R.C.P., nor an agreed statement prepared in accordance with Rule 378, T.R.C.P., before this Court. Findings of fact were neither requested nor filed. The judgment recites that the trial court “heard” and “considered” the evidence. Under such circumstances, we must presume that the trial court found every fact in issue necessary to sustain its judgment. Mays v. Pierce, 154 Tex. 489, 281 S.W.2d 79 (Tex.Sup.1955); Armenia v. Nussbaum, 519 S.W.2d 673 (Tex.Civ.App.—Corpus Christi 1975, writ ref’d n. r. e.); City of Corpus Christi v. Gilley, 458 S.W.2d 124 (Tex.Civ.App.—Corpus Christi 1970, writ ref’d n. r. e.); Rea Express v. Missouri Pacific Railroad Company, 447 S.W.2d 721 (Tex.Civ.App.—Houston [14th Dist.] 1969, writ ref’d n. r. e.); Carver v. City of Wichita Falls, 427 S.W.2d 636 (Tex.Civ.App.—Fort Worth 1968, writ ref’d n. r. e.).

It is only in an exceptional case, i. e., where fundamental error is presented, that an appellant is entitled to a reversal of the trial court’s judgment in the absence of a statement of facts. Houston Fire & Casualty Ins. Co. v. Walker, 152 Tex. 503, 260 S.W.2d 600 (Tex.Sup.1958). This is not such an exceptional case. Fundamental error is not presented by the record in this appeal. Therefore, every reasonable presumption consistent with the record will be indulged in favor of the correctness of the judgment rendered in this case by the trial court. McElyea v. Parker, 125 Tex. 225, 81 S.W.2d 649 (Tex.Comm’n App. 1985, opinion adopted).

It is not incumbent upon an appellee in an appeal to show that the judgment rendered in his favor by the trial court is sustained by the evidence, but the burden is on the appellant to bring before the appellate court a record which reveals error that requires a reversal. Englander Co. v. Kennedy, 428 S.W.2d 806 (Tex.Sup.1968). No such record is here presented by the plaintiff. In the case at bar, in the absence of a complete or an agreed statement of facts which contains the evidence which was introduced at the trial, we must presume that there was evidence to support the judgment of the trial court. Plaintiff’s points cannot be sustained.

Even though there is neither a complete statement nor an agreed statement of facts in the record, plaintiff contends that this Court, pursuant to the provisions of Rule 419, T.R.C.P., should accept as true certain statements “as to the facts” contained in his original brief which he says were not challenged by defendant in its reply brief. The statements which plaintiff says are unchallenged statements of fact, as they appear in his brief, read:

“That he (plaintiff) was denied registration into the program on account of his sex is an uncontroverted fact.”
“Testimony in the trial below established that the kickball games were played and were to be played in a public park.”

Rule 419 is permissive rather than mandatory. It merely states that “any statement made by appellant in his original brief as to the facts or the record may be accepted by the court as correct unless challenged by the opposing party.” (Emphasis supplied). Consequently, we do have some discretion in applying the Rule. Clyde v. Hamilton, 414 S.W.2d 434 (Tex.Sup.1967).

One purpose of Rule 419 is to avoid casting on the appellate court the appellee’s burden of searching the record to determine whether the appellant’s statement of the evidence contained in the statement of facts is correct. Donnelly v. Donnelly, 220 S.W.2d 278 (Tex.Civ.App.—Fort Worth 1949, writ ref’d n. r. e.); Whatley v. Whatley, 493 S.W.2d 299 (Tex.Civ.App.—Dallas 1973, no writ). The Rule, however, was not intended to act as a substitute for the filing of a statement of facts as part of the record in an appeal. Here, there is no statement of facts for the appellate court to search. Nowhere in plaintiffs brief is there a quotation of any testimony of any witness. No reference is made therein to any facts testified to by a witness. The statements made by plaintiff in his brief that certain facts are uncontroverted rest solely upon plaintiff’s conclusions as to the effect of testimony, the context and exactness of which is not disclosed by the brief.

The record in this case does not justify our acceptance of plaintiff’s statements in his brief “as to facts” as being correct. To do so would require us to accept those statements in lieu of a statement of facts. This, we decline to do. We exercise our discretion by refusing to accept the above-quoted statements in plaintiff’s brief as being correct statements of facts.

Furthermore, there is a cogent reason why this Court cannot and should not accept plaintiff’s statements as being correct. The statements in plaintiff’s brief which he claims are statements of uncontroverted facts were challenged by defendant in his briefs. In view of such challenges, we are not warranted in applying Rule 419 to this case. See Clyde v. Hamilton, supra; Coleman v. Pacific Employers Insurance Company, 484 S.W.2d 449 (Tex.Civ.App.—Tyler 1972, writ ref’d n. r. e.).

Plaintiff also contends that he established a prima facie case in his favor in the trial court, and since defendant did not introduce any evidence in rebuttal, that he was entitled to judgment. Those contentions cannot be sustained. They are statements of legal conclusions, not of facts.

Plaintiff impliedly argues that this Court should reverse the judgment of the trial court and render judgment in his favor for the injunctive relief prayed for because “he provided the trial court with a verified petition . . . and a memorandum of points and authorities”, and that the defendant furnished neither. The argument is without merit. Assuming, arguendo, that plaintiff’s petition was properly verified, it is well settled that the allegations in plaintiff’s verified petition for injunctive relief are not evidence and cannot, standing alone, support a judgment for plaintiff. Millwrights Local Union No. 2484 v. Rust Engineering Co., 483 S.W.2d 683 (Tex.Sup.1968). The “Memorandum of points and authorities” presented by plaintiff to the trial court is not evidence; we cannot treat that statement as a statement “as to the facts” of this case. Pope v. American National Insurance Co., 443 S.W.2d 377 (Tex.Civ.App.—Tyler 1969, writ ref’d n. r. e.).

The reference which plaintiff makes in his brief to the public accommodation ordinance which he says was passed by the City of Corpus Christi on December 2,1964, and which he “suggests” could apply to this case in such a manner as to afford him injunctive relief, is of no assistance to plaintiff in this appeal. There is no indication in either the record or plaintiff’s brief that this ordinance was introduced in evidence at the trial of this case.

Plaintiff has not shown any legal basis for a reversal of the trial court’s judgment. The transcript and the briefs do not support plaintiff’s claim that the uncontroverted facts entitle him injunctive relief as a matter of law. It, therefore, follows that the judgment of the trial court must be affirmed. All of plaintiff’s points of error are overruled.

The judgment of the trial court is affirmed.


author: JAMES, Justice.

text:
    TEXAS NATIONAL BANK OF DALLAS, Appellant, v. FIDELITY AND DEPOSIT COMPANY OF MARYLAND, Appellee.
    No. 5458.
    Court of Civil Appeals of Texas, Waco.
    Aug. 29, 1975.

      Crocker & Murphy, Terence J. Murphy, Dallas, for appellant.
    Strasburger, Price, Kelton, Martin & Unis, Frank L. Skillern, Jr., James K. Pe-den, III, Dallas, for appellee.
   OPINION

JAMES, Justice.

This is a suit on a “Banker’s Blanket Bond,” by a bank against a bonding company. The trial court sitting without a jury held that the bank take nothing against the bonding company, from which the bank appeals. We affirm.

Plaintiff-Appellant Texas National Bank of Dallas (hereinafter called “the bank”) brought this suit against Defendant-Appel-lee Fidelity and Deposit Co. of Maryland (hereinafter called “the bonding company”) and Leslie L. Stewart, a customer of the bank. The bank sued Stewart for the unpaid balance due upon his note owing to the bank in the principal amount of $40,326.91 plus 10% interest and attorney’s fees (as called for in the note) with an alternative cause of action based upon fraud. The bank sued the bonding company for $40,-326.91 plus 10% interest based upon the “Banker’s Blanket Bond” known as “Standard Form No. 24” which the bonding company had theretofore issued to the bank.

