author: LEDDY, Judge. CURETON, Chief Justice.

text:
    MARTIN et al. v. DIAL et al.
    No. 1381—5976.
    Commission of Appeals of Texas, Section B.
    Feb. 1, 1933.

      Hamilton & Hamilton, of Dallas, G. R. Pate and Burney Braly, both of Fort Worth, Don Emery, Morgan, Morgan & Britain, and S. A. L. Morgan, all of Amarillo, Black & Graves, of Austin, John E.. Green, Jr., and David Proctor, both of Houston, and J. T. Montgomery and R. C. Stanford, both of Wichita Falls, for plaintiffs in error.
    Lloyd Fletcher, of Amarillo, H. D. Bishop, of Austin, and W. B. Harrell, of Dallas, for defendants in error.
   LEDDY, Judge.

This case involves the title to a large tract of valuable oil land situated in Hutchison county, Tex. The record is very voluminous. Three opinions were written by the Court of Civil Appeals, covering more than 50 typewritten pages. The application for writ of error contains over 200 pages.

We have given all of the questions presented by this record a most careful consideration. The conclusion we have reached on two of the principal legal questions raised disposes of this controversy. It will therefore only be necessary to quote such portions of the record as are pertinent to our decision of these particular questions. The two questions, the determination of which decides this controversy in favor of plaintiffs in error, are these:

First, the will of J. C. Dial constitutes Gertrude A. Dial independent executrix of his estate.

Second, the oil and gas lease and deed executed by C. L. Dial, surviving partner of the firm of Dial Brothers, and Gertrude A. Dial, individually and as the executrix of the estate of J. O. Dial, conveyed a good title to the grantees therein.

The will of J. 0. Dial, omitting portions immaterial to this controversy, is as follows:

“Second: I desire and direct that all of my just debts be paid upon proof of the existence of same without delay, and that such proof shall be made of the existence and justness of said debts by the sworn statements of all holding the same, and that they be paid by my executrix hereinafter mentioned.”
“Third: It is my -will and desire, and I so direct, that all the property of which I may die seized and possessed of, both real and personal, pass to my beloved wife, Gertrude A. Dial, after the payment of all just debts and the expenses incident to the probation of this will, subject, however, to the following conditions:
“(a) That the same shall be held by her for the support and maintenance of my children and the support and maintenance of my wife during widowhood.
“(b) That at the end of her widowhood that all of such property, both real and personal, pass to and be vested in fee simple, share and share alike to my children who may be living at such time, or their issues, if any there be.
“Fourth: I hereby appoint and constitute my beloved wife, Mrs. Gertrude A. Dial, the sole executrix of this my last will and testament during her widowhood and that during such widowhood no bond or other security be required of her as such'executrix, but upon the termination of such widowhood I direct that my brother, O. L. Dial, be appointed executor of said estate, both real and personal, and that no bond be required of him as such; it being the intention of this will and of the testator herein that the wife of the testator have full control and management of all of the testator’s estate, both real and' personal, for the use and benefit of herself and the children of herself and the testator during her widowhood, but that at the end of said widowhood that all of said property, both real and personal, pass and be vested in the testator’s children, and that the control and management .of the same be divested from the said wife of the testator at the end of such widowhood and be placed beyond her control and management in the brother named herein of the testator if he be living, and if not living then in the nearest of male kin to said testator ; that at the end of such widowhood the executrix herein be required to render an account stating the amount of property on hand at the time, both real and personal, and that the same be filed as a part of the record in the probation of this will, and that upon the devisees herein becoming of age that the executrix or executor, as the case may be, likewise file a statement showing the amount of property, both real and personal, on hand at such time, but that no bond be required of either party; the testator herein relying upon the. honesty and integrity of the parties herein named.
“Fifth: It is my desire that no other action, and I so direct, shall be had in the county court in the administration of my estate than to approve and record this will and to return an inventory and appraisement of my estate and list of claims.
“Sixth: I also direct and desire that such Insurance policies that are payable to my •children be paid over by the insurance companies direct to the executrix 'herein named immediately upon proof of death and that such executrix hold the same for the use and benefit of the beneficiary or beneficiaries named in such policy, using the same for the support, maintenance and education, according to their station in life of such beneficiary or beneficiaries therein named; that the insurance company require no bond for the delivery of such money. Should, however, at the end of the' executrix’ widowhood she should elect to keep the children of the testator herein, then it is directed by this will and testament that she be required to support and maintain said children at her own proper expense, excepting that after said children have passed through the high school that the moneys herein devised shall be used for their education in some approved educational institution in the event she of her own means may not be able to do so.
“Seventh: In construing this will I direct that it.be construed as rigidly as possible in favor of the executrix herein during widowhood, but after that time I direct that it be construed as nearly as can be so against such executrix and in favor of the devisees herein.”

. Plaintiffs in error contend that the provisions of testator’s will conclusively evince an intention that Gertrude A. Dial, as executrix, should handle his estate free from any action of the probate court.

Defendants in error insist that the will properly construed does not authorize the estate to be administered free from the control of the probate court. This insistence is based, first, on the provisions of the will which require Gertrude A. Dial, as executrix, at the end of her widowhood to render an account stating the amount of property on hand at the time, both real and personal, and that the same be filed “as a part of the record in the probation of this will, and that upon the devisees herein becoming of age, that the executrix or executor, as the case may be, likewise file a statement showing the amount of property, both real and personal, on hand at said time”; and, secondly, upon that provision directing that the executrix should pay claims against the estate upon sworn proof of their existence and justness.

The testator provided in his will that no bond should be required’ .of the executrix, and in language too clear and plain to be misunderstood directed that his estate should be administered free from any control of the probate court. In fact, the provision of the will of testator in this respect is in practically the identical verbiage of the statute in regard to the administration of estates independent of the probate court. Article 3436, B. S. 1925.

An inspection of the entire will does not disclose any language fairly susceptible of a construction which would destroy this clear and distinct expression of the testator’s desire upon this subject. The direction to the executrix to require sworn proof of claims before payment does not call for or require any action whatever upon the part of the probate court. The testator certainly had the right to direct the method and manner in which the independent executrix should handle claims against his estate without thereby subjecting the same to the control of the probate court. However much he may have limited and restricted the power of the independent executrix, so long as such limitations or restrictions do not require or invoke any action by the probate court, it would not operate to prevent the executrix’ handling the estate free from the control of such court.

Nor do the provisions requiring the executrix, upon ceasing to act as such, to render an account and statement, stating the amount of property then on hand, require any action upon the part of such court.

Defendants in error contend that the testator in using the word “account” meant to require the executrix at the end of her widowhood to file an account of all her acts as such executrix. From this premise it is reasoned that if such an account was required, it was necessarily implied that the probate court should determine its correctness. We are unwilling to give the word “account” the meaning defendants in error would thus place upon it. We think the testator in clear and specific language has specified what the required account should contain. His direction is that she should render an account “stating the amount of property on hand at the time, both real and personal,” and that the same be filed as a part of the record in the probation of the will. It is thus seen that the testator has distinctly defined what this accorint should contain; that is, a mere statement of the amount of real and personal property on hand at the time the executrix ceased to be a widow. The correctness of this view is confirmed by a subsequent provision of the will. That the nature of the instrument directed to be filed at the end of the executrix’ widowhood is intended to be similar to that required when the minor devisees should become of age is plainly shown in the language of the will which provides that the executrix at that time should “likewise” file a statement showing the amount of property both real and personal on hand.

We think the will plainly shows that the desire upon the part of the testator that these statements be filed by the executrix when her official connection with the estate should cease, was solely for record purposes. He plainly manifests such intention in the language that the required statements “be filed as a part of the record in the probation'of the will.” The-testator, who was a lawyer, knew that his estate was heavily indebted. He had directed in his will that such debts should be paid. He is bound to have known that the payment thereof would require the sale of a large portion of his estate and that the property in the hands of the executrix at the time of either of the events specified in the will would not be the same as that shown by the inventory and appraisement. It was his evident purpose to have the record correctly reveal the specific property which the devisees would come into possession of at the time of the happening of either of the specified contingencies. Neither of these provisions required any action on the part of the probate court. They were merely directions to the executrix which the testator clearly had the right to give.

The provisions of the will in this ease are wholly unlike those in the cases of Bain v. Coats (Tex. Com. App.) 244 S. W. 130, 131, and Hughes v. Mulanax, 105 Tex. 576, 153 S. W. 299, 300, which are strongly relied upon by defendants in error. In the first case cited the testator provided as follows: “It is my will that no other action shall be had in the county court in the administration of my estate than to prove, and record this will, to return an inventory and appraisement of my estate, to file, approve and record the bond of my executors or executor, as the case may be, and to require a report of all the acts of my executors or executor, in the said administration of my ' estate.” It will be noted that this provision expressly directs that the probate court require the executor to report all his acts in the administration of the estate. In fact, the opinion of the court in that case clearly points out the difference in the provision of the will before the ecttirt from a requirement which merely directs the filing of a statement by the executrix. It is there said: “If [the will] authorizes the court to ‘require a report of all the acts of my executors, or executor.’ This provision of the will is not tantamount to a direction by the testator to an independent executor to file a report of all his acts. In such a case, the probate court would have no power or duty to perform concerning the matter, except when specially invoked by the suit of an interested party. In the case at bar, it becomes the duty of the court, of its own motion, to have' the provision carried out.”

