author: AKIN, Justice.

text:
    Patsy Jean Meador CARNES, Appellant, v. Florence MEADOR, Individually and as Administratrix of the Estate of Ray D. Meador, Deceased, Appellee.
    No. 18683.
    Court of Civil Appeals of Texas, Dallas.
    Oct. 30, 1975.
    Rehearing Denied Dec. 9, 1975.
    Second Rehearing Denied Jan. 15, 1976.

      Neil Brans, Dallas, for appellant.
    Gayle E. Oler, Dallas, for appellee.
   AKIN, Justice.

This suit for a declaratory judgment is between Ray D. Meador’s widow, Florence Meador, as plaintiff, and his daughter by a former marriage, Patsy Jean Meador Carnes, as defendant. Three items of personal property are involved, all of which the widow (individually or as administratrix) claims as community property. The first two items are a $15,000 certificate of deposit and a $9,000 checking account, both in the name of “Ray D. Meador or Patsy Jean Meador Carnes.” The third item is a $10,-000 gift from the checking account which the deceased made two months before his death to the defendant daughter’s husband. The defendant, after entering an unsuccessful plea in abatement, claimed all the property on three theories: Gift, joint tenancy with right of survivorship, and third-party beneficiary contract. The trial court awarded all three items to the widow. The daughter appeals.

Three principal questions are presented: (1) Should the plea in abatement have been sustained, because the administratrix did not obtain the probate court’s consent to bring the suit in her administrative capacity? (2) Did either the certificate of deposit or the checking account signature card create a third-party beneficiary contract, raising a presumption that the deceased intended his daughter to have the funds? (3) Would disposition of the funds in the accounts to the defendant and the $10,000 gift to the son-in-law constitute constructive fraud as to the widow’s community interest in those funds? We answer the first question in the negative; the second question in the negative as to the certificate of deposit but in the affirmative as to the checking account; and the third question in the affirmative. Accordingly, we reverse and remand.

Plea in Abatement

Defendant argues that plaintiff must obtain an order of the probate court granting her permission to sue in her capacity as administratrix and that since plaintiff failed to do so the court erred in overruling her plea in abatement. We cannot agree. Tex.Rev.Civ.Stat.Ann. art. 1981 (Vernon 1964) provides that suits for recovery of personal property may be instituted by executors, administrators, or guardians. Furthermore, Tex.Prob.Code Ann. § 233 (Vernon 1956) imposes a duty on the admin-istratrix to “collect all claims and debts due the estate and to recover possession of all property of the estate . . . .” We hold that this section of the Probate Code gives the administratrix authority to institute all suits necessary for the preservation of the estate pending distribution. See Kriegel v. Scott, 439 S.W.2d 445, 446 (Tex.Civ.App.—Houston [14th Dist.] 1969, writ ref’d n. r. e.); Ravkind v. Bergman, 342 S.W.2d 61 (Tex.Civ.App.—Fort Worth 1960, writ ref’d n. r. e.); Barfield v. Miller, 70 S.W.2d 632 (Tex.Civ.App.—Amarillo 1934, writ dism’d); see also Duenkel v. Amarillo Bank & Trust Co., 222 S.W. 670 (Tex.Civ.App.—Amarillo 1920, writ ref’d).

Defendant also contends that plaintiff had no authority to bring suit in her individual capacity because she was an heir. We cannot agree. Since plaintiff owned one-half of the community property in her own right and not as heir, she had a right to sue in her individual capacity for her one-half interest. Kreis v. Kreis, 36 S.W.2d 821, 827 (Tex.Civ.App.—Amarillo 1931, writ dism’d). We conclude, therefore, that the trial court correctly overruled defendant’s plea in abatement.

Character of the Funds

Decedent opened the checking account in the name of “Ray D. Meador or Patsy Jean Meador Carnes,” before his marriage to plaintiff on October 13, 1967. At the time of the marriage, $7,238 was in the checking account. Thereafter, and until the time of his death the decedent made withdrawals and deposits to this account. Several months before his death, decedent gave his son-in-law, C. E. Carnes, $10,000 by check •from this account. At his death, the balance was $9,000.