The trial court sitting without a jury awarded the bank judgment against Stewart for $40,326.91 plus interest and attorney’s fees as prayed for; however, the bank was denied any recovery against the bonding company, from which take-nothing judgment .the bank appeals.

As of January 5, 1970, Stewart was indebted to the bank in the amount of $65,-000.00, consisting of three notes, a $36,-000.00 note, a $21,000.00 note renewed on that date, and an $8,000.00 note executed on that date. The proceeds of the latter note were the last monies advanced to Stewart by the bank at any time. The $36,000.00 note was subsequently renewed in March, 1970, and the $8,000.00 note was renewed in April 1970. As of April 13,1970, Stewart’s indebtedness to the bank remained at $65,-000.00. On the last-mentioned date Stewart delivered to the bank as collateral for his debts two stock certificates representing 2,000 shares of Graphic Science, Incorporated. Stewart made no payment on his indebtedness at that time. On April 24,1970, Stewart renewed his $21,000.00 note, and on July 3, 1970, Stewart’s three notes were combined into a single note for $65,000.00. On July 31, 1970, Stewart delivered two additional stock certificates representing 2000 shares of the same company, Graphic Science, Inc., these certificates being in the name of Allen Glover to be similarly held as collateral for his debt, which remained at $65,000.00.

Stewart’s note was subsequently renewed on November 6,1970; and on December 24, 1970, Stewart made a payment which reduced the debt to $61,436.21. Thereafter, the balance of the indebtedness was reduced by the disposition of collateral held by the bank, until at the time of trial the balance of the note was $40,326.91.

It is undisputed that the stock certificates representing 4000 shares of Graphic Science, Inc., were forgeries and worthless at all times material to this controversy. Stewart delivered these instruments to the bank at the times above-mentioned because of a threat by the bank each time to call his loans and demand immediate payment thereof. The bank did not discover the forged nature of the certificates until April, 1971.

Appellant bank asserts one point of error contending the trial court erred in failing to render judgment for the bank against the bonding company “after Stewart delivered counterfeit securities to Texas National (Bank) as collateral for his note, loss was effected therefrom and F. & D. refused payment to Texas National under its banker’s blanket bond, especially Insuring Agreement (E) which promised payment for such loss.” We overrule this point.

The pertinent provisions of Insuring Agreement (E) of the bond in question, (upon which the bank seeks recovery against the bonding company) provides that the bank is indemnified and held harmless for the following:

“(E) Loss (1) through the Insured’s having, in good faith and in the course of business, whether for its own account or for the account of others, in any representative, fiduciary, agency or any other capacity, either gratuitously or otherwise, purchased or otherwise acquired, accepted or received, or sold or delivered, or given any value, extended any credit or assumed any liability, on the faith of, or otherwise acted upon, any securities, documents or other written instruments which proved to have been
(a) counterfeited or forged, as to the signature of any maker, drawer, issuer, endorser, assignor, lessee, transfer agent or registrar, acceptor, surety, or guarantor or as to the signature of any person signing in any other capacity or . .” (emphasis supplied).

By the language thus used, it is only loss occurring through the activity described which raises coverage under the bond.

The trial court made findings of fact and conclusions of law, pertinent of which are as follows:

“5. Plaintiff advanced no additional monies to Defendant Stewart after January 5, 1970.”
“7. On or about April 13, 1970, Defendant Stewart pledged to Plaintiff certain stocks as security for his debt, including what purported to be two stock certificates in the name of Defendant Stewart for 1,000 shares each in a company named Graphic Sciences, Inc., which certificates are Plaintiff’s exhibits 3 and 4. Said certificates were not genuine but were counterfeit, Defendant Stewart having caused same to be printed. Said certificates were worthless at the time they were pledged and at all times thereafter.
8. At the time of the delivery of said certificates, Plaintiff could not have collected its debt from Defendant Stewart if Plaintiff had called Defendant Stewart’s loan.
9. Plaintiff did not sustain a loss through the pledge by Defendant Stewart of the two stock certificates referred to in Finding 7.
10. On or about April 24, 1970, Plaintiff renewed Note 5422 in the amount of $21,000.00. On or about July 3, 1970, Plaintiff renewed all outstanding loans and combined same into one note in the principal amount of $65,000.00.
11. At the dates of said renewals, Plaintiff could not have collected its debt from Defendant Stewart if Plaintiff had not renewed the notes described in Finding 10.
12. Plaintiff did not sustain a loss through the renewals of said notes, even though such renewals were based in part on the counterfeit stock certificates.
13. On or about July 31,1970, Defendant Stewart pledged to Plaintiff as security for his debt what purported to be two additional stock certificates in the name of Allen F. Glover for 1,000 shares each in Graphic Sciences, Inc., which certificates are Plaintiff’s exhibits 5 and 6. Said certificates were not genuine, but were counterfeit, Defendant Stewart having' caused same to be printed. Said certificates were worthless at the time they were pledged and at all times thereafter.
14. Plaintiff never received stock powers even purporting to be signed by Allen F. Glover, and even if the stock had been genuine, Plaintiff could not have foreclosed on its pledge of said stock.
15. At the time of the delivery of said certificates, Plaintiff could not have collected its debt from Defendant Stewart if Plaintiff had called Defendant Stewart’s loan.
16. Plaintiff did not sustain a loss through the pledge by Defendant Stewart of the two stock certificates referred to in Finding 13.
17. On or about November 6, 1970, Plaintiff renewed Defendant Stewart’s note. On or about December 23, 1970, Plaintiff again renewed Defendant Stewart’s said note.
18. On the dates of said renewals, Plaintiff could not have collected its debt from Defendant Stewart if Plaintiff had not renewed said notes.
19. .Plaintiff did not sustain a loss through the renewal of said notes, even though such renewals were based in part on the counterfeit stock certificates.”

Significantly, the trial court determined that the bank did not sustain a loss through the pledges by Stewart of the forged certificates on either of the two occasions herein-above set out, that is, on April 13,1970, and on July 31, 1970; and further, that the bank sustained no loss through any of the renewals of Stewart’s notes, even though such renewals were based in part on the counterfeit stock certificates. Moreover, the trial court found that the bank could not have collected its debt from Stewart at either of the times he put up the forged certificates as collateral, or at any of the times when Stewart renewed his indebtedness. Appellant bank has not challenged any of these findings of fact. Without detailing the evidence, the trial court’s findings have support in the record.

As plaintiff in the trial court, the bank had the burden of proof to establish fact findings to the effect that it (the bank) sustained a loss through its acceptance of the forged securities. The bank failed to establish these fact findings in the trial court.

By its single point of error, Appellant bank is contending in effect that the record as a whole shows as a matter of law that the bank sustained its loss through its acceptance of the forged securities. Under the record before us we cannot so hold.

What we have here is a problem of construction of Insuring Agreement (E) of the contract between the parties. What did the parties intend by the language used?

It is factually established that the bank had already suffered the loss before any forged securities were accepted. The bank is saying that because of its acceptance of the forged securities, that it failed to recoup a loss it already had. (It was stipulated that if the forged instruments had been genuine, that they would have been of sufficient value to have paid off the debt.) The bank contends that the bond covers this type loss.

On the other hand, the bonding company argues that this type of loss is not covered by the bond. In effect the bonding company says the type loss contemplated to be covered is that wherein the bank suffers a loss which is initially sustained through the acceptance of a forged security, such as, in a case wherein the bank would have loaned Stewart additional or new money on the faith of the forged security.

We are of the opinion that the loss now before us in the case at bar is one not covered by the bond.

In construing fidelity bonds, courts follow the liberal rules applicable to insurance contracts rather than the strict rules of suretyship. However, the bond cannot be extended by implication, or enlarged by construction, beyond the actual terms of the agreement entered into by the parties. Great American Insurance Co. v. Langdeau (Tex.Sup.Ct.1964) 379 S.W.2d 62.