The second case above cited is easily distinguishable from the instant ease. There the will provided that the executor should give bond and make an annual report to the probate court, which reports were required to be “acted on by said court in the saíne manner as the annual reports of "other executors- and administrators.” -

' The case of Epperson v. Reeves, 35 Tex. Civ. App. 167, 79 S. W. 845, 847, in which á writ of error was refused by the Supreme Court, is directly- in point to sustain the view that the provision of the will in-question re-> quiring the filing of statements by the executrix is not sufficient to place the estate under the control of the probate court. In the above case the will required the executor from year to year to “file a report * * * showing the condition of the estate, which may be seen by creditors and heirs.” In holding that this provision did not operate to prevent the executor’s acting independent of the probate court, the court Said: “This, in our opinion, was not intended as any restriction on the exercise of the powers granted to the executors, nor as intended to give the court supervision over the acts of the executors in the administration of the estate, and, this being so, the powers of the executors were as ample with this provision in the will as without it. Besides, the provision expressly states the purpose of its filing to be that it may be seen by creditors and heirs, and did not contemplate that it should be audited by the court, and the acts of the executors embodied in it approved or disapproved. If such a construction were given this provision, it would entirely defeat the discretion which the testator conferred on his executors in plain terms. It is evident that this was his idea in reference to beeping the heirs and creditors informed periodically of what had been done by his executors, and that he did not intend thereby that the court should act upon such report, and thereby supervise or revise their proceedings. We conclude that the will comes within the provision of article 1995, Say les? Rev. Oiv. St., and that this was what is commonly known as an independent administration.”

If we should interpret these provisions in accordance with defendants in error’s view, we would bring the provisions of this will into irreconcilable conflict. The construction we have given avoids any conflict and harmonizes the provisions of the entire instrument. It is a well-settled rule of construction that where it is possible a will should be so construed as to harmonize inconsistent and repugnant clauses or provisions so as to give effect to each. Dulin v. Moore, 96 Tex. 135, 70 S. W. 742; Faulk v. Dashiell, 62 Tex. 642, 50 Am. Rep. 542; 40 Cyc. p. 1416, and authorities there cited.

Further, if we should adopt defendants in error’s construction that the provisions of the third and fourth clauses of the will were intended by the testator to have the effect of placing his estate under the control of the probate court, such provisions would be in irreconcilable conflict with the fifth clause, in which he specifically provides that no action be had in the probate court except to probate ' the will and file an inventory and appraise-' ment. With this' direct conflict we should be compelled to give' effect to the provision of the fifth clause, as it appears later in the will. It is the general rule that where there is an irreconcilable conflict between two clauses of a will, the later clause will prevail as being the latest expression of the testator’s intent. Thrasher v. Ingram, 32 Ala. 645; Rogers v. Highnote, 126 Ga. 740, 56 S. E. 93; Harris v. Ferguy, 207 Ill. 534, 69 N. E. 844; In re Freeman’s Estate, 146 Iowa, 38, 124 N. W. 804; Butler v. Moore, 94 Ind. 359; Deppen’s Trustee v. Deppen, 132 Ky. 755, 117 S. W. 352; In re Bates, 159 Mass. 252, 34 N. E. 266; Mart-ley v. Martley, 77 Neb. 163, 108 N. W. 979; Sheafe v. Gushing, 17 N. H. 508; Hendershot v. Shields, 42 N. J. Eq. 317, 3 A. 355; Adams v. Massey, 184 N. Y. 62, 76 N. E. 916; Baird v. Baird, 42 N. C. 265; In re Phillips’ Estate, 205 Pa. 504, 55 A. 210, 97 Am. St. Rep. 743; Waring v. Bosher’s Adm’r, 91 Va. 286, 21 S. E. 464 ; 40 Cyc. p. 1417, and authorities cited in note 37.

The facts pertinent to the question as to whether the oil and gas lease and deed to the land in controversy executed by O. L. Dial as surviving partner of the firm of Dial Broth-ters, and Gertrude A. Dial, individually, and as executrix of the estate of J. O. Dial, conveyed a valid title to the grantees in said instruments, are substantially these:

In the year 1914, J. C. Dial, an attorney, and his'brother, O. L. Dial, a ranchman, With the view of operating a cattle ranch, formed a partnership under the firm name of Dial Brothers. C. L. Dial was employed to manage the business at a salary of $75 a month. J. G. Dial contributed to the original capital of the partnership the sum of $600 in cash. O. L. Dial delivered to the partnership 300 head of cattle incumbered in the amount of $5,000. This incumbrance was to be paid by the partnership, and O. L. Dial was to be reimbursed out of the partnership assets in the sum of $10,000 for the value of his equity in the cattle furnished to the partnership. It was agreed that the partners were to share equally in the profits and losses of the partnership.

In the year 1916 the partnership purchased the land involved in this controversy to be used in grazing the cattle. The'partnership continued until April 8, 1918, on which date J. 0. Dial died. At the time of his death the partnership owned the lands in controversy, which were incumbered with liens to secure purchase-money obligations for the payment of which the partnership was bound, in the sum of approximately-$50,000. There were also on hand about 2,250 head of cattle, which were being grazed on the land involved, together with certain other leased lands. It appears that at the time of the death of J. O. Dial the partnership owed, in addition to the purchase money for the land and the debt claimed by the surviving partner, approxi- . mately $100,000.

J. O. Dial left surviving his widow, Gertrude A. Dial, and two minor children, David and Elizabeth Dial. He left a will, the terms of which have been heretofore set forth, naming Gertrude A. Dial .as sole executrix without bond, which was. subsequently probated and his widow duly qualified thereunder by taking the statutory oath and thereafter for a period of about four years attempted to act as executrix free from direction of the probate court.

After the death of J. O. Dial, O. L. Dial, the surviving partner, continued in possession and control of the property belonging to the partnership estate and continued to look after the cattle which were grazed on the partnership lands.. Some three months after the death of J. O. Dial, a large portion of the debts owed by the partnership to banks and cattle loan companies were renewed. These creditors accepted new notes for their debts signed by O. L. Dial, the surviving partner, and by Gertrude A. Dial as independent executrix of the estate of J. O. Dial. These notes were also indorsed by W. H. Dial, the father of J. O. and C. L. Dial. These renewal notes were secured by chattel mortgages on the partnership cattle, and new mortgages were executed from time to time by C. L. Dial, the surviving partner, joined by Gertrude A. Dial, the executrix. The original notes given as a part of the purchase money of the land in controversy were never renewed.

The surviving partner testified upon the trial that in the summer of 1918 the weather was unusually dry and the grazing on the land was such that the cattle were in extremely poor condition, and that during the fall of that year they became infected with a contagious disease known as “scab”; that because of these conditions he was unable to dispose of any part of the cattle; and that in carrying the cattle through the following winter it was necessary to provide feed for them; and also to dip the cattle at considerable expense, in an attempt to free them from the • disease with which they were infected. He further testified that there were no partnership funds on hand with which to pay’for feed or treatment of the cattle or to pay interest accrued on the debts owing by the partnership. Some eight months after the death of J. O. Dial, O. L. Dial was still in possession of ■ the partnership property. At this time no proceeding of any kind had been instituted by the executrix or the devisees of J. O. Dial to disturb the possession and control of the partnership assets by O. D. Dial.

In December, 1918, G. L. Dial, the surviving partner, joined by Gertrude A. Dial, as executrix of the estate of J. O. Dial, deceased, and W. H. Dial (who purported to act as executor, but who clearly had no authority to do so), executed and delivered to T. E. Durham an oil and gas lease covering the land in con-' troversy. Durham paid the surviving partner $2,751 in cash as a consideration for the lease. The lease contained the provision that if a well was not commenced on said land, or on other lands leased in this prospective oil field, on or before November 1, 1920, the lease should terminate unless a rental of $2,751 should be paid each year for the privilege of deferring the commencement of drilling operations. Such operations might only be deferred for a period of five years. Two annual rentals were paid, but before the third rental became due a well was drilled, with the result that oil and gas were discovered in paying quantities. C. L. Dial testified, without contradiction, that he executed this lease for the purpose of obtaining money to buy cake to feed the partnership cattle through the winter of 1918.

Portions of the partnership cattle were sold from time to time. On March 11, 1922, there still remained unpaid indebtedness of the partnership aggregating more than $125,000. About $50,000 of these debts were obligations executed during the lifetime of J. O. Dial as part of the purchase money of the land in controversy. Other debts of the partnership had been renewed from time to time, but were still unpaid. Some of the creditors of the partnership were demanding immediate payment of their claims. In order to satisfy these creditors and others holding obligations against the partnership, the surviving partner sold the land in controversy to N. H. Martin and J. J. Perkins, for the purpose of obtaining funds with which to discharge the existing partnership debts. The deed was executed by C. L. Dial, the surviving partner, joined by his wife, and Gertrude A. Dial for herself individually and as independent executrix of the estate of J. 0. Dial, deceased, and by W. I-I. Dial, also purporting to act as executor of said estate. The consideration recited in the deed was the assumption by the grantees of the purchase-money obligations made prior to the death of J. O. Dial of approximately $52,000, and about $44,000 of other debts, most of which were renewals of partnership debts incurred prior to the death of .1. O. Dial. A small portion of the indebtedness represented borrowed money used for the puipose of feeding and caring for the partnership cattle. It was shown, without dispute, that the grantees in the above deed paid all of the indebtedness assumed by them in this transaction.