A certificate of deposit in the sum of $10,000 was purchased in the name of “Ray D. Meador or Patsy Jean Meador Carnes” on July 13,1967, before decedent’s marriage to plaintiff. On July 13, 1968, after his marriage to plaintiff, an additional $5,000 was added to this initial $10,000 to purchase a $15,000 certificate also in the same names. This certificate of deposit was renewed annually with the last maturity date being July 13, 1972. Plaintiff and decedent separated in July 1970, but did not divorce or enter into a written separation agreement. Each lived apart, paid his or her own bills, and filed separate income tax returns. Decedent died intestate on July 21, 1972.

Although the funds of decedent at the time of his marriage to the plaintiff were his separate property, all funds acquired thereafter were prima facie community property. Tex. Family Code Ann. § 5.02 (Vernon 1973). The jury found that the funds in the certificate of deposit and the funds in the cheeking account were so commingled with community property that the separate property could not be traced and identified. When separate property becomes so commingled with the community property that it cannot be identified, the separate property becomes community property. Stanley v. Stanley, 294 S.W.2d 132, 136 (Tex.Civ.App.—Amarillo 1956, writ ref’d n. r. e.), cert. denied, 354 U.S. 910, 77 S.Ct. 1296, 1 L.Ed.2d 1428 (1957). No attack was made on the jury findings of commingling or inability to identify separate funds. To overcome the statutory presumption of community property, the burden was upon defendant to trace the property. If fact issues were raised, defendant also had the burden to request special issues that, if answered favorably, would rebut this presumption. Tarver v. Tarver, 394 S.W.2d 780, 783 (Tex.1965). This she failed to do. In view of the jury findings, we must treat these funds as community property for the purpose of this appeal.

Gift

Defendant contends that the opening of the account and the purchase of the certificate of deposit in the name of decedent “or” defendant Carnes constituted a gift of the funds by decedent to defendant Carnes. We cannot agree. The requisites of a valid inter vivos gift are “a clear intent on the part of the donor to make such gift, accompanied by a present delivery . of the property, of such character as to divest the donor of the title, dominion, and control over it, and an acceptance by the donee.” [Emphasis added.] Giles v. Giles, 94 S.W.2d 208, 210 (Tex.Civ.App.—Austin 1936, writ dism’d). Since the jury found that decedent alone exercised dominion and control over the funds in the certificate of deposit and in the cheeking account, defendant’s contention of a gift is precluded.

Joint Tenancy with Right of Survivorship

Defendant argues that she is entitled to recover the funds as a joint tenant with a right of survivorship. Tex.Prob. Code Ann. § 46 (Vernon Supp.1974). We cannot agree. The certificate contains no language of rights of survivorship. Although the checking account uses the words “or to the survivor to sign” this language is not tantamount to the language that the account is held by them as joint tenants with the right of survivorship. Quilter v. Wendland, 403 S.W.2d 335, 338 (Tex.1966); Krueger v. Williams, 163 Tex. 545, 548, 359 S.W.2d 48, 51 (1962). We conclude, therefore, that § 46 of the Probate Code does not apply.

Third-Party Beneficiary Contract

A. Certificate of Deposit. Defendant contends that she is entitled to receive these funds on the theory that she was the third-party beneficiary of a contract between decedent and the bank because the certificate was in the name of “Ray D. Meador or Patsy Jean Meador Carnes,” with either having the right to withdraw these funds. No reference to the rights of a “survivor” appeared in the language of the certificate. Although the word “or” may authorize the alleged beneficiary to make withdrawals from the account, it is not tantamount to expression of an intent that defendant should receive these funds at her father’s death. This word alone does not give rise to a presumption of intention that the survivor should have title to the funds. Forehand v. Light, 452 S.W.2d 709, 710 (Tex.1970); Steinbach v. Kieke, 451 S.W.2d 956, 959 (Tex.Civ.App.—Houston [14th Dist.] 1970, no writ). Consequently, the trial court properly denied defendant any interest in these funds.