As stated, the bank’s claim for recovery is predicated upon Insuring Agreement (E), which provides for indemnity based upon “Loss through the Insured’s hav-ing_acquired, accepted or received,_or_extended any cred-it_on the faith of_any securities,_proved to have been_counterfeited or forged_ (emphasis supplied).

The word “through” has been defined as: by means of, in consequence of, by reason of, by the intermediary of, and because of. See Piper, Stiles and Ladd v. Fidelity and Deposit Co. of Maryland (Houston 1st Tex. Civ.App.1968) 435 S.W.2d 934, NRE.

In the light of our construction of the language used in the bond, as hereinabove set out, we hold that the loss sustained by the bank in the record before us was not covered by the bond. See Allen State Bank v. Traveler's Indemnity Co. (La.App.1972) 270 So.2d 270.

Judgment of the trial court is accordingly affirmed.

Affirmed.


author: NYE, Chief Justice.

text:
    Charles R. FREEMAN, Jr., et ux., Appellants, v. GONZALES COUNTY SAVINGS & LOAN ASSOCIATION, Appellee.
    No. 978.
    Court of Civil Appeals of Texas, Corpus Christi.
    Aug. 29, 1975.
    Rehearing Denied Sept. 18, 1975.

      John V. Elick, Procter & Jones, Austin, for appellants.
    R. L. Miller, Miller & Miller, Gonzales, for appellee.
   OPINION

NYE, Chief Justice.

This is a usury case. Plaintiffs, Charles R. Freeman, Jr. and wife, Katherine L. Freeman, brought suit against defendant, Gonzales County Savings & Loan Association, alleging that certain charges, arising out of a one year term note executed November 29,1973, constituted a charge made for interest causing the total interest charged to be in excess of the rate allowed by law, therefore usurious. Judgment was granted to defendant Gonzales County Savings & Loan Association on its motion for summary judgment.

The facts of this case are relatively undisputed. The record shows that the defendant was, as the name indicates, a savings and loan association, organized and operated under the “Texas Savings and Loan Act”, Article 852a, § 1.01 et seq., Tex.Rev. Civ.Stat.Ann. (1964). On or about November 29, 1978, the plaintiffs hereafter referred to as the Freemans executed a promissory note in the principal sum of $38,-400.00, payable to the order of defendant Association. Said note bore interest from its date until maturity, at the rate of nine percent (9%) per annum, payable semiannually as it accrued. The principal of such note was due one year from November 29, 1973. The purpose of the loan was for the construction of two houses on land located on the outer limits of Seguin, Texas. The note was secured by a deed of trust on such land.

In order for the Freemans to obtain the loan from defendant, they were required to pay certain expenses and charges upon closing. Among these charges or expenses was a “loan fee” amounting to two percent (2%) of the loan. This was $768.00. This loan fee was in addition to other charges (attorney’s fee $200.00; appraisal and inspection fee $384.00; interim construction inspection $400.00; credit report $10.00; interim Construction Policy $30.00; and recording fee $25.00) which were all set out in the loan settlement or closing statement furnished to the Freemans and signed by them.

Mr. Freeman was billed for the first semiannual interest payment, but such was not paid by the Freemans. The Savings and Loan took the amount due out of the escrow account and applied it to Freeman’s interest payment. Thereafter, in June, 1974, the Freemans brought suit against the defendant Association alleging that they had been charged a rate of interest in excess of that allowed by law and it was therefore usurious. More specifically, the Freemans alleged that the “loan fee” (2%— $768.00) charged by the Association, constituted interest and when taken together with the prepaid interest of $3,456.00 (9%), constituted a charge for interest which was in excess of the rate allowed by law. The Freemans contend that the promissory note executed by them was therefore usurious and void to the full extent of the interest therein charged. The Freemans alleged further that they were entitled to recover double the amount of interest “contracted for, charged, or received”. (Article 5069-1.-06, Tex.Rev.Civ.Stat.Ann.).

The Savings and Loan Association answered, stating that the charges ($768.00 loan fee) were for legitimate loan expenses incurred in connection with the loan and the closing thereof. The Savings and Loan then filed its motion for summary judgment alleging that the loan fee was a commitment fee for the making of the permanent loan and that such a charge was expressly authorized under the terms and provisions of the Texas Savings and Loan Act, Article 852a, § 5.07, and that as such it is not to be deemed as part of the interest collected or agreed to be paid on such loan within the meaning of the usury laws of this State. The Freemans also filed their motion for summary judgment alleging that the pleadings and depositions on file show that there is no genuine issue of any material fact and, therefore, they were entitled to judgment against the Association as a matter of law.

The trial court granted the Savings and. Loan’s motion for summary judgment, denying the Freemans’ motion and held that the Freemans take nothing by their suit. From that judgment, the Freemans have duly perfected their appeal to this Court.

The Freemans bring forth three points of error alleging in effect that the trial court should not have granted summary judgment for the Association and that in the alternative, the trial court erred in failing to grant summary judgment for the Free-mans suggesting that we reverse and render judgment accordingly.

The provisions of Rule 166-A, T.R. C.P., are applicable alike to defendants and plaintiffs who move for summary judgment; the judgment sought should be granted and if granted should be affirmed, if, and only if the summary judgment record establishes a right thereto as a matter of law. Gibbs v. General Motors Corporation, 450 S.W.2d 827 (Tex.Sup.1970).

As stated by the Freemans in their brief, the primary question before the trial court was whether or not Section 5.07 of the Texas Savings and Loan Act permits a savings and loan association to charge a “loan fee” for making a loan without such “loan fee” being considered as interest for purposes of determining if a loan transaction is tainted with usury. For a proper determination thereof, much depends upon the precise nature and purpose of a savings and loan association’s operations as well as the statutes under which it operates.- All associations in this State are chartered either by the Federal Home Loan Banks Board or by the Texas Savings and Loan Commissioner. Persons opening savings accounts and depositing funds receive dividends. Though dividends issued by savings and loan associations are computed in the form of interest, they are called dividends because the Texas Statute forbids their payment until the expense of operation of the association and the required minimum transfer to its loss reserves (Art. 852a, § 7.03) have been satisfied. See 44 Texas L.Rev. 966,969 (1966). The object and business of savings and loan associations are matters of public utility. Although they are privately owned, they operate in the field of public interest like banks, insurance companies, and railroads, and are properly to be considered as quasi-public institutions. Brazosport Savings and Loan Association v. American Savings and Loan Association, 161 Tex. 543, 342 S.W.2d 747 (1961).

The Texas Constitution, Article 16, § 11, authorizes the Legislature to regulate lenders and establish maximum rates of interest. Said section reads in pertinent part as follows:

“The Legislature shall have authority to classify loans and lenders, license and regulate lenders, define interest and fix maximum rates of interest; provided, however, in the absence of legislation fixing maximum rates of interest all contracts for a greater rate of interest than ten per centum (10%) per annum shall be deemed usurious; . . . ”

Pursuant to the Legislature’s authority from the above cited constitutional provision, the Legislature in 1963 enacted the “Texas Savings and Loan Act”, Article 852a, Tex.Rev.Civ.Stat.Ann., taking effect January 1, 1964. Included within such act is Section 5.07 relating to expenses, fees and charges for real estate loans which provides in pertinent part:

“Sec. 5.07. Every association may require borrowing members to pay all reasonable expenses incurred in connection with the making, closing, disbursing, extending, readjusting or renewing of real estate loans, which such charges may be collected by the association from the borrower and retained by it or paid to any persons, including any director, officer, or employee of the association rendering services in connection therewith, or paid directly by the borrower. In addition, associations may charge premiums for making such loans as well as penalties for prepayments or late payments; provided, that unless agreed in writing to the contrary, any prepayment of principal shall be applied on the final installment of the note or other obligation until fully paid, and thereafter on the installments in the inverse order of their maturity. The expenses, fees and charges authorized herein shall be in addition to interest authorized by law, and shall not be deemed to be a part of the interest collected or agreed to be paid on such loans within the meaning of any law of this State which limits the rate of interest which may be exacted in any transaction. (Emphasis supplied).