This suit was originally brought by Gertrude A. Dial, suing for herself individually and as next friends of the minors, Elizabeth and David Dial. Lloyd Fletcher was appointed guardian ad litem for the minors. He filed a third amended petition in which no recovery was sought by Gertrude Dial. The suit was • confined to an effort in behalf of the minors, through their next friend, to set aside and annul the oil and gas lease and deed to the property in controversy and to recover the interest in the property devised to the minors under the will of their father, J. O. Dial.

At the conclusion of the evidence ■ the trial court peremptorily instructed the jury to return a verdict for plaintiffs in error. Upon •the verdict thus returned judgment was ren-derod that defendants in error take nothing by reason of this suit. Upon appeal the Court of Civil Appeals reversed the judgment of the trial court and remanded the cause for another trial.

In the defendants in error’s petition in the trial court there -was no charge that the purchaser of the oil and gas lease, or either of the purchasers under the deed to the land in controversy, made any false or fraudulent representations to induce the execution of either of said instruments, nor was it charged that either of said purchasers acted collu-sively with the surviving partner for the purpose of defrauding the estate of the deceased partner. The oil and gas lease and deed were attacked as being void for a number of reasons, the most substantial of which may be thus summarized:

(a) That the surviving partner was wholly without authority to execute the oil and gas lease on the partnership land as he was empowered to sell the minerals in said land fox-cash only.

(b) That said lease conferred only an option to explore the land for oil and gas and was not such a sale of the minerals as the surviving partner was authorized to make in the liquidation of the partnership affairs.

(c) That both the oil and gas lease and the deed were void because they were executed by the surviving partner after a reasonable time had elapsed for the liquidation of the partnership affairs.

(d) That the deed by the surviving partner was void because it showed upon its face that a large portion of the consideration was the assumption and payment by the grantees of renewed partnership debts which the surviving partner was without authority to renew so as to bind the partnership assets.

The rule is well established that the death of one partner dissolves the partnership. The law, however, places upon the sui--viving partner the duty to wind xtp the partnership affairs. After paying all outstanding indebtedness, he must account to the heirs and personal representatives of the deceased partner for their interest in what remains. In order to accomplish this purpose the surviving partner is entitled to the exclusive possession.of the partnership assets. He is clothed with full power to sell all or any part of the partnership property for the purpose of paying such debts. His power in this respect is equal to that of a community survivor. Sanger v. Moody’s Heirs, 60 Tex. 96, 101; Moore v. Steele, 67 Tex. 435, 3 S. W. 448; Sherk v. First National Bank of Hereford (Tex. Com. App.) 206 S. W. 507; Mur-rell v. Mandelbaum, 85 Tex. 22, 19 S. W. 880, 34 Am. St. Rep. 777; Amarillo National Bank v. Harrell (Tex. Civ. App.) 159 S. W. 858; Altgelt v. Alamo National Bank, 98 Tex. 252, 83 S. W. 6.

At the time of the execution of the oil and gas lease the partnership owed approximately $150,000. It was shown without dispute that the surviving partner had no funds on hand with which to pay these debts or to bixy feed for tho cattle. He had listed the land for sale with a number of brokers, but had been unable up to that time to effect a sale. There can be no question but. that the surviving partner, under the circumstances, had the legal right to sell all of the land or any portion thereof in order to liquidate the outstanding indebtedness. It is equally clear that the sale of the oil and gas lease was a sale of an interest in the land. It is no longer an open question in this state that an oil and gas lease similar to the one under consideration conveys an interest in land. The purchaser of such lease takes a determinable fee to the minerals in place. Stephens County v. Mid-Kansas Oil & Gas Co., 113 Tex. 160, 254 S. W. 290, 29 A. L. R. 566; Corsi-cana Petroleum Co. v. Owens, 110 Tex. 568, 222 S. W. 154; Hager v. Stakes, 116 Tex. 453, 294 S. W. 835.

But it is argued that the surviving paxtner could sell the minerals in the land only for cash. We are unwilling to assent to a proposition which would so restrict the power of a surviving partner in the liquidation of firm assets. The power of such partner to sell minerals in lands necessarily implies an authority to sell in the usual and customary way in which such minerals are oi-dinarily disposed of. Theisen v. Robison, 117 Tex. 489, 504, 8 S.W. (2d) 646; Sawyer V. Robison, 114 Tex. 437, 268 S. W. 151; Ehl-inger v. Clark, 117 Tex. 547, 563, 8 S.W.(2d) 666. No sound reason has been advanced why a surviving partner should not be accorded the privilege of selling the minerals in a tract of land owned by the partnership in a way that is generally recognized as being the most advantageous. It is a matter of common knowledge that the average landowner almost universally disposes of the minerals in land situated in nonproductive territory through the execution of mineral leases retaining a specified royalty. The practical effect of the mineral lease executed by the surviving partner was to dispose of a portion of the minerals in place. We know of no rule of law that wo-uld operate to compel the surviving partner to dispose of all of the minerals by one transaction. The retained royalty, and even the interest in the lease with its stipulated rentals, was subject to immediate disposition by the surviving pax*tner. It was no more necessary that he dispose of all of the mineral interest in the land by one conveyance than it was that he should sell the surface rights to all of the land at the same time.

Nor can we assent to the correctness of the holding of the Court of Civil Appeals that if the surviving partner delayed beyond a reasonable time in selling the partnership realty to pay' existing debts, liis power to sell was thereby destroyed even though the debts remained unpaid, and that any conveyance made by him after the lapse of a reasonable time for the liquidation of the partnership affairs would be wholly void.

Undue delay on the part of a surviving partner in selling the partnership assets and liquidating existing debts does not operate to destroy, or in any way impair, the power of such survivor to sell the firm, property. His duty to sell such property is a continuing one so long as there are unsatisfied debts existing against the partnership. As long as the duty continues, necessarily the.power to sell must exist. Where a surviving partner negligently fails to proceed w[th reasonable "diligence in disposing of partnership property for the purpose of discharging the outstanding indebtedness, the representative of the estate of the deceased partner' or any creditor may invoke the aid of a court of equity to compel him to perform his duty in this regard, or in such proceeding may oust him and have the partnership affairs wound up through a receiver.

In the case of Clay v. Freeman, 118 U. S. 97, 6 S. Ct. 964, 968, 30 L. Ed. 104, the surviving partner had delayed selling the partnership property for a period of eighteen years after the death of his partner. The heirs of the deceased partner sued to recover an interest in the property. The court, in denying the right pf the heirs to recover until there had been an accounting, said: “The same rale applies in the case of partnership property in the possession of the surviving partner. He has a right to hold it until the debts of the firm are paid, and if the firm is indebted to him, he has a right to hold it until he is paid. It is true, it is his duty to dispose of the partnership property, and settle the partnership debts. But that is a duty to which he may, at any time, be compelled by the representatives of the deceased partner; and although his neglect or delay in winding up the concern may expose him to the animadversion of the court, and to the vigorous exercise of its power to compel him to do his duty, it will not relieve the partnership assets in his hands from the lien of the partnership debts. [Italics ours.] Being in possession of those assets, he is not affected by the statute of limitations. If the statute runs against anybody, it runs against the representatives of the deceased partner in relation to their right to call him to account. The proposition that the partnership property can be taken out of the surviving partner’s hands, and distributed among the several partners and their representatives without a settlement and payment of the partnership debts, including any balance due the surviving partner himself, is a proposition that equity will not for a moment entertain."

The testimony of the surviving partner shows that the delay in disposing of the partnership property was due to his desire to obtain a fair and reasonable price for the property. A surviving partner is vested with some discretion as to the manner of closing the business and the time to be taken for this purpose. He may hold the partnership property for a period sufficient to enable him to avoid a sacrifice of the assets and to make an advantageous disposition of the property. Big Four Implement Co. v. Keyser, 99 Kan. 8, 161 P. 592, L. R. A. 1917C, 166.

The representatives of the estate of the deceased partner and the creditors of the partnership are as much interested in the partnership property’s being disposed of upon the most advantageous terms as is the surviving partner. If such partner abuses the discretion vested in him as to the time taken to dispose of the property, the legal representatives or creditors of the deceased partner are not without a remedy. They may upon-proper showing, in a court of equity, compel a prompt disposition of the partnership property by the surviving partner. Gertrude A. Dial was the duly qualified and acting legal representative of the estate of the deceased partner. Being such representative, she was charged with the duty of taking such action as would protect the minors’ interest in this property as well as her own. If the surviving partner was unduly or unreasonably delaying the sale of the partnership assets, she had the right to demand that he proceed with diligence to liquidate its affairs ; and, if he failed to do so, she was entitled to invoke the aid of a court of equity to compel the performance of such duty. She took no steps whatever to compel the surviving partner to make an earlier disposition of the partnership assets; on the contrary, she consented and acquiesced in the delay. Acting in her official capacity as independent executrix of the estate of J. C. Dial, she joined the surviving partner in the execution of the renewal partnership notes, described in the deed to Perkins and Martin, and also joined in the execution of the oil and gas lease and deed to the land in controversy. Pier action in this respect foreclosed the right of any of the devisees of the estate represented by her to complain of any undue delay in the sale of the partnership assets by the surviving partner.