B. Checking Account. The language on the signature card of the checking account is: “Bank is hereby authorized to recognize either of the signatures . in the payment of funds or the transaction of any other business. Either one or both or to the survivor to sign checks.” [Emphasis added.] This was signed by both decedent and defendant Carnes. The key word here is “survivor.” Forehand v. Light, supra. We hold that the language on this account card creates a presumption that the deceased intended to enter into a third-party beneficiary contract with the bank under which the defendant was to receive the funds in this account at his death. The burden of proof is, therefore, upon plaintiff to rebut this presumption. Krueger v. Williams, supra, 359 S.W.2d at 58; Quilter v. Wendland, supra, 403 S.W.2d at 337; Brown v. Lane, 383 S.W.2d 649, 650 (Tex. Civ.App.—Dallas 1964, writ ref’d); In re Staver’s Estate, 218 Wis. 114, 260 N.W. 655, 658 (1935); see East, Survivorship in “A or B” Bank Accounts: Application of the Parol Evidence Buie, 25 Baylor L.Rev. 336 (1973). This plaintiff failed to do. Indeed, the question of whether the placing of defendant’s name on the signature card was solely for decedent’s benefit was submitted to the jury and answered in the negative. The trial court disregarded this finding as immaterial, which action is not assigned as error. However, plaintiff failed to obtain a finding rebutting the presumption that de-, cedent intended defendant to have the funds under a third-party beneficiary contract. Krueger v. Williams, supra. Accordingly, we sustain defendant’s fourth point of error which asserts that the language on the signature card of the account raised a presumption that decedent intended defendant to have the funds under a third-party beneficiary contract with the bank.

Constructive Fraud

Although a spouse has the right to dispose of community property under his or her control under Tex. Family Code Ann. § 5.22 (Vernon 1973), he may not dispose of his spouse’s interest in community funds if actual or constructive fraud exists. Without specific proof of fraudulent intent, Texas courts nevertheless have set aside any gift of community funds as a constructive fraud on the other spouse if the gift is capricious, excessive or arbitrary. Givens v. Girard Life Insurance Co., 480 S.W.2d 421 (Tex.Civ.App.—Dallas 1972, writ ref’d n. r. e.).

Constructive fraud is the breach of a legal or equitable duty which the law declares fraudulent because it violates a fiduciary relationship. Archer v. Griffith, 390 S.W.2d 735, 740 (Tex.1964). A trust relationship exists between husband and wife as to that community property controlled by each spouse. Brownson v. New, 259 S.W.2d 277, 281 (Tex.Civ.App.—San Antonio 1953, writ dism’d). Thus, a presumption of constructive fraud arises when a spouse unfairly disposes of the other spouse’s one-half interest in community property. Reaney v. Reaney, 505 S.W.2d 338, 340 (Tex.Civ.App. —Dallas 1974, no writ). The burden of proof is, therefore, upon the disposing spouse or his donee to prove the fairness of the disposition of the other spouse’s one-half community ownership. Murphy v. Metropolitan Life Insurance Co., 498 S.W.2d 278, 282 (Tex.Civ.App.—Houston [14th Dist.] 1973, writ ref’d n. r. e.); Davis v. Prudential Insurance Company of America, 331 F.2d 346 (5th Cir. 1964); see Huie, Community Property Laws as Applied to Life Insurance, 18 Texas L.Rev. 121 (1940). Implicit in these holdings is the recognition that each spouse owns a one-half interest in all community funds regardless of which spouse has management and control. Johanson, Revocable Trusts and Community Property: The Substantive Problems, 47 Texas L.Rev. 537, 566 (1969).

In determining if a presumption of constructive fraud exists as to the surviving spouse, we consider whether the community funds purportedly transferred to defendant Carnes and her husband were in reasonable proportion to the remaining community assets. Givens v. Girard Life Insurance Co., supra; Murphy v. Metropolitan Life Insurance Co., supra; see Cohrs v. Scott, 161 Tex. 11, 121, 338 S.W.2d 127, 133 (1960). Here, the total community funds were approximately $34,000, including the gift to the defendant’s husband of $10,000, the $15,000 in the certificate of deposit, and the $9,000 in the checking account. Plaintiff wife had no other community property and lived entirely on proceeds from social security. By a $10,000 gift to defendant’s husband and by a presumptive third-party beneficiary contract with the bank for the benefit of defendant with respect to the $9,000 in the checking account, decedent disposed of $19,000 in community funds, which was $2,000 in excess of his one-half interest. Such dispositions raise a presumption of constructive fraud. Accordingly, we must determine how this presumption affects the rights of the present parties.