In other words to paraphrase Section 5.07, it states that the association may require borrowing members to pay all reasonable expenses incurred in connection with the making of a real estate loan. In addition, the association may charge premiums for making such loans — the expenses, fees and charges authorized herein shall be in addition to interest authorized by law and shall not be deemed to be a part of the interest collected or agreed to be paid on such loans within the meaning of the laws of this State.

Since the. Texas Constitution (Article 16, § 11) authorized the Legislature to classify loans and lenders and fix maximum rates of interest, it is clear that the Legislature did this in enacting Article 852a, (the Texas Savings and Loan Act). This Act permits them to charge premiums for making such loans. It permits its association to collect reasonable expenses incurred in connection with making the loan. This is in addition to the interest authorized by law (Article 5069-1.02). The premiums and the reasonable expenses collected are not to be deemed to be part of the interest collected or agreed to be paid on such loans within the meaning of the law of this State which limits the rate of interest.

In 1967, the Legislature again acted pursuant to our Constitution (Article 16, § 11) in enacting title 79, (Interest-Consumer Credit-Consumer Protection Act, Article 5069-1.01 et seq.). Article 5069-1.02, which became effective October 1, 1967, provides:

“Except as otherwise fixed by law, the maximum rate of interest shall be ten percent per annum. A greater rate of interest than ten percent per annum unless otherwise authorized by law shall be deemed usurious. All contracts for usury are contrary to public policy and shall be subject to appropriate penalties . prescribed in Article 1.06 of this Subtitle.” (Emphasis added).

Article 5069-1.01(a) defines interest as “the compensation allowed by law for the use or forbearance or detention of money; . . . Article 5069-1.06 (1971) relating to penalties for charging usurious rates provides:

“(1) Any person who contracts for\ charges or receives interest which is greater than the amount authorized by this Subtitle, shall forfeit to the obligor twice the amount of interest contracted for, charged or received, and reasonable attorney fees fixed by the court provided that there shall be no penalty for a violation which results from an accidental and bona fide error.”

The Freemans’ main contention is that the loans made by the Association are subject to the comprehensive code of legislation dealing with interest-consumer credit-consumer protection found in Article 5069-1.01 et seq., Tex.Rev.Civ.Stat.Ann. More particularly, they contend that the two percent (2%) “loan fee” constitutes interest, and when taken together with the nine percent (9%), which is admitted to be interest in the promissory note, constitutes usurious interest in excess of the lawful rate and is, therefore, in violation of Article 5069-1.02.

Those loans, particularly the one questioned here, which were made by a savings and loan institution are subject to the Texas usury laws to the extent that the stated rate of interest charged in such loans cannot exceed ten percent (10%). (Tex. Const. art. 16, § 11). Turning now to the defendant’s closing statement, item B(8) reads as follows:

“8. Other charges (premium, commission or loan fee, etc.) — Loan fee 768.00”

The defendant Association in designating the $768.00 as a “loan fee”, excluded those categories which are authorized by law, i. e., premiums or penalties. The question then before us is whether the summary judgment evidence shows that the $768.00 “loan fee” was a “reasonable expense incurred in connection with the making_of (the) real estate loan(s) . . .”, which is authorized by law affecting this Association.

. Included in the summary judgment evidence was the deposition testimony of Henry A. Majefski, executive vice president of Gonzales County Savings and Loan Association. With respect to the $768.00 “loan fee”, Mr. Majefski testified as follows:

“Q Now, item eight is the loan fee. Do you or do you not consider that to be interest charges?
A No, sir.
Q You do not. What do you consider it to be?
A I consider that as payment for having a permanent loan approved to use in connection with these houses after they are completed and sold or not sold. I consider that the same fee as if I would give an approval on a loan and he pays me those fees and he goes to the bank and gets his interim loan. The bank would require a loan approval.
Q Well, is there any particular expense that Gonzales County Savings and Loan is out that this $768.00 is destined to cover?
A I would say that the general facilities of the association in negotiating the loan and advising and setting it up and working out details is an expense.
Q All right. And is that what your testimony is that that $768.00 is destined to cover?
Á Yes.
Q All right. Is— In order that we can get that clear, you said it covers the expense of negotiating the loan?
A And having a permanent loan available.
Q Now, you are saying he is paying you $768.00—
A For twelve months.
Q —for consideration of having a permanent loan available?
A Right.
Q All right. Your testimony today is that that truth in lending statement was executed in connection with a permanent loan?
A Yes, sir.
Q Can you tell us what is a permanent loan in your opinion, or as you— Pertaining to this case.
A A permanent loan is a long term loan whereby it is made for a period, like in this case, 25 years.
Q All right.
A Setting out the monthly payments.”

It appears to us from this deposition testimony that the “loan fee” as defined by Mr. Majefski was not shown to be a “reasonable expense” as a matter of law that would have authorized the granting of a summary judgment. Mr. Majefski’s testimony vacillated. He first stated that it was considered as payment for having a permanent loan approved. Next, he says that it was for negotiating, advising, and setting up and working out the details of the loan as an expense. Then again, he states that it is for “having a permanent loan available — for twelve months.”

The Texas Savings and Loan Act (Article 852a, § 5.07) specifically limits the charges that savings and loan associations may make. They may require their borrowing members to pay all reasonable expenses incurred; they may charge premiums for making such loans; and they may exact penalties for prepayments or late payments. The “loan fee”, if authorized by law, must fall within one of the above categories, otherwise it is unauthorized. If unauthorized, it would be added to the interest charged, and make the transaction usurious.

Although Mr. Majefski testified that the “loan fee” was an “expense”, this was a mere conclusion and was not established as a matter of law. There was no evidence that such expense (or the other expenses charged), were “reasonable”. Mr. Majefski stated that he considered the $768.00 “loan fee” a proper charge for having a permanent loan available for the Freemans. If this was true, then this would make the “loan fee” a commitment fee, and as such would constitute interest. In Imperial Corporation of America v. Frenchman’s Creek Corporation, 453 F.2d 1338 (C.C.A., 5th Cir. 1972), the Circuit Court of Appeals held that a commitment fee (there $67,500.00) was, by operation of law, front end interest for the purpose of determining whether the loan was usurious. The Court further stated that Texas Courts will give effect to it by spreading over the life of the loan the impact of the judicially determined interest. See also Nevels v. Harris, 129 Tex. 190, 102 S.W.2d 1046 (1987); Laid Rite, Inc. v. Texas Industries, Inc., 512 S.W.2d 884 (Tex.Civ.App.—Fort Worth 1974, no writ).

The burden was on the appellee Association to show, by competent summary judgment proof, that as a matter of law the “loan fee” was a reasonable expense incurred in connection with the making of the real estate loan and was therefore an authorized charge pursuant to the Texas Savings and Loan Act. The appellee has failed to satisfy this burden.

The fundamental and dominant rule controlling the construction of a statute is to ascertain, if possible, the intention of the Legislature expressed therein. The statute in question (Article 852a, § 5.07) which authorized the savings and loan associations to charge “reasonable expenses” incurred in connection with the making of a real estate loan, must be interpreted so as to conform with the Legislature’s intent. Calvert v. Texas Pipe Line Company, 517 S.W.2d 777 (Tex.Sup.1974). The Texas Constitution, Article 16, § 11, authorized the Legislature to classify loans and lenders, define interest and fix maximum rates of interest. Pursuant to such mandate, the Savings and Loan Act was enacted allowing such institutions to charge reasonable expenses incurred in connection with the making of a real estate loan, without certain expenses being treated as interest. This must be shown in determining whether the transaction was usurious or not. The particular statutory enactment (§ 5.07) with which we are concerned is an exception to the general usury laws. The Legislature, by allowing such an exception, intended that, before such a charge can be made (without the same being treated as interest), there must be proof that such an expense was a “reasonable expense” and was incurred in connection with the making of the real estate loan. The summary judgment proof does not meet this test.