If we were to hold that' mere negligence of the surviving partner in not promptly disposing of the partnership real estate would operate to destroy his power to sell and render any deed made by him void, the title to property purchased from a surviving partner in the course of a firm’s liquidation would rest upon a precarious basis indeed. In fact, it would be extremely difficult under such conditions for a surviving partner to sell partnership realty at anything like its fair val-Tie. The title to .property purchased from such survivor would be subject to be defeated by the determination of an issue of fact as to whether the disposition of the property was made within a reasonable time after the death of a partner. It is altogether probable that there would be but few, if any, purchasers willing to take a title subject to such a risk. A number of tracts of land might be sold by a surviving partner on the same date, and yet in an attack upon such sales by heirs of the deceased partner some of the titles might be upheld while others might be defeated by the findings of different juries on the issue of fact as to whether the property was sold by the survivor within a reasonable time.

We conclude that the contention, that the deed of the surviving partner to the land in controversy is void'because it appears that a part of the consideration was the assumption and payment of renewed notes for which the partnership was not liable, is equally without merit. It is true that the general rule is that the power of a partner to make a contract binding upon the Ann ceases upon the dissolution of the firm by the death of a partner. The surviving partner can enter into no contract which will bind the estate of the deceased partnership except such as is reasonably appropriate and necessary in settling its affairs. First National Bank v. Payne & Co.’s Assignees, 85 Va. 890, 9 S. E. 153, 3 L. R. A. 284.

But where the partnership has no funds on hand with which to meet existing obligations and the same must either be renewed or the property of the partnership sacrificed through forced sale, the surviving partner, under his power to preserve the estate, is fully authorized to execute necessary renewals of existing indebtedness. While some of the texts announce the broad proposition that the surviving partner cannot execute a renewal of existing indebtedness which is binding upon the partnership assets, we think the better rule is that he may do so when in the exercise of a fair discretion he believes that such action is necessary to prevent the partnership property’s being sacrificed.

It is a well-recognized principle of law that a surviving partner in performing his duty of liquidating the firm affairs may subject the assets of the partnership to a mortgage for money borrowed to discharge firm obligations. Ruling Case Law, vol. 20, p. 997, § 234, announces the rule in this regard as follows: “For the purpose of winding up partnership affairs a surviving partner has the power to borrow money and give a pledge or mortgage of the partnership assets. It seems that he may exercise this power even if the effect is to prefer one firm creditor over another. It has been pointed out that 'cases may arise in which the exercise of such authority may be highly expedient if not necessary for the preservation of the' rights of . creditors and persons interested in the distribution of the assets of the firm.”

In Rowley’s Modern Law of Partnership, vol. 2, § 620, it is said: “The power of alienation, whether direct, by sale, or indirect, by incumbrance, of firm property by a surviving partner, when for proper purposes, is too well settled to raise serious question.” The same author in the same section further sdys: “A surviving partner may likewise incumber . by mortgage or pledge property of the firm, when it is necessary, and is done for the benefit of the firm, and when this is done in good faith, it has been held that the mortgage is effectual against the partnership creditors as well as against the representatives of the deceased partner * * The author further states: “And it has been held that if necessary to prevent sacrifice, he may give a trust deed upon partnership real estate to secure a firm debt.”

There are many decisions of courts of the highest repute which sustain the rule as above declared. Durant v. Pierson, 124 N. Y. 444, 26 N. E. 1095, 12 L. R. A. 146, 121 Am. St. Rep. 686; Fitzpatrick v. Flannagan, 106 U. S. 648, 1 S. Ct. 369, 27 L. Ed. 211; Burchinell v. Koon, 8 Colo. App. 463, 46 P. 932; Id., 25 Colo. 59, 52 P. 1100; Knox v. Gye, L. R. 5; H. L. 656; Amunategui v. Spokane Cattle Loan Co., 36 Idaho, 688, 214 P. 211, 20 R. C. L. 997, § 234; Nat.l Exchange Bank of Lexington v. Wilgus’ Ex’rs, 95 Ky. 309, 25 S. W. 2; First Nat’l Bank v. Cody, 93 Ga. 127, 19 S. E. 831; Fidelity Union Casualty Co. v. Hammock (Tex. Civ. App.) 5 S. W.(2d) 812.

If a surviving partner in liquidating the partnership affairs' has the power to borrow money for the purpose of paying existing indebtedness and pledge partership assets to secure its payment, there is no sound reason why he should be denied the right to renew existing indebtedness so as to bind such assets when he in good faith believes that a renewal is necessary to' prevent a sacrifice of the partnership property. The power of the surviving partner to bind the partnership assets by his renewal of existing partnership indebtedness is affirmed by the Supreme' Court of Georgia in the ease of First National Bank v. Cody,'93 Ga. 127, 19 S. E. 831, 839. In holding that such power in the surviving partner exists the court observed: “It has been definitely decided by this court that where one holding a debt against a partnership accepts, after its dissolution, a renewal note or draft of one of the partners for the debt, and extends the time of payment, without the knowledge or consent. of the other partners, they are absolutely discharged. * ⅜ * ^ cannot, however, assent to the proposition that where a firm is dissolved by death, and a note due by the firm is renewed in tlie firm name by a surviving partner, tbe firm assets are not still bound for the debt.”

A similar holding was made by the Supreme Court of Idaho in the case of Amuna-tegui v. Spokane Cattle Loan Co., 36 Idaho, 688, 214 P. 211, 212, wherein it is said:

“The general rule would seem to be that surviving partners may transfer the personal property of the partnership by way of pledge or mortgage to secure the existing debts of the partnership, and when such transfer is made in good faith it is effectual against all other creditors as well as against the representative of the deceased partner. [Citing many cases.]
“A partnership being dissolved by the death of one of the partners, the survivor has the entire legal right to all of the assets of the firm for the purpose of winding up the affairs of the partnership. He has the right to dispose of them as he pleases, to settle all debts due to or from the concern, to make any compromises deemed necessary, and to turn the assets into an available and distributable form. [Citing case.]
“He also has the right to secure extension of credits 6y renewals, or by pledge or mortgage of personal propen'ty to secure payment of partnership indebtedness, and to transfer the indebtedness from one creditor to another for the benefit of the partnership.”

In Espy v. Comer, 76 Ala. 501, the Supreme Court of Alabama held that although when a partnership is dissolved by the death of one of the members, the surviving partner cannot by any act or acknowledgment revive or continue in force a debt of the firm so as to bind the estate of the deceased partner, the discharge of his estate does not change the character of the debt as a partnership liability.

The Supreme Court of Iowa reached a like conclusion in the case of Van Staden v. Kline, 64 Iowa, 180, 20 N. W. 3. In that case it appeared that a firm had borrowed money securing it by mortgage on firm assets. After the dissolution of the firm by death, a surviving partner, in order to secure an extension of the lien, executed renewal notes and a mortgage to secure same. The court held that no new debt Was created and that the partnership property continued liable for the original debt.

In any event, the right of those interested in the estate- of the deceased partner to complain that these renewals by the surviving partner were. not necessary for the proper preservation of the estate is foreclosed by the action of the independent executrix, who was charged with the duty of representing the estate of the deceased partner, in joining with the surviving partner in the execution of the renewed notes, the payment of ■which was assumed by the grantees in the deed to the land in controversy executed by the surviving partner. Where the duly accredited representative of the estate of a deceased partner, by a joinder in a conveyance, has led a purchaser of the property from the surviving partner to believe that the property is being conveyed upon a consideration satisfactory to the estate he represents, those for whom he thus acts should not be permitted, in the absence of fraud or collusion, to recover the property in a suit against such purchaser.

Aside from this there is no evidence showing that the parties intended to extinguish the original indebtedness by renewal of the notes existing at the time of the death of J. O. Dial. In the absence of such showing, the original indebtedness would remain ■ in full force and effect. Since this is true, a sale by the surviving partner of the partnership property for the purpose of discharging such indebtedness would be authorized. Wilcox v. First National Bank, 93 Tex. 322, 333, 55 S. W. 317; Ellis v. Singletary, 45 Tex. 27; Wright v. Wooters, 46 Tex. 380; Dillon v. Kauffman & Runge, 58 Tex. 696; Hicks v. Morris, 57 Tex. 658; Daniel on Negotiable Instruments (5th Ed.) §§ 1266 and 1266L.

It is also asserted that a small portion of the indebtedness assumed in the deed and paid by the grantees represented money borrowed by the surviving partner to feed and care for the cattle and that such obligations were not a valid charge against the partnership assets, and therefore the deed to the land was void.

As we have heretofore shown, the independent executrix of the estate of the deceased partner consented and acquiesced in the action of the surviving partner in keeping the cattle for the length of time they wore held by him. She knew, of course, that if the cattle were kept it would be necessary that they be cared for and fed. In her official capacity she joined the surviving partner in the execution of notes, the proceeds of which were used in earing for and feeding the cattle. Her action in this respect effectually prevents any one interested in the estate from claiming that the expense thus incurred in earing for the cattle should not be a charge against the partnership assets.