If a spouse disposes of community property in fraud of the other spouse’s rights, the aggrieved spouse has a right of recourse first against the property or estate of the disposing spouse; and, if that proves to be of no avail, then the aggrieved spouse may pursue the proceeds to the extent of her community interest into the hands of the party to whom the funds have been conveyed. Hartman v. Crain, 398 S.W.2d 387, 389 (Tex.Civ.App.—Houston 1966, no writ); see Cohrs v. Scott, supra, 338 S.W.2d at 133. See also Quilliam, Gratuitous Transfers of Community Property to Third Persons, 2 Tex.Tech.L.Rev. 23, 40 (1970). Accordingly, plaintiff, in her individual capacity, is entitled to reimbursement from decedent’s share of the community estate for her one-half interest in the funds disposed of in fraud of her rights, and, to the extent that this share of the community funds remaining is insufficient for full reimbursement, she is entitled to recovery against defendant out of the funds in defendant’s hands. We do not - determine whether the gift of $10,000 to defendant’s husband should be charged with any part of this reimbursement, since he is not a party here, and the question has not been briefed in this court.

Since the case must be reversed on defendant’s fourth point of error because of the trial court’s error in denying defendant her interest in the checking account, we must determine whether we should render judgment in her favor, or remand for a new trial. We conclude that the entire case should be remanded to a new trial under Tex.R.Civ.P. 434 because additional matters of fact must be ascertained and the matter to be decreed is uncertain. We have held that the signature card for the checking account raises only a presumption that the survivor was entitled to the funds, and we cannot say that the facts that bear on rebuttal of this presumption have been fully developed. The existence and effect of constructive fraud should be finally determined only after development of all the facts. The record raises other questions not properly before us for decision such as the amount of decedent’s interest in the community estate available for reimbursement to plaintiff. Consequently, in the interest of justice, we reverse and remand the entire case for a new trial. Morrow v. Shotwell, 477 S.W.2d 538, 541 (Tex.1972).

Reversed and remanded.

ON MOTION FOR REHEARING

Plaintiff argues that our holding that the language on the signature card of the checking account created a presumption of a third party beneficiary contract for defendant Carnes’s benefit is immaterial. She contends that the jury finding that it would be unfair to Meador’s community property rights to give the entire proceeds of the account to Carnes is a constructive fraud on Meador. She then equates constructive fraud with actual fraud as defined in Tex.Bus. & Comm.Code Ann. § 24.02 (Vernon 1968) and concludes that since constructive fraud was found, the holding of the Supreme Court in Krueger v. Williams, 163 Tex. 545, 359 S.W.2d 48 (1962) is inapplicable. We cannot agree.

Section 24.02 requires an intent to defraud by the transferor-grantor. See Hunter v. Pitcock, 346 S.W.2d 509 (Tex.Civ. App.—Fort Worth 1961, no writ); cf. Hawes v. Central Texas Production Credit Ass’n, 492 S.W.2d 714 (Tex.Civ.App.—Austin), affirmed, 503 S.W.2d 234 (Tex.1973). Constructive fraud does not require the intent to defraud [Peiser & Co. v. Peticolas, 50 Tex. 638, 646 (1879)] required under § 24.02; instead it is an equitable doctrine employed by courts to rectify an injury resulting from the breach of a fiduciary relationship. Archer v. Griffith, 390 S.W.2d 735, 740 (Tex.1964). Thus, a finding of unfairness is not tantamount to a finding of intent to defraud under § 24.02. Since no intent to defraud was proved, § 24.02 does not apply.