The summary judgment proof when tested by the rules governing the granting of such judgments did not entitle either party to a judgment. There are clearly fact issues that must be resolved by a jury or the finder of facts. The judgment of the trial court is reversed and the cause is accordingly remanded for a new trial.

Reversed and remanded.


text:
    Maria BECERRA, Appellant, v. Nicolas GARIBALDO, Appellee.
    No. 981.
    Court of Civil Appeals of Texas, Corpus Christi.
    Aug. 29, 1975.
    Rehearing Denied Sept. 18, 1975.

      J. A. Canales, Canales & Garza, Corpus Christi, for appellant.
    Neal Dancer, Corpus Christi, for appellee.
   OPINION

BISSETT, Justice.

This is an appeal from an order that granted a change in the custody of a minor child. Nicolas Garibaldo, the petitioner and natural father of the child Michael Anthony Garibaldo, instituted suit to change the custodial provisions in an order previously made that placed custody of the child in Mafia Becerra, respondent, the child’s maternal aunt. Trial was to a jury which found in petitioner’s favor. Judgment was entered in the verdict. Maria Becerra has duly perfected an appeal from that judgment.

A brief history of prior litigation affecting the parties is necessary to an understanding of the case presented by this appeal. Nicolas Garibaldo, appellee herein, and his former wife, Amada Garibaldo, were divorced by decree of the Court of Domestic Relations of Nueces County, Texas, on February 8,1971. The decree awarded the custody of Michael Anthony Garibal-do (Michael), then two years of age, and Patricia Garibaldo (Patricia), then twelve years of age, children of the marriage, to Maria Becerra, appellant herein, with each parent having “the right of reasonable visitation with the said minor children”. On September 26, 1973, appellee filed a suit against appellant and asked for a change of custody of the minor children. The suit was docketed as Cause No. 119,541. The case proceeded to trial before the court without the aid of a jury. On December 18, 1973, the trial judge orally announced from the bench that the petitioner, Nicolas Gari-baldo, shall have the right to have the children with him on certain specified dates, but that their custody shall remain in Maria Becerra. The judgment in that Cause (No. 119,541), however, was not signed by the trial judge until October 29, 1974. The judgment, reduced to writing the oral pronouncements made on December 18, 1973.

The petition in the case now on appeal, which was docketed in the trial court as Cause No. 74-1995, was filed on June 26, 1974, approximately 6 months after the oral pronouncements were made in Cause No. 119,541, and 7 months prior to the rendition of judgment in this case, Cause No. 74-1995. The jury, in response to the one special issue which was submitted, found that “since December 18, 1973, there has occurred such a material and substantial change of condition that under the existing circumstances and conditions it would be in the best interest and welfare of the said Michael Anthony Garibaldo to change his custody to Nicolas Garibaldo.”

Appellant, in her first point, contends that “the trial court erred in not dismissing this case for lack of jurisdiction because the same case was pending in Cause No. 119,541, thereby committing fundamental error”. The point cannot be sustained. This case, Cause No. 74-1995, proceeded to trial on October 29, 1974, and the judgment in Cause No. 119,541 was signed on the same date. Appellant, after announcing ready and after the first witness had started testifying, orally moved that the case be dismissed because Cause No. 119,541 was still pending. While the record is not clear as to the hour that the judgment in Cause No. 119,541 was actually signed, apparently it had already been signed when appellant made her motion. The trial court overruled the motion and that ruling is not attacked in this appeal. Appellant then proceeded to defend against the suit that had been brought against her and docketed as Cause No. 74-1995. The judgment in the case presented by this appeal was rendered on January 15, 1975, which was long after the judgment rendered in Cause No. 119,541 could be set aside by the trial court on its own motion, or by action upon a motion for new trial. The question here is not one of “pendency”, since it is conclusively established by the record that on January 15, 1975, the date the judgment was rendered in Cause No. 74-1995, that Cause No. 119,541, was not a “pending case”.

Ex parte Godeke, 168 Tex. 387, 355 S.W.2d 701 (1962), relied upon by appellant, is not in point. There, the judgment, which was rendered by the Milam County District Court on December 21, 1961, was still subject to judicial vacation or attack by motion for new trial when the Nueces County Court of Domestic Relations rendered its judgment on December 29,1971. Here, the trial court had completely lost all jurisdiction of Cause No. 119,541 on the date that judgment was rendered in Cause No. 74-1995. Fundamental error is not presented by the record. Appellant’s first point is overruled.

Appellant’s second point, wherein she complains that it was error to allow Michael, who was almost six years old at the time of trial, to testify before the jury, must be sustained. When Michael was called as a witness by appellee, appellant objected because of his tender age and immaturity. The objection was overruled. The child’s answers to many of the preliminary questions asked by the trial judge were completely unresponsive. The oath was then administered to the child who testified that he wanted to live with his father. Following other unresponsive answers to questions propounded to the child, counsel for appellant renewed his objection, and moved that the child’s testimony be stricken from the record. The trial court denied the motion at that time and said that he would carry it with the case, even though the court had already declared the child incompetent to testify as a witness. Nothing further was done with respect to either the motion or the child’s testimony.

There is no civil statute in this State which fixes the age at which children are competent to testify in court, but at common law, in civil cases, children who are at least fourteen years of age are presumed to be competent; under that age, no presumption prevails and the matter rests within the sound discretion of the court. Westbrook v. Texas & P. Ry. Co., 203 S.W.2d 279 (Tex.Civ.App.—Eastland 1947, writ ref’d n. r. e.). The record shows that the child did not understand most of the questions asked, and showed complete ignorance regarding the consequences of false swearing. “Before a ruling admitting a child of tender years to testify should be permitted to stand, there should be something to show that he has some appreciation of the wrong of false swearing”. North Texas Construction Company v. Bostick, 98 Tex. 239, 83 S.W. 12 (1904). There was no showing of such appreciation in this case. Furthermore, there was no showing that Michael was of sufficient maturity to express a wish as to his managing conservator. It was error to permit the child to testify. Appellant’s second point is sustained.

The previous judgment which placed Michael, then just over two years of age, in the custody of appellant, having become final long before suit was filed in this case, was res judicata of the child’s best interest and of his custody. Taylor v. Meek, 154 Tex. 305, 276 S.W.2d 787 (1955). However, proof of a material change of conditions and circumstances since the rendition of that decree will support a change of custody if such would be in the best interest of the child. Bukovich v. Bukovich, 399 S.W.2d 528 (Tex.Sup.1966). But, the changed conditions must be such “as affects the welfare and best interests of the child and be of such nature that to leave the custody of the child as previously adjudicated would be injurious to the child and requires that the custody be changed.” Dohrmann v. Chandler, 435 S.W.2d 232 (Tex.Civ.App.—Corpus Christi 1968, no writ). A slight change in conditions does not warrant a change in custody of children. Short v. Short, 163 Tex. 287, 354 S.W.2d 933 (1962).

It is a well settled rule in this State that in a suit whose object is the change of custody of a minor child, or children, as the case may be, the non-custodian, such as the father in this case, has the burden of proving that a material change of conditions has occurred since the rendition of the prior decree before a court can change or modify the custodial orders previously made. Knowles v. Grimes, 437 S.W.2d 816 (Tex.Sup.1969). In this case, we have two prior decrees that placed custody of Michael with appellant. In the original decree of divorce between appellee and Amada Garibaldo, rendered on February 8, 1971, appellant was “awarded” the custody of the children. In a subsequent judgment which was orally pronounced on December 18, 1973 but which was not actually signed until October 24,1974, it was provided that the custody of Michael (and his sister, Patricia) “shall remain in Maria Becerra”.