Even if it be assumed that the renewal notes executed by the surviving partner were effective to -extinguish the original partnership indebtedness, the result would be that the surviving partner would have a valid claim for contribution against the partnership property on account of his having paid more than his pro rata share of the partnership debts. In other words, a surviving partner who individually pays the debts of the dissolved partnership is subrogated to the claims of creditors and he may satisfy his claim by the use of the same power of sale that he might have exercised to discharge the claim if still held by the creditor. To deny a surviving partner the right of subro-gation to creditors whose claims he has individually paid would be most inequitable and unjust. Indisputably the surviving partner had the power to sell the land in controversy in satisfaction of the original notes before they were renewed. If he could have legally sold it then for the payment of the debts instead of renewing them, surely he would be authorized to sell to reimburse himself for the amount of the debts he has individually discharged. The right of the surViving partner to contribution under such circumstances is clearly set forth in the following quotation from the case of Dyer v. Morse, 10 Wash. 492, 39 P. 138, 139, 28 L. R. A. 89, in which the court said: “It appears from the agreed statement of facts that the debts were all paid before the passage of the act of 1873, and that the surviving partner had taken possession of this property as his own, to reimburse himself for the moneys advanced by him in paying the debt's of the firm, and that for that purpose he had paid out a sum in excess of the value of all its property. This being so, a court of equity will sustain his self-asserted title to the property, if at that time it would have leen in his power to have conveyed the property to another for the purpose of paying such debts. This would not be the effect of such action, if all the property had not been required to pay the debts; but, in view of that fact, it would be inequitable to hold that the surviving partner did not obtain by the payment of the firm indebtedness the same right to the property which he could have conveyed to another.”

There are numerous decisions to the same effect, among which we cite: Dillon v. Kauff-man & Runge, 58 Tex. 696; Chalk v. Collier (Tex. Civ. App.) 208 S. W. 972; Hicks v. Morris, 57 Tex. 658; Durant v. Pierson, 124 N. Y. 444, 26 N. E. 1095, 12 L. R. A. 146, 21 Am. St. Rep. 686; Prudhomme v. Henry, 5 La. Ann. 700; Morris’ Adm’r v. Morris’ Adm’r, 4 Grat. (Va.) 293; Gee v. Humphries, 49 S. C. 253, 27 S. E. 101; Sells’ Adm’rs v. Hubbell, 2 Johns. Ch. (N. Y.) 394.

At the time the deed to the land in question was executed, the partnership unquestionably owed a large part of the original purchase money which had never been renewed. The purchasers assumed and paid this indebtedness. It was thus established as a matter of law that the land was sold by the surviving partner for the purpose of paying existing partnership debts. Clemmons v. McDowell (Tex. Com. App.) 12 S.W.(2d) 955; Jones v. Harris (Tex. Civ. App.) 139 S. W. 69; Crawford v. Gibson (Tex. Civ. App.) 203 S. W. 375.

It was not necessary, in order to uphold the sale made by the surviving partner, that the exact amount of partnership debts be established or to trace the proceeds of the sale or to show that all of the proceeds were used in paying debts. Terrell v. McCown, 91 Tex. 231, 254, 43 S. W. 2; Clemmons v. McDowell (Tex. Com. App.) 12 S.W.(2d) 955; Norwood v. King (Tex. Civ. App.) 155 S. W. 366 (Writ Ref.); Stone v. Light (Tex. Civ. App.) 228 S. W. 1108.

If the estate of J. C. Dial had been subject to the control of the probate court, that court would have possessed the power, upon proper showing by the executrix that a renewal of existing indebtedness was necessary to preserve the partnership’s property in which the estate was interested, to have authorized her to join the surviving partner in the execution of such .renewal. If she had done so under such authorization, there could be no doubt that the partnership assets would have been bound for the payment of such indebtedness. Since this is true, the j'oinder of Gertrude Dial as independent executrix in the renewal of such indebtedness would likewise bind the partnership assets, as she could do without order of the probate court any act which she could have done as an ordinary executrix under such an order. Dwyer v. Kalteyer, 68 Tex. 554, 5 S. W. 75; Carlton v. Goebler, 94 Tex. 93, 58 S. W. 829 McDonough v. Cross, 40 Tex. 251.

There are a number of other legal questions urged which it is unnecessary for us to consider, as a decision of them becomes immaterial because of the conclusions reached on the questions we have heretofore discussed.

The action of the trial court in peremptorily instructing the jury to return a verdict in favor of plaintiffs in error was proper. We therefore recommend that the judgment of the Court of Civil Appeals be reversed and the judgment of the trial court affirmed.

CURETON, Chief Justice.

The judgment of the Court of Civil Appeals is reversed, and that of the district court is affirmed.


source: Caselaw Access Project

author: HARVEY, P. J. CURETON, O. J.

license: Public Domain

text:
    LIVESAY v. FIRST NAT. BANK OF LOCKNEY, TEX.
    No. 1604—5995.
    Commission of Appeals of Texas, Section A.
    Feb. 1, 1933.
    Joiner & Cook, of Plainview, for plaintiff in error.
    L. O. Penry, of Fort Worth, and P. B. Randolph, of Plainview, for defendant in error.
   HARVEY, P. J.

This is a suit by the plaintiff in error, E. G. Livesay, as temporary administrator of the estate of J. T. Livesay, deceased, against the Plainview Mutual Life Insurance Association of Plainview, Tex., and the First National Bank of Lockney, Tex. The administrator seeks to recover the amount of two insurance policies on the life of J. T. Livesay, for the sum of $1,000 each, which were issued to the said bank, as beneficiary, by said insurance association. One of the policies had already been paid by the insurance association to the bank when the suit was brought. The trial court rendered judgment for the plaintiff in error against the insurance association for the sum of $1,940; being the amount of the policies less $60 premiums (or assessments) paid on the policies by the bank. A recovery by the bank on the unpaid policy was denied, and the insurance association was allowed a recovery against the bank in the sum of $940; being the amount paid to the bank by the insurance association, less amount of the premiums (or assessments) which the bank had paid. The bank appealed, and the Court of Civil Appeals reversed the judgment of the trial court, and rendered judgment denying the plaintiff in error, the administrator, any recovery at all, and awarding the bank a recovery of $1,000 against the insurance association on the unpaid policy, and adjudging that the insurance association take nothing against the bank on account of the payment previously made by the association to the bank. 37 S.W.(2d) 765. The administrator, the plaintiff in error here, applied to the Supreme Court for writ of error, which was granted.

The controversy involv&d in this appeal is between the plaintiff in error and the bank. It is admitted by all parties that the policies constituted valid contracts of insurance, and were in force when J. T. Livesay died.

The facts are substantially as follows:

On February 21,1927, J. T. Livesay became indebted to the bank in the sum of $2,786, for which he executed his promissory note to the bank. The note was due March 10, 1927, and bore interest from date until paid. A balance of $2,619 and accrued interest, still remains unpaid. J. T. Livesay was duly declared a bankrupt, and in June, 1927, was duly discharged in the bankruptcy court, from his debts, including the note due the bank.- There is no testimony to show that Livesay, after his discharge in bankruptcy, ever made any payment on the note, or promised to pay the debt evidenced by the'note. The policies in controversy were issued on September 27, 1929, and, according to their terms, were payable to the bank, as beneficiary. Aside from the facts stated, there is nothing in the testimony to show that J. T. Livesay, the insured, consented for the policies to be issued. The latter died May 11, 1930, and proof of his death was duly furnished by the bank to the insurance association. The association paid one of the policies to the bank. The other policy remains unpaid.

The plaintiff in error contends that the bank had no insurable interest in the life of Livesay; First, because the discharge of Livesay, in bankruptcy, from liability on the debt due the bank terminated the bank’s insurable interest in Livesay’s life; and, second, because there is no testimony to show that Livesay consented for the policies to be issued. The second branch of this contention relates to a matter which is immaterial to the question of insurable interest. Even though the fact had been affirmatively established that Livesay, the insured, did not consent for the policies to be issued, such fact would not affect the Insurable interest of the bank, if the latter had such an interest; neither codld such consent of Livesay, if given, have created an insurable interest in the bank, if none existed. The controlling question is whether or not the insurable interest of the bank in the life of livesay, which depended on the debt due from the latter, was terminated by the discharge in bankruptcy. It is well settled that although a discharge in bankruptcy has effect to< release the debtor from the legal obligation to pay a debt involved in the discharge, a moral obligation still rests on the debtor to pay the debt. The discharge affects the remedy, but does not constitute payment of the debt. Zavelo v. Reeves, 227 TJ. S. 625, S3 S. a. 365, 57 L. Ed. 676, Ann. Cas. 1914D, 664 ; 3E.O. L., and authorities there cited. The same thing is true with respect to a debt which has become barred by limitation. With reference to the insurable interest of a creditor in the life of his debtor, there is no room for a distinction on principle between a case where the debtor has been discharged in bankruptcy and a case where the debt has become barred by the statutes of limitation. The relation of the parties respecting the debt is precisely the same in both cases, and the moral obligation of the debtor to pay is the same. In volume 1, May on Insurance (4th Ed.) § 108, the doctrine respecting the insurable interest of a creditor, which depends on a debt against which the statutes of limitation have run, is stated in the following words: “If the debt be one to which the statutes of limitation might be pleaded at the time of the death of the debtor, it nevertheless constitutes an interest which will support a policy. A debt still exists. It is not extinguished by the currency of the statute, as in case of payment. It may be revised by a new promise, and indeed without such promise be enforced by action, unless the defense of the statute be interposed. The law does not presume that a new promise will be refused or the defense of the statute interposed. And there can be no doubt that same would be the case, though the statute had run against the debt at the time of the insurance, and for the same reasons.”