Neither do we agree that a capricious, excessive or arbitrary transfer of community property is wholly void. It is only voidable at the election of the other spouse, and may be avoided only in so far as it deprives her of her community interest. It should be allowed to stand to the extent that the surviving spouse can be reimbursed out of the remaining assets of the decedent’s estate. Thus, to that extent, the loss occasioned by such reimbursement will fall on the decedent’s heir or devisee rather than on his donee, in accordance with the principle that a person has complete power to dispose of his own property during his lifetime. Consequently, we adhere to the direction in our original opinion that plaintiff should first be reimbursed from decedent’s share of the community estate for dispositions of community property found to be capricious, excessive, or arbitrary, and then if the presumption of defendant’s sur-vivorship right with respect to the bank account is not rebutted, plaintiff should be allowed further reimbursement from those funds.

Motions overruled.

      . Thus, in Land v. Marshall, 426 S.W.2d 841, 844 (Tex.1968), the supreme court expressly recognized this principle when it stated with respect to an inter vivos trust of community property:
      “The court of civil appeals held that the Marshall Trust failed because Marshall did not have the right to make a testamentary disposition of his wife’s community property. This is a correct legal principle.”
      The court was, however, unable to dispose of this case on this principle because the fraud-on-the-wife theory had not been preserved on appeal.


source: Caselaw Access Project

author: OSBORN, Justice.

license: Public Domain

text:
    John William CRAVENS, Appellant, v. Wilma Louise CRAVENS, Appellee.
    No. 6477.
    Court of Civil Appeals of Texas, El Paso.
    Dec. 10, 1975.
    Rehearing Denied Jan. 14, 1976.

      Alexander, Lowe & Pratt, Bill Alexander, Benny J. Lowe, Odessa, for appellant.
    Milburn & Warner, Cullom F. Milburn, Eben D. Warner, III, Odessa, for appellee.
   OPINION

OSBORN, Justice.

This is a divorce case in which the only question on appeal concerns a polygraph examination and its effect on the division of community property. Having concluded that there .was no reversible error in the trial Court proceedings, we affirm the judgment of the trial Court.

The parties herein were married in 1946 and separated in 1974. During that marriage, they accumulated a substantial amount of community property including approximately ten acres of improved property in Odessa, Texas, worth about $90,-000.00. In addition, they owned household goods, several vehicles and some water well drilling equipment. In November, 1973, Mr. Cravens became concerned about a depression or recession and withdrew $13,-000.00 from a savings and loan account, and he also withdrew $8,000.00 from a bank account. He used $3,000.00 to buy Mrs. Cravens a ear, and placed $18,000.00 in a storage shed beside their house. The parties separated after a fight in October, 1974, and a couple of weeks later, Mrs. Cravens filed suit for divorce. Mr. Cravens testified that he had been out of town on business about that time, and when he returned, he found the lock on the storage shed broken and the money was gone. He reported it to the Sheriff’s Department but the money was never recovered.

At a preliminary hearing, the parties and their attorneys agreed with the Court that both Mr. and Mrs. Cravens would take a polygraph examination concerning the disappearance of the $18,000.00 and that Don Reaves would do the examination. Prior to the final hearing, Mrs. Cravens took the examination, but Mr. Cravens did not take the examination because the polygraph operator was apparently doing an investigation on someone charged with a crime, who was represented at the time by Mr. Cravens’ attorney. Attempts to have someone else do the examination were never completed.

Both parties filed sworn inventories of property in their possession. They each testified at length about the values of such property, and each denied any knowledge concerning the loss of the $18,000.00. Mrs. Cravens called Don Reaves as a witness and he testified, over strenuous objections, that his polygraph examination of Mrs. Cravens indicated that she was telling the truth when she said she had no knowledge as to what happened to the missing money.

At the conclusion of the hearing, the Court granted the divorce and divided the community property. The final judgment awarded $18,000.00 in cash to Mr. Cravens and recited “ * * * which $18,000.00 is deemed to be in the possession of John William Cravens.” It would appear that this conclusion was based primarily upon the results of the examination taken by Mrs. Cravens and Mr. Cravens’ failure to take such a test, because after the conclusion of the evidentiary hearing, the Court said:

“ * * * it is my full intention that if Mr. Cravens takes a lie detector test and should he pass that lie detector test wherein it is shown that he does not know the whereabouts of the $18,000.00, that he did not take the $18,000.00, that he is certain that he did not tell anyone who may have got the $18,000.00, * * it will be my intention to grant a motion for new trial if such occurs within the thirty days, or I would entertain an equitable bill of review if it is after thirty days, and at such time I would increase the minimum which Mrs. Cravens would owe Mr. Cravens by the sum of $9,000.00.”