In child custody proceedings, the jury’s findings are binding upon the court if they are supported by evidence of probative force. In re Y, 516 S.W.2d 199 (Tex.Civ.App.—Corpus Christi 1974, writ ref’d n. r. e.).

In a jury case, where there is no evidence of a material change of conditions that affects the best interest and welfare of the minor child subsequent to the rendition of the judgment which placed the child in the custody of a certain person or institution, as the case may be, the trial court, should, upon a motion for an instructed verdict by the custodian, grant the same, and refuse to change the custodial provisions contained in the former judgment. Where a material change of conditions has been established by the evidence, the question then to be resolved is whether the best interest and welfare of the child would be served by changing custody from the custodian to the non-custodian. De Gaish v. Marriott, 345 S.W.2d 585 (Tex.Civ.App.—San Antonio 1961, no writ). If there is evidence of probative force from which reasonable minds might have reached the same conclusion as that reached by the jury, then the evidence is sufficient to support the jury’s finding, and the trial judge would be required to render judgment in keeping with the jury finding. Kirchner v. Van Skike, 410 S.W.2d 467 (Tex.Civ.App.—Tyler 1968, no writ). If, however, there was merely some evidence to support such finding, the trial court could, as in any other civil case, grant a new trial, either on his own motion, or in response to a formal motion for new trial, if he was of the opinion that the evidence was factually insufficient to support the jury’s finding, or that the finding was so against the great weight and preponderance of the evidence as to be manifestly unjust. In re Y, supra. The trial judge, however, could not disregard such finding, substitute his own finding for that of the jury, and render judgment contrary to the jury’s finding. Thus, a judgment non obstante veredicto would be improper.

Appellant, in her third point, says that there was “no evidence” of a material change of conditions since December 18, 1973. In disposing of that point, a law point, we consider only the evidence that supports the jury’s finding, and disregard all evidence contrary thereto. Garza v. Alviar, 395 S.W.2d 821 (Tex.Sup.1965). She further says, in her fourth point, that the evidence is “factually insufficient” to support the jury’s finding, and, in her fifth point, that the finding “was against the great weight and preponderance” of the evidence. The “factual insufficiency” and the “against the great weight and preponderance of the evidence” points require us to review and weigh all the evidence. In re King’s Estate, 150 Tex. 662, 244 S.W.2d 660 (1951); Calvert, “No Evidence” and “Insufficient Evidence”, 38 Texas L.Rev. 359 (1960).

The special issue which inquired into whether or not there had been a material change of conditions “since December 18, 1973” is not challenged by anyone in this appeal. Both appellant and appellee tried the case on the theory that the last judgment was rendered on that date. The trial court, at various times during the trial, limited the questions relating to alleged change of conditions to those that occurred since that date. No one objected to the limitations so imposed by the trial court. There is no point or cross point relating to the ruling by the judge or to the submission of the issue.

After both sides had rested and before the charge was read to the jury, the trial judge asked appellee’s counsel:

“Are you admitting that the children, the child, the subject of this suit, was with Maria Becerra by virtue of the judgment that was rendered by the Court on December 18, 1973?”

Counsel answered:

“Yes, sir.”

Under the circumstances, we consider that the judgment which was not signed until October 29, 1974 merely reduced to writing the judgment that was orally made on December 18, 1973.

We first consider only the evidence that tends to support the jury’s finding and the judgment that was rendered prior thereto. Appellee married his second (and present) wife, Balbina Garibaldo (Balbina) on May 19, 1973. She testified that she enjoyed having Michael in her home; that Michael was very happy to be with his father, and that a good relationship existed between the two; that appellant and the other women who either lived in appellant’s house or were frequent visitors there, including Patricia (Michael’s sister), who was sixteen years of age at the time of trial, and Ama-da Little, appellee’s divorced wife and the mother of Michael, would call appellee vile, obscene and vulgar names when he would come for Michael, and that they used these words in the presence of Michael; that on June 7,1974, when she and appellee went to appellant’s house for Michael, she saw appellant put some “blue stuff” in Michael’s mouth, and that he was crying at the time. She also testified that appellant, while parked in an automobile in proximity to the place where she (Balbina) worked, spanked Michael and pushed him to the floor of the car because he (Michael) waved at her (Bal-bina).

Appellee’s employer testified that Michael would cling to his father “like he doesn’t want to leave him” when appellee was preparing to return Michael to appellant; that on one occasion just after appel-lee had obtained Michael from appellant, that Balbina brought him over to his house, that he had been crying, and that his lips were swollen. He also stated that it was obvious that appellee’s love for Michael “was reciprocated by the boy”.

Appellee testified that he loved his son; that at the time of the divorce in February, 1971, he did not have a suitable home for his children, but that he has since remarried and can now provide Michael with a good home; and that he wants the child to live with him. When he was asked on cross-examination to enumerate the changes in conditions which occurred since December 18, 1973, he replied: “Well, he is under very much pressure, sir, because when I take him home every other weekend, I have to comfort him for an hour, hour and a half; he comes in just as if he were frightened; he doesn’t play right, won’t play right until later, he starts playing right”. He further stated that “they look after him a little bit badly”.

While there is no evidence of physical abuse or mistreatment of Michael by appellant, either before or after December 18, 1973, there is some evidence that Michael suffered emotional stress when he was returned to appellant, that it required a short interval of time to adjust to being with appellee when appellee picked him up from appellant, and that appellee’s home was a suitable home for the child. There is also evidence that appellant and others in her home used foul and vulgar language in the presence of the child. There is some evidence to support the jury’s finding. Appellant’s third point is overruled.

We next consider the “factual insufficiency of the evidence” and the “against the great weight and preponderance of the evidence” points. In doing so, we review and weigh all of the evidence.

In addition to what has already been summarized with respect to appellee’s testimony, appellee was asked:

“Did you have any trouble at all about the child (Michael) up until the time you got married to this lady (Balbina) here?”

He responded:

“Well, before, no, but when they found out that I was going to get married, yes”.

Appellee was then asked:

“Have you had trouble since December 18, 1973 in seeing your child?”

He answered:

“No, I haven’t had problems since then”.

Appellant, in addition to testifying herself, called several witnesses, and introduced several exhibits. Included in the exhibits are several photographs. One, which was taken in appellant’s home after Michael had spent a month with appellee, shows Michael in the arms of Patricia, his sister; he is smiling and appears to be happy. Another, which was also taken in appellant’s home, was taken on the day that appellee “was told by the court to bring Michael back”; Michael and appellant are embracing; each are smiling, and are, apparently, happy.

There is testimony from a disinterested witness who was well acquainted with the parties to this suit. She said that she had never seen Michael, while in appellant’s house, under stress or under any type of “psychological conditions” that would upset him; that she had never heard appellant use any foul language; that she had never seen any person in appellant’s home bathe or cover Michael with any type of blue substance; that she had been in appellant’s home on five or six occasions when appellee and his wife brought Michael back to appellant’s home, and that Michael appeared to be happy to return to appellant’s home; and that there was no resentment in appellant’s home towards appellee. Another disinterested witness testified that appellant “is doing a good job of raising the boy”. Patricia testified that she had never seen her little brother mistreated by appellant; that Michael was happy in appellant s home; and that she had “never heard any bad words in the household”.