The above doctrine is inherently sound, and is so recognized by the authorities, Rawls v. American Mut. Life Ins. Co., 27 N. Y. 282, 84 Am. Dec. 280; Curtiss v. Ætna Life Ins. Co., 90 Cal. 245, 27 P. 211, 25 Am. St. Rep. 114; Connecticut Mutual Life Ins. Co. v. Dunscomb, 108 Tenn. 724, 69 S. W. 345, 58 L. R. A. 694, 91 Am. St. Rep. 769; 37 C. J. p. 395; 1 Cooley’s Briefs on Insurance, 315; 14 R. C. L. p. 924. The same principle has been applied in sustaining the insurable interest of a creditor, which interest depended upon -a debt from which the debtor had been released by the operation of the terms of a general assignment executed by the debtor for the benefit of his creditors. Manhattan Life Ins. Co. v. Hennessy (C. C. A.) 99 F. 64.

We conclude that, to the extent of the debt in question, and the premiums or assessments paid by the bank to keep the policies alive, the bank had an insurable interest in the life of J. T. Livesay at the time the latter died.

We therefore recommend that the judgment of the Court of Civil Appeals be in all things affirmed.

CURETON, O. J.

The judgment of the Court of Civil Appeals is affirmed, as recommended by the commission.


author: HARVEY, Presiding Judge. CURETON, Chief Justice.

text:
    FAGG v. TEXAS CO. et al.
    No. 1612—6018.
    Commission of Appeals of Texas, Section A.
    Feb. 15, 1933.

      Anderson, Orr & McCord, of Fort Worth, for plaintiff in error.
    Wynne & Wynne, of Wills Point, and Yin-son, Elkins, Sweeton & Weems, of Houston, for defendants in error.
   HARVEY, Presiding Judge.

In this suit, the plaintiff in error, G. 'E. Fagg, seeks to enforce specific performance of a contract in writing entered into by and between the plaintiff in error, on the one hand, and the defendants in error J. A. Bracken and wife, on the other. In the plaintiff’s petition it is alleged that, by virtue of the terms of the contract, Bracken and wife became bound to execute to Fagg, the plaintiff, an oil •and gas lease investing the plaintiff with the right to bore wells for oil and gas on a certain tract of four and a fraction acres of land described in the plaintiff’s petition, and the right to seven-eighths of the oil and gas discovered, so long as same is produced in paying quantities. The trial court sustained a general exception to the plaintiff’s petition, and a judgment of dismissal was entered. The judgment of the trial court was affirmed by the Court of Civil Appeals [38 S.W.(2d) 818], and Fagg applied for the writ of error, which has been granted.

The written instrument alleged reads as follows:

“That this agreement made and entered into on this the 26th day of November, A. D. 1929, by and between J. A. Bracken and wife, Rhoda Bracken, of Tyler, Smith County, Texas, parties of the first part, and G. E. Fagg of Fort Worth, Tarrant County, Texas, party of the second part:
“Witnesseth:
“That the said parties of the first part have located a surplus amount of land in the J. Walling Survey in Van Zandt County, Texas, and out of a certain 86 acres of land which was deeded to the said J. A. Bracken by H. O. Gilbert by deed dated the 15th day of September, A. D. 1925, as recorded in Volume 169, page 136, Deed Records of Van Zandt County, Texas, reference to which deed is here made for all purposes, less a certain 46 acres of land sold to J. R. Shivers; and the said J. A. Bracken and wife, Rhoda Bracken, being desirous of selling seven-eighths (7/8) oil and gas lease on the amount of surplus acreage which they claim to be four acres more or less, and the said G. E. Fagg being desirous of purchasing the same, have entered into the following agreement, towit:
“The said parties of the first part agree to secure the services of the County Engineer of Van Zandt County, Texas, at the earliest convenient moment, and will have this land surveyed, and will establish corners at such certain points that will establish the surplus, if any.
“That the parties of the first part will deliver to the said party of the second part a certified plat setting out the findings of the County Engineer of Van Zandt County, Texas; and that in the event there are four or more acres of land, the said party of the second part agrees to place in the Peoples National Bank of Tyler, Smith County, Texas, •the sum of thirty thousand dollars ($30,000.-00), or a guaranty thereof, satisfactory to the President of the said Peoples National Bank of Tyler, Texas, upon the delivery to the party of the second part by the said J. A. Bracken and wife Rhoda Bracken, of a certified plat establishing this amount of acreage.
“It is further agreed and understood by both parties hereto that an 88 form lease, properly describing the surplus tract of land above mentioned, is to be placed in escrow in the Peoples National Bank of Tyler, Smith County, Texas, along with a copy of the plat furnished by the County Engineer of Van Zandt County, Texas, together with the said thirty thousand dollars ($30,000.00) above mentioned or a guaranty thereof.
“It is further agreed and understood by all parties hereto that the said party of the second part shall be delivered an abstract of title supplemented to date, and that he is to have five days from the date of the receipt of the abstract for the examination of same by his attorney; and that if there are any objections to the title by his attorney, then and in that event, the said J. A. Bracken and wife, Rhoda Bracken, shall have the necessary time in which to cure such objections; but in the event the said J. A. Bracken and wife, Rhoda Bracken, fail or refuse to cure such objections, then the said party of the second part reserves the right to cure such objections himself, or to waive such objections, but the party of the second part shall have the necessary time to cure such objections as may he set out in writing by his attorney; and that the said J. A. Bracken and wife, Rhoda Bracken, only agree to deliver a good and merchantable limitation title; and that, when such title has been perfected by the said J. A. Bracken and wife, Rhoda Bracken, then and in that event, The Peoples National Bank of Tyler, Texas, is hereby instructed to deliver over to the said J. A. Bracken and wife, Rhoda Bracken, the said thirty thousand dollars ($30,000.00), hut the said The Peoples National Bank of Tyler, Texas, is further instructed to hold the above mentioned lease pending the spudding of a well on said tract of land to be more fully described in the above mentioned lease; but when the said well has been spudded and surface casing set, The Peoples National Bank of Tyler, Texas, is hereby instructed to deliver to the said G. E. Fagg or order the lease above mentioned.
“It is further agreed and understood by the said G. E. Fagg that he will drill said well to a depth of three thousand (3,000) feet, or the Jarman sand, which is known as the Woodbine sand, but if, in the opinion of the said G. E. Fagg, a producing sand sufficient to pay is found at a lesser depth, then and in that event, he agrees to test same, and if found to be a paying sand, reserves the right to set and develop at such point.
“The drilling of said well is to be commenced within ninety days from the time party of the second part obtains merchantable title to the leased premises, provided however, that the time elapsing between the date of the filing of party of the second part’s application with the Railroad Commission of Texas, Oil & Gas Division, for a permit to drill said well, and the date of the granting of such permit shall be excluded in calculating the above mentioned period of time within which said well is to be stal'ted.
“It is further agreed and understood by all parties hereto that the party of the second part shall file such an application to drill immediately upon his acceptance of title to the above mentioned lands; and that due diligence shall be exercised to secure same. Failure to start and prosecute the drilling of said well as herein specified shall terminate this lease as to both parties, and the moneys previously paid to the lessors by the lessee shall be retained by the lessors as liquidated damages, unless such failure to start and prosecute the drilling of said well, in accordance with the terms and provisions of this contract, shall be due to acts of Providence beyond lessee’s control.”

With reference to the averments of the plaintiff’s petition, it is sufficient to say that the same show a cause of action for specific performance as sought, if the foregoing written instrument meets the requirements of the statute of frauds. Moreover, we shall assume, for present purposes, that the written instrument furnishes sufficient means to identify the tract of land described in the petition.

In order for an action to be maintained on a contract for the conveyance of real estate, the contract, or some memorandum thereof, is required by the statute of frauds to be in writing. R. S. art. 3905. It is settled by the decisions that such a writing does not meet the requirements of the statute, if the subject-matter of the agreement is not described sufficiently to identify same. Oil and gas in place under land are regarded in law as real estate, and a contract for the conveyance of rights therein falls within the purview of the statute. So then, even with the fact conceded that the written instrument set out above sufficiently describes the tract of land, the question of the sufficiency of the ih-strument to satisfy the requirements of the statute remains to be decided. For it appears from the instrument that the subject-matter of the agreement was the transfer of rights to oil and gas in place under the tract of land, and not the transfer of the tract of land itself. The tract of land to be affected by the proposed lease was an essential element of description, but not the only one. The character, extent, and duration of the rights to oil and gas in place, which the proposed lessee was to acquire, constituted an essential part of the subject-matter of the agreement, and called for means of identification. Cantrell v. Garrard (Tex. Com. App.) 240 S. W. 533; Anders v. Johnson (Tex. Com. App.) 276 S. W. 678.

The terms of the written agreement plainly disclose that an outright sale or unqualified conveyance of a seven-eighths interest in the oil and gas in place was not under contemplation of the parties; but the making of a lease which was to invest the proposed lessee with some character of rightsi in those minerals was contemplated. The particular character of the rights which were to be acquired by the proposed lessee, or the extent or duration of such rights, is not in any wise disclosed or made ascertainable. The provision relative to “an 88 form lease” can shed no light on those matters, for the reason that the character of printed matter contained in any designated class of oil and gas lease forms depends on what matter various designers of such forms may deem appropriate — and may vary accordingly. As we see it, the reference to “an 88 form lease” is as incapable of definite application as if the term “oil and gas lease form” had been used instead.

We recommend that the judgment of the trial court, and that of the Court of Civil Appeals affirming same, be affirmed.

CURETON, Chief Justice.

Judgments of the district court and the Court of Civil Appeals are affirmed, as recommended by the Commission of Appeals.


author: SHARP, Judge. CURETON, Chief Justice.

text:
    UNION INDEMNITY CO. v. ROCKWELL.
    No. 1616—6029.
    Commission of Appeals of Texas, Section A.
    Feb. 15, 1933.
    Cox & Hayden, of Abilene, for plaintiff in error.
    Butts & Wright, of Cisco, for defendant in error.
   SHARP, Judge.

In September, 1928, W. W. Johnston entered into a contract with the Cisco independent school district for the construction of a ward school building in the city of Cisco and gave a bond, with the Union Indemnity Company, as surety, to secure the performance of the contract. The bond was given to meet the requirements of article 5160, R. C. S., as amended by Acts 1927, 1st Called Sess., c. 39, § 1. Johnston completed the building; it was accepted by the school district and final payment therefor made to him on March 8, 1929. The entire amount of such payment was applied by Johnston on debts contracted by him in the erection of the building.

Jack Winston, a subcontractor, entered into a verbal contract with Johnston to install the entire plumbing for the school building for the sum of $1,875. The sum of $650 was paid thereon, leaving a balance unpaid of $1,-225. He attempted to comply with article 5160 by filing a verified claim for the unpaid amount with the county clerk of Eastland county. Winston afterwards, for a valuable consideration, assigned his claim to J. M. Rockwell. Rockwell sold and delivered to Johnston a large amount of building material for use in the building. This amounted to something like $10,000. There remained unpaid of this amount a balance of $350.75. He attempted to comply with article 5160 and sought judgment against Johnston and the Union Indemnity Company for that amount and also for the sum of $1,225 claimed by Winston which had been assigned to him.

Judgment was rendered by the trial court in favor of Rockwell and against Johnston and the Union Indemnity Company for the sum of $1,707.05. Johnston did not appeal. The Court of Civil Appeals held that Rockwell was not entitled to recover judgment against the Union Indemnity Company for the sum of $365.40, being a part of the material that he had furnished Johnston, and reduced the judgment of the trial court to the sum of $1,-331.65, and as so modified the judgment of the trial court was affirmed. 38 S.W.(2d) 821. We refer to the opinion of the Court of Civil Appeals for a more detailed statement of the case.

The errors complained of in the application for writ of error relate- solely to the construction of article 5160 by the Court of Civil Appeals. Plaintiff in error contends that the court should have held that the affidavit filed by Winston did not comply with the provisions of article 5160 and therefore his claim was not secured. On the other hand, it is contended by defendant in error that the contract made by Winston was for a gross amount and for a complete or turnkey job, and that it was not necessary to file an itemized account of the labor and material furnished by him in installing the plumbing in order to secure the payment thereof as required by the terms of that article.

The facts show -that Johnston made a contract to construct a school building for the Cisco independent school district and gave a bond as required by statute with the Union Indemnity Company, as surety, to fulfill the terms of the contract; that Wrinston, a subcontractor, made a verbal contract with Johnston to furnish all labor and material and install the plumbing in the building for the sum of $1,875; that it was a turnkey job ; that he did furnish all labor and material and did install the plumbing as he contracted to do; that he had been paid thereon the sum of $650 and for the remainder of $1,225 he filed an affidavit for the purpose of giving notice and securing life claim as provided by law. The pertinent parts of the affidavit filed by Winston read as follows:

“That on or about the 20th day of September, 1928, he (Winston) made and entered into a contract with W. W. Johnston for the furnishing of all labor and material to be used in the plumbing of a school building for the Cisco Independent School District on Block No. 58, in the City of Cisco, Eastland County, Texas, the contract price being the sum of $1,875.00, said contract being a verbal contract and for what is commonly known as a turnkey job. That he duly and seasonably furnished all of said labor and material, and prior to February 6, 1929, did furnish the labor and material for what is commonly known as the roughing in for which he was paid the sum of $650.00, and on February 6, 7, 8 and 9th days of February, 1929, started setting fixtures and connections in said building, and did during the weeks commencing February li, 1929, and terminating on February 23, 1929, install all of the fixtures and complete said plumbing job, as provided for in said contract, and did in every way and respect fully carry out and perform each and every covenant of his said contract.
“That with the exception of said sum of $650.00, which was paid on or about the 15th day of November, 1928, no part of said sum of $1,875.00 has been paid and there remains unpaid and due and owing to affiant the sum of $1,225.00, which came due and payable on the completion of said work, that is on the 23rd day of February, 1929, and that said balance is just, due and unpaid.”

Winston’s claim arose under article 5160, as amended in 1927. This article provided that .a contractor entering into a formal contract with a school district for the construction of any public building shall be required, before commencing such work, to execute the usual penal bond, that such contractor shall promptly pay for material and labor supplied him in the prosecution of the work provided for in the contract The act further provides: “ * * * -That no person, or persons, firm or corporation shall be secured in the payment of any claim contracted prior to the execution of the contract that said bond is given to secure, and provided further that all claims for labor shall be itemized and sworn to by the owner or his authorized agent and filed with the contractor or with the county clerk of the county in which said work is being prosecuted within thirty days from the date that said claim accrued and became payable, and all claims for material shall be itemized and sworn to by the owner or his authorized agent and filed with the contractor or with the county clerk of the county in which said work is being prosecuted within thirty days from the date of the delivery of saiid material; and any claim filed after said thirty days shall not be secured by said bond.”

Does the affidavit filed by Winston meet the requirements of the foregoing article in order to secure the payment of the claim asserted by him? Winston had no contract with the Cisco independent school district; he asserts his claim by reason of hfe contract with Johnston. Whatever security he or his assignee might claim against the surety is created purely by statute. Article 5160, as enacted in 1913, did not require that the claim for labor and material furnished be itemized and verified. In 1927 the Legislature amended this article so as to require the claim to be itemized and sworn to.

In some jurisdictions the rule is announced that where the work was done or the materials furnished under an entire contract to do . or furnish the same for a gross sum, it is not necessary that claimant should- itemize his account in his statement. 40 C. J. p. 242, § 293bb, and cases cited in notes. But the foregoing rule does not prevail in this state. Our courts hold that, at least where the claimant is a subcontractor, it is necessary that the claim or statement should contain an itemized account of the work done and materials furnished for the building. Meyers v. Wood, 95 Tex. 67, 65 S. W. 174; Ferguson v. Ash-bell, 53 Tex. 245. In construing statutes involving analogous principles, our Supreme Court, after an exhaustive review of authorities, has reiterated the foregoing rule. Ball v. Davis, 118 Tex. 534,18 S.W.(2d) 1063; McClellan v. Haley (Tex. Com. App.) 250 S. W. 413.

When we construe the affidavit made by Winston in the light of article 5160 and the decisions of the courts of this state, it is plain that the affidavit is insufficient to meet the requirements of the law. It is not an itemized statement for labor performed or materials furnished, but is merely a statement of the gross amount due for both labor and material. The Legislature has provided how these claims may be secured, but the statute must be strictly complied with. Winston could have secured his claim against the surety for labor and material furnished had he complied with the provisions of the statute, but since he did not do this his claim is not enforceable against the plaintiff in error.

We therefore recommend:

(1) That that part of the judgments of the trial court and Court of Civil Appeals wherein Rockwell recovered a judgment against the Union Indemnity Company for $1,225, the amount claimed by him as assignee of Winston, be reversed, and that judgment be entered herein that as to that item and amount Rockwell recover nothing against the Union Indemnity 'Company.

(2) That the judgment of the Court of Ci¡v-il Appeals in all other respects be affirmed.

CURETON, Chief Justice.

The judgment of the Court of Civil Appeals is reversed and rendered in part and affirmed in part, as recommended by the Commission of Appeals.


author: RYAN, Judge. CURETON, Chief Justice.

text:
    WOODRUM TRUCK LINES v. BAILEY.
    No. 1361—5930.
    Commission of Appeals of Texas, Section B.
    Feb. 15, 1933.
    Sullivan, Speer & Minor, of Denton, and Collins & Houston, of Dallas, for plaintiff in error.
    W. F. Smith, of Oklahoma City, Okl., and Robert H. Hopkins, of Denton, for defendant in error.
   RYAN, Judge.

This suit was instituted by Bailey, defendant in error, against the partnership firm of Woodrum Truck Lines, plaintiffs in error, for damages alleged to have been sustained by Bailey as the result of an automobile collision alleged to have been proximately caused by the negligence of the agent and employee of the Truck Bines.

A jury to whom special issues were submitted found that the driver of the truck owned by the Truck Lines was not guilty of the negligence on which Bailey based his suit, that Bailey whs not guilty of contributory negligence, and that the collision of the motor vehicles that resulted in the injury to plaintiff below was an unavoidable accident; the trial court accordingly rendered judgment against plaintiff below and in favor of the defendant, Truck Lines, and the individual members of that partnership firm.

Motion for new trial was overruled on December 20, 1929.

The Court of Civil Appeals held that there was no proper basis in the evidence for submitting the defense of unavoidable accident in any form, as a separate and independent defense, but this could not have. resulted injuriously to the plaintiff, Bailey, since the jury’s finding that the defendant Truck Lines, was not guilty of the negligence on which the suit was based was itself a separate and full defense.