Consideration of all the evidence compels us to hold that the evidence is factually insufficient to support the jury’s finding, and that the finding upon which the judgment was based is so against the great weight and preponderance of the evidence as to be manifestly unjust. The love of appellee for his son, appellee’s remarriage and the acquisition of a suitable home, without more, are not sufficient to support a change of custody in this case. Smith v. Clements, 424 S.W.2d 826 (Tex.Civ.App.—Amarillo 1968, writ ref’d n. r. e.); Fontaine v. Fontaine, 325 S.W.2d 428 (Tex.Civ.App.—Dallas 1959, no writ). Appellant’s fourth and fifth points are sustained. Accordingly, the judgment of the trial court is reversed and the cause is remanded for a new trial.

Reversed and remanded.


author: YOUNG, Justice.

text:
    Doris F. BOX, and the Estate of Murff William Box, Deceased, Appellants, v. SOUTHERN FARM BUREAU LIFE INSURANCE COMPANY, Appellee.
    No. 959.
    Court of Civil Appeals of Texas, Corpus Christi.
    Aug. 29, 1975.
    Rehearing Denied Sept. 18, 1975.
    Robert H. Kern, III, Rankin, Kern, Martinez <& Jones, McAllen, for appellants.

      Atlas, Hall, Schwarz, Mills, Gurwitz & Bland, McAllen, Adams, Graham, Lewis, Jenkins, Jones & Graham, Perry Jones, McAllen, for appellee.
   OPINION

YOUNG, Justice.

This appeal arises from a dispute over the proceeds of a life insurance policy upon the life of Murff William Box, deceased. Ap-pellee, Southern Farm Bureau Life Insurance Company, issued the policy which is the subject of this action. Appellees Candice Box and Murff William Box, Jr., are the children of the marriage of Murff William Box, deceased, and Beatrice Box. Appellant Doris F. Box is the widow and was the second wife of the decedent, Murff William Box.

During the marriage of Murff William Box and Beatrice Box, Southern Farm issued policy # 50134 with a face value of $5,000.00 upon the life of the decedent.

Ón March 6, 1964, Murff William Box deceased and Beatrice Box entered into a “Proposed Property Settlement”. In this document the parties agreed that the life insurance policy in question would be kept in full force and effect by Murff William Box; that the beneficiaries of said policy would be their children, Murff William Box, Jr. and Candice Box; and that the beneficiaries could not be changed . . except with the consent of both parties hereto. .. . ”

These parents were divorced March 9, 1964. The property settlement agreement was approved by the court and made a part of the judgment of divorce.

Thereafter, on October 9, 1968, Mr. Box changed the beneficiary of the policy in question to be “Doris F. Bird, friend” whom he subsequently married. They were still married at the time of Mr. Box’s death, July 7, 1973.

Southern Farm initiated this action by filing its “Bill of Interpleader”. This bill named appellees Murff W. Box, Jr., Candice Box and appellant Doris F. Box defendants. There Southern Farm pleaded that the named defendants asserted conflicting claims to the proceeds of the insurance policy and prayed that the trial court adjudicate their rights. Appellees Murff W. Box, Jr. and Candice Box answered the bill and also filed a third party action naming the Estate of Murff William Box as third party defendant. The purpose of the action against the estate was recovery of $774.13. This amount had been deducted by Southern Farm from the proceeds of the policy in question in repayment of a loan to Mr. Box which loan was secured by the policy.

All parties waived trial by jury and submitted the cause to the trial court. The trial court decreed that appellees, Murff W. Box, Jr. and Candice Box recover the sum of $4,241.97, less $400.00 attorney’s fees, from appellee, Southern Farm. Murff W. Box and Candice Box were also granted recovery of $774.13 against the Estate of Murff W. Box, deceased. It was further ordered that appellant Doris Box take nothing. It is from such judgment that appellants have perfected this appeal.

Appellants’ brief contains five points of error. The first four points complain of the trial court’s award of the net proceeds of the insurance policy to appellees, Murff Box, Jr. and Candice Box. Appellants’ fifth point complains of the trial court’s granting appellees Murff W. Box, Jr. and Candice Box judgment against the Estate of Murff W. Box, deceased, in the amount of $774.13.

These first four points will be discussed together. Appellants argue that the “property settlement agreement”: (1) was voidable; (2) did not grant appellees’ Murff W. Box, Jr. and Candice Box rights enforceable against appellee Southern Farm; (3) did not grant appellees Murff, Jr., and Candice rights enforceable against appellee Southern Farm which extended beyond their age of majority; and (4) did not grant appellees Murff W. Box, Jr., and Candice Box rights against appellee Southern Farm Bureau which were superior to the rights of appellant Doris F. Box. We disagree with those contentions.

A general rule of law about insurance in this State is that where the insured reserves the right to change the beneficiary in the policy, the beneficiary therein obtains no vested interest in the proceeds of the policy prior to the death of the insured. The insured may change the beneficiary at will and thereby divest a prior beneficiary of all interest in the proceeds of the policy. Volunteer State Life Ins. Co. v. Hardin, 145 Tex. 245, 197 S.W.2d 105 (1946). This rule, however, does not prevail where the insured, for a valuable consideration, agrees to designate a certain beneficiary and not to change that beneficiary without the consent of the party with whom he (the insured) has contracted. As stated in Locomotive Engineers’ Mut. Life & Accident Ins. Ass’n v. Waterhouse, 257 S.W.. 304 (Tex.Civ.App.—El Paso 1924, writ ref’d), . . the equity of the case requires that it be held that he was found to observe his contract. . . . ” Also see Leal v. Leal, 401 S.W.2d 293 (Tex.Civ.App.—San Antonio 1966, no writ). This is true even where the insured has the right, under the terms of the insurance policy, to change the designated beneficiary. Locomotive Engineers’ Mut. Life & Accident Ins. Ass’n v. Waterhouse, supra; Leal v. Leal, supra.

In the case before us, the decedent entered into a contract with Beatrice Box whereby he agreed to maintain the insurance policy in question. The decedent further agreed that the appellees Murff W. Box, Jr. and Candice Box would be the beneficiaries of the policy. It was expressly agreed that the beneficiaries could not be changed without the consent of Beatrice Box. This agreement made no limitations to the period of each child’s minority.

We hold, therefore, that the property settlement agreement gave appellees Murff and Candice Box a vested equitable interest in the proceeds of the insurance policy upon their father’s life. This vested equitable interest could not be divested without the consent of Beatrice Box.

Although we have been unable to find a case decided by the courts of this State which presents precisely the fact situation now under consideration, there are numerous cases from other jurisdictions in which courts have considered cases much like the one before us now. The courts in those cases have upheld recovery for beneficiaries like Murff, Jr., and Candice. See Shoudy v. Shoudy, 55 Cal.App. 344, 203 P. 433 (1921); Campbell v. Prudential Insurance Company of America, 137 N.E.2d 515 (Ohio Ct.App. 1955); Goodrich v. Massachusetts Mutual Life Ins. Co., 34 Tenn.App. 516, 240 S.W.2d 263 (1951); Prudential Insurance Company of America v. Gibson, 421 S.W.2d 26 (Mo.Ct.App.1967).

The marriage to appellant, Doris Box, the named beneficiary of the policy in question, was a voluntary act by Murff W. Box. The record before us does not show any consideration which passed to the deceased in return for naming Doris Box beneficiary of the life insurance policy. Nor was the decedent compelled to name Doris Box beneficiary. Appellant Doris Box cannot, under the facts before us, be said to have any equities in her favor which are superior to those prior equities which have arisen in favor of the children of Mr. Box. On the contrary, the equities of the children are superior because of the agreement executed by their parents and approved by the court rendering the divorce decree. For these reasons, appellants’ first four points of error are overruled.

By their fifth point of error, appellants complain that the trial court erred in awarding appellees Murff and Candice Box judgment in the amount of $774.13 against appellant Estate. We hold that the appel-lees Murff and Candice Box obtained vested interests in the insurance policy as of the date of the property settlement agreement. The face value of this policy is $5,000.00. It was clearly the intent of the parties to the settlement agreement that the $5,000.00 fund remain intact for the benefit of the children of the marriage (appellees herein). The agreement by the decedent not to change the beneficiaries of the policy without the consent of Beatrice Box would be meaningless if the same purpose could be accomplished by borrowing money on the policy and thus depleting the proceeds payable upon the death of the insured.