The Coqjt of Civil Appeals, in this connection, states: “On the issue as to whose fault it was that brought about the collision, the evidence was sharply conflicting. The testimony of several witnesses for the plaintiff would support a finding that the collision was the result of the negligence of the truck driver, while according to the testimony of several witnesses offered by the defendants, it was occasioned through the negligence of plaintiff and not through any negligence on the part of defendants. * ⅜ * In rebuttal of the testimony of plaintiff’s witness-, Sidney Willis, Which tended to show that the collision resulted from the negligence of defendants’ truck driver, the defendants introduced Ted Lewis, the sheriff, who testified that he had gone to the place where Willis said he was, when he witnessed the accident, and by reason of certain natural obstructions to his view, it would have been impossible for Willis, from that location, to see the two cars as they approached the place of collision. After introducing that testimony, counsel for defendants in open court and in the presence of the jury offered and requested the court to permit the jury to 'go to the place of the accident and there view the surroundings.”

Bailey’s counsel objected to the granting of the request, and, although said request was refused by the court, took a bill of exceptions to the action of defendants’ counsel in making the offer in the presence of the jury on the grounds, first, that it is not permissible for the jury to take such action while trying a case; and, second, the offer was deliberately made and calculated to and would prejudice the rights of plaintiff before a jury trying the cause, in that plaintiff was forced to object to such action, and the jury concluded, or could have concluded, from the fact that said objection was made, that the plaintiff did not desire them to view the scene of the accident, causing them to be prejudiced against him.

The Court of Civil Appeals concluded that a viewing of the premises by the jury would have been such misconduct as constitutes reversible error, and plaintiff had the legal right to object and should not be prejudiced for exercising such legal right, but plaintiff was thus placed in a situation from which the jury might construe the refusal to agree to such viewing as an admission, that the testimony of the witness, Sidney Willis, was untrue and was reasonably calculated to prejudice the rights of plaintiff; the court therefore determined that such an injury will be presumed, in the absence of any showing in the record, that it did not operate to plaintiff’s harm (Bell v. Blackwell [Tex. Com. App.] 283 S. W. 765), and for that error reversed the judgment below and remanded the cause. 36 S.W.(2d) 1090, 1094.

The application for writ of error to the Supreme Court assigns as error (1) such action of the Court of Civil Appeals; and (2) the action of that court in refusing to dismiss the appeal on the ground that the appeal bond was not filed within twenty days after expiration of the term at which judgment was rendered.

We shall consider, first, the motion to dismiss the appeal.

First. Courts of Civil Appeals have the power, upon affidavit or otherwise, as by them may be thought proper, to ascertain such matters of fact as may be necessary to the proper exercise of tlieir jurisdiction. Article 1822, Rev. Stat. 1925.

Whether the appeal bond was filed within the time prescribed by law was a question of fact, and therefore determinable by the Court of Civil Appeals.

It appears from the transcript that the trial court adjourned on December 21, 1929. .That the appeal bond in the present case must have been approved and filed within twenty days thereafter is jurisdictional. Article 2253, Rev. Stat. 1925.

Whether the bond was so approved and filed within that period is a question of fact. The appeal bond was marked “filed” by the clerk of the trial court, on January 11, 1930, which was the twenty-first day after expiration of the term of court at which the judgment was rendered. In reply to a motion to dismiss the appeal because said bond was not filed within the statutory period, the appellant satisfied the Court of Civil Appeals, by affidavit, that, contrary to said file mark, the bond was actually filed and approved within the twenty-day period, and the motion to dismiss was overruled. We see no error in this. Blalock v. Slocomb (Tex. Com. App.) 245 S. W. 648; Maury v. Turner (Tex. Com. App.) 244 S. W. 809.

Second. Plaintiffs in error contend that there is no statute on the subject of permitting the jury to view the surroundings of the accident, and it is therefore within the discretion of the trial court to permit such view, as at common law, with the logical result that no error was committed by counsel in offering to allow such view.

While at common law the practice of allowing the jury to examine or view the premises or property concerning which the controversy exists (where it was impossible or inconvenient to produce the same in court) was sanctioned to a limited extent (2 Wig-more on Evidence, § 1162; Jones on Evidence [3d Ed.] § 404 ; 3 Jones Commentaries on Evidence [2d Ed.] § 1403), this was always a matter within the trial court’s sound discretion (Jones on Evidence [3d Ed.] § 406), and in England is now controlled by statute (2 Wig-more on Evidence, § 1164; 3 Jones Commentaries on Evidence [2d Ed.] §§ 1404, 1406, 1408).

It is said by Mr. Jones in his- Commentaries (volume 3, § 1404): “The origin of the practice of viewing property, shows to a certain extent, it sprang from the common law. At the present date, however, it is regarded as a statutory proceeding, and a view is usually granted and conducted under the statute laws in force. Statutes may be found in almost every state.” ' These statutes and the rules governing in each are as various as the cases arising thereunder, resulting in conflicts of decision, more apparent than real, when considered in connection with the statutes themselves.

Different methods of procedure are provided under the different statutes concerning the trial court’s discretion, and its exercise, con* duct, and place of the view, appointment, and duties of showers of the premises, attendance, supervision, and conduct of the jury, presence of the judge and counsel, as well as the nature and effect of the view—also whether (a) what the jury may observe can, under any circumstances, become evidence, being limited only as means to a better understanding and application of the testimony which has been produced; or (b) whether it' may, as mute evidence, be used by the jury in reaching a conclusion, like any other evidence offered, even to the extent of being taken as determinative of the dispute to the exclusion of parol testimony; or (c) whether the jury’s observation may be used as evidence, not as preponderating or in itself sufficient to uphold a verdict, but as supported by what actually appears in the record. Notes to People of the State of New York v. Thorn, 42 L. R. A. S68.

In this state, however, since the Act of May 13, 1846 (2 Gammers Laws, p. 1669), under section 107 thereof (carried into the Rev. Stat. 1925 as art. 2175), reading “all vouchers, views, essoins, and also trials by wager of battle and wager of law are repealed,” all laws authorizing a trial by view were repealed, and we have no such practice. Galveston, H. & W. Ry. Co. v. Waples et al., 3 Willson, Civ. Cas. Ct. App. page 484, § 410. As said by Chief Justice Roberts in Smith v. State, 42 Tex. 444: “There is thus no authority found in this State for such a mode of .enlightening * * * the jury as to the material facts of a case which they have to try.” In Austin & N. W. R. Co. v. Cluck, 97 Tex. 181, 77 S. W. 403, 64 L. R. A. 494, 104 Am. St. Rep. 863, 1 Ann. Cas. 261, Judge Brown calls attention to such repeal of the right of view under the common law.

In Lovett v. State, 87 Tex. Cr. R. 548, 223 S. W. 210, it appeared that the jury, pending the trial, were permitted to visit the scene of a homicide and view the ground, its location and environments. In reversing a judgment of conviction Judge Davidson said that this character of conduct is not legally justifiable. To the same effect see Southern Traction Co. v. Wilson (Tex. Com. App.) 254 S. W. 1104; Hovey v. Sanders (Tex. Civ. App.) 174 S. W. 1025; Ft. Worth Imp. Dist. v. Weatherred (Tex. Civ. App.) 149 S. W. 550; Texas Mid. R. R. v. Brown (Tex. Com. App.) 228 S. W. 915; Letsinger v. Panhandle & S. E. R. Co. (Tex. Civ. App.) 286 S. W. 1107; Southern Traction Co. v. Wilson (Tex. Com. App.) 254 S. W. 1104.

As correctly said by the Court of Civil Appeals: “Manifestly, it would have been error for the court to grant the request of defendant’s counsel to have the jury go out and view the place of the accident with its surroundings. * * * Clearly, plaintiff’s counsel had the legal right to object to the granting of the motion made by defendant’s counsel, and plaintiff should not be prejudiced for exercising that legal right; yet his refusal to agree to that action by the jury might probably be construed * ⅜ * as an admission that the testimony of plaintiff’s witness Sidney Willis was untrue. * * * Since the action taken was reasonably calculated to prejudice the right of plaintiff, such an injury will be presumed, in the absence of any showing in the record that it did not operate to plaintiff’s harm.”

The issues were sharply drawn and the testimony closely conflicting. The testimony of Willis tended to show that the collision resulted from the negligence of defendant’s truck driver; in rebuttal thereof, the defendants introduced Ted Lewis, sheriff of the county, who testified that he had gone to the place where Willis said he was when he witnessed the accident, and that, by reason of certain natural obstructions to his view, it would have been impossible for Willis, from that location, to see the two ears as they approached the place of collision; then counsel for defendants in open court and in the presence of the jury offered and requested the court to permit the jury to go to the place of the accident and there view the surroundings.

What more natural conclusion would a jury of laymen reach, under such circumstances, than that a view of the premises would disclose the correctness of the sheriff’s testimony and plaintiff feared to let them have the benefit of such a view?

Doubtful questions of evidence or procedure should not be proposed or discussed in the presence of the jury. Letsinger v. Panhandle & S. F. R. Co. (Tex. Civ. App.) 286 S. W. 1107.

As said by Judge Jackson in Holliday Creamery Co. v. Haney (Tex. Civ. App.) 283 S. W. 938, 939, quoting from Seripps v. Reilly, 38 Mich. 10: “The essence of the wrong consists in the fact that such incompetent testimony is brought to the attention of the jury, more than in the method adopted in communicating the fact. No matter how the information is derived, the result is the same.”

The Court of Civil Appeals concluded that the action of defendants’ counsel in the matter was reasonably calculated to prejudice the right of plaintiff (defendant in error here); in this we concur, and therefore recommend that its judgment reversing that of the trial court and remanding the cause be affirmed.

CURETON, Chief Justice.

The judgment of the Court of Civil Appeals, which reverses the judgment of the trial court, is affirmed, as recommended by the Commission of Appeals.