The settlement agreement provides that if the policy in question is surrendered for its cash surrender value, one-half of the proceeds would be payable to Beatrice Box. Clearly that provision would be circumvented if the insured were permitted to borrow money against the cash surrender value of the policy. The rights of the appellees, Murff and Candice Box to the proceeds of the policy are derived from the property settlement agreement. Because Mr. Box appropriated a portion of the policy proceeds in which appellees Murff and Candice Box had a vested interest, appellant-Estate is liable for that portion. Appellants’ fifth point of error is overruled.

The judgment of the trial court is affirmed.


text:
    Vernon H. OBELGONER, Appellant, v. Russell OBELGONER et al., Appellees.
    No. 953.
    Court of Civil Appeals of Texas, Corpus Christi.
    Aug. 29, 1975.
    Rehearing Denied Sept. 18, 1975.

      Vernon H. Obelgoner, pro se.
    Charles R. Porter, Jr., Porter, Taylor, Gonzalez, Thompson & Rogers, Corpus Christi, for appellees.
   OPINION

YOUNG, Justice.

This summary judgment action arose from a suit brought by Vernon H. Obelgoner against Russell Obelgoner, Elizabeth Obelgoner and Carl Oil & Gas-, Inc. There the plaintiff sought to remove cloud from title to an oil, gas and mineral lease.

Motions for summary judgment were filed by the plaintiff and the defendants.. After a hearing, the trial court denied the plaintiff’s motion and granted defendants’ motion. The plaintiff appeals.

On June 7, 1956, William F. Obelgoner and wife Huida Obelgoner executed an oil and gas lease covering two tracts of land totaling 184.25 acres of land in favor of appellant for a primary term of ten years. Subsequently, one of the tracts (116 acres) covered by the lease was conveyed by gift to Russell Obelgoner, subject to the existing oil and gas lease in favor of appellant.

On November 22, 1963, prior to the expiration of the primary term of the 1956 lease, Huida Obelgoner, a feme sole, Russell Obelgoner and wife, Elizabeth Obelgoner, leased the same 184.25 acres of land to appellant for a primary term of ten years. The primary term was to run from the “effective date” of the lease. It is admitted that appellant has not obtained production under either the June 7, 1956 lease or the November 22, 1963 lease.

By lease dated September 4,1973, Russell Obelgoner and wife, Elizabeth Obelgoner executed an oil and gas lease in favor of Royce Schulte. This lease covers the same tracts leased to appellant in 1956 and 1963 and provides that it has a primary term of five years to begin on November 23, 1973. This lease was subsequently assigned to ap-pellee Carl Oil & Gas, Inc.

Appellant contends that the 1963 lease was a top lease and was not to become effective until June 7, 1966. In other words, the lease should not terminate before November 22, 1976. He asserts that this intent of the parties is clearly expressed by the lease wherein it states:

“2. Subject to the other provisions herein contained, this lease shall be for a term of ten years from the effective date (called ‘primary term’). . . .”

To. the contrary, appellees contend that the 1963 lease expired November 22, 1973. They argue that the lease clearly expresses the intention of the parties that the lease be effective as of November 22, 1963.

Appellant’s first point of error complains of the trial court’s granting appellees’ motion for summary judgment. His second point complains of the trial court’s denial of appellant’s motion for summary judgment. The following discussion is dispositive of both points.

The burden of proving that there is no genuine issue of any material fact is upon the movant. All doubts as to the existence of a genuine issue regarding a material fact must be resolved against the moving party. Great American Reserve Insurance Company v. San Antonio Plumbing Supply Company, 391 S.W.2d 41 (Tex.Sup.1965); Gulbenkian v. Penn, 151 Tex. 412, 252 S.W.2d 929 (1952). About the particular case before us, we note that the issue of whether or not the lease in question is ambiguous is a question of law. Ferguson v. von Seggern, 434 S.W.2d 380 (Tex.Civ:App.—Dallas 1968, writ ref’d n. r. e.); Davis v. Andrews, 361 S.W.2d 419 (Tex.Civ.App.—Dallas 1962, writ ref’d n. r. e.). Once it is determined that a contract is unambiguous, the meaning of such contract is to be determined as a matter of law from the language used therein. Tower Contracting Company v. Flores, 157 Tex. 297, 302 S.W.2d 396 (1957); Lewis v. East Texas Finance Co., 136 Tex. 149, 146 S.W.2d 977 (1941).

The meaning of the term “effective date” is not in issue. Clearly, “effective date” refers to the date when the lease becomes operative. The controlling issue is what date the 1963 lease specifies to be the “effective date”. The lease states that it was “. . . made this 22 day of November, A.D. 1963 ...”

Paragraph 1 of the lease states, in part: “Lessor in consideration of Ten and no/100 Dollars ($10.00), in hand paid, of the royalties herein provided, and of the agreement of Lessee contained, hereby grants, leases and lets exclusively unto Lessee. . . .” (Emphasis supplied.)

This phrase indicates a present grant. It does not, in any way, indicate a future grant. The lease does not contain any reference to any prior lease or any collateral agreements between the parties. In and of itself, the term “effective date” does not conflict with the term “this date” which is used in paragraph 5 of the lease. Upon reading the instrument in its entirety, we find that it clearly expresses the intent of the parties that the lease become operative on November 22, 1963.

Appellant would have this Court consider the terms of an “oral agreement” which he entered into with appellee Russell Obelgoner prior to November 22, 1963. We cannot consider this “agreement” because it was not entered into by all of the parties to the lease. The intention of the parties is to be gathered from the language used in the instrument and not from the secret intentions of some of the parties to the instrument. Magnolia Petroleum Co. v. Storm, 239 S.W.2d 437 (Tex.Civ.App.—El Paso 1950, writ ref’d n. r. e.); Easterwood v. Liberty Mutual Ins. Co., 93 S.W.2d 1173 (Tex.Civ.App.—Waco 1936, writ ref’d).

In the affidavit in support of his motion for summary judgment, appellant states:

“. . . all parties knew and understood that said top or second lease described above was inoperative and ineffective on 22 November, A.D. 1963 and would remain inoperative and ineffective until June 7, 19S6, . . .”

In answer to this contention, we would point out that the question before us is not what the parties meant to say but what they did say by the use of the words contained in the agreement. Dedier v. Grossman, 454 S.W.2d 231 (Tex.Civ.App.—Dallas 1970, writ ref’d n. r. e.); Cutrer v. Cutrer, 334 S.W.2d 599 (Tex.Civ.App.—San Antonio 1960, aff’d, 162 Tex. 166, 345 S.W.2d 513).

Appellant’s affidavit in opposition to appellees’ motion for summary judgment further states:

“. . . Prior to June 7, 1966, and about May 1, 1966, I talked to Huida Obelgoner and asked her if she and Russell and Elizabeth understood that they had nothing coming that year as the bonus had been paid in advance and her exact words were ‘We understand’.”

This evidence cannot be considered as evidence of the surrounding circumstances at the time the lease was executed by the parties. The affidavit clearly shows that these conversations took place after the lease was executed.

Furthermore, the quoted excerpt from appellant’s affidavit is evidence of an utterance of the subjective intent or will of Huida Obelgoner. Such evidence is clearly inadmissible. Cutrer v. Cutrer, 162 Tex. 166, 345 S.W.2d 513 (1961).

For the reasons previously stated, the trial court correctly ruled that appellees had proven that no genuine issue regarding any material fact existed. Because the ap-pellees are entitled to judgment as a matter of law, all of appellant’s points of error are overruled.

The judgment of the trial court is affirmed.