The Appellant contends by three points of error that the trial Court erred in receiving the evidence as to the results of the polygraph examination and in dividing the community property based upon such evidence, and the fact that he did not take such an examination. Appellee contends that such testimony was admissible under an agreement of the parties, but that in any event the division of community property was fair and just and that there was no reversible error.

We conclude that the trial Court erred in receiving the evidence as to the results of the polygraph examination over Appellant’s objection. All parties acknowledged that an agreement was made for such an examination. During the testimony of Mr. Reaves, the Court said:

“ * * * it was offered or suggested and it ended up that the 2 lawyers left here with the agreement with the Court that each of their parties would take a lie detector test. And furthermore it was agreed that Mr. Reaves would be the one that would do it."

Later during the trial, Mr. Alexander, Counsel for Appellant, stated:

“ * * * at one time here we had a hearing where you heard me agree to have Mr. Beeves give both of you a polygraph test.”

Mr. Cravens also acknowledged that such an agreement existed. He testified as follows:

“ * * * Did you, at the time of your deposition, agree to take the lie detector test?
“A Yes, sir.”

But at no time was there any compliance with Rule 11, Tex.R.Civ.P. It provides:

“No agreement between attorneys or parties touching any suit pending will be enforced unless it be in writing, signed and filed with the papers as part of the record, or unless it be made in open court and entered of record.”

As this Court announced, much to the regret of complaining counsel, in Texas Electric Service Company v. Yater, 494 S.W.2d 271 (Tex.Civ.App.—El Paso 1973, writ ref d n. r. e.), the result is that “As a penalty for failing to comply with the rule, the agreement is made unenforceable.” Even where a valid stipulation has been made, some courts have still refused to admit the results of a polygraph examination. Lewis v. State, 500 S.W.2d 167 (Tex.Cr.App.1973); Romero v. State, 493 S.W.2d 206 (Tex.Cr.App.1973). Also see Annot., 53 A.L.R.3d 1005, § 3. Since there was no valid stipulation before the trial Court, it was error to overrule Appellant’s objection to the testimony of the polygraph operator. Skillern & Sons, Inc. v. Stewart, 379 S.W.2d 687 (Tex.Civ.App.—Fort Worth 1964, writ ref’d n. r. e.).

The Appellant also has the burden on appeal to show that the error complained of amounted to such a denial of the rights of the Appellant as was reasonably calculated to cause and probably did cause the rendition of an improper judgment in this case, i. e., harmful error. Rule 434, Tex.R. Civ.P.

First, it must be noted that in a decree of divorce the court shall order a division of the estate of the parties in a manner that the court deems just and right, having due regard for the rights of each party. Tex.Family Code Ann., § 3.63. The division of the property does not have to be equal and the court may award the wife a substantial portion of the husband’s separate property where the circumstances make such action necessary to effect a fair and just division of the property. Keene v. Keene, 445 S.W.2d 624 (Tex.Civ.App.—Dallas 1969, writ dism’d). In this connection it is well settled that in making the division of the property the court may consider the disparity of the earning power of the parties, as well as their business opportunities, capacities and abilities. In re Marriage of McCurdy, 489 S.W.2d 712 (Tex.Civ.App.—Amarillo 1973, writ dism’d). And it has long been the rule that the trial court’s division of any and all property, separate and community, “ * * * should be corrected on appeal only where an abuse of discretion is shown in that the disposition made of some property is manifestly unjust and unfair.” Hedtke v. Hedtke, 112 Tex. 404, 248 S.W. 21 (1923).

In this case, the Appellee testified concerning injuries she received as the result of an attack upon her by Appellant shortly before their separation. She also testified as to her disability resulting from her injuries, and her present inability to do tasks that she previously could have performed. Based upon such evidence, the trial Court could have awarded her a disproportionate share of the property.

In addition, we note that while each party testified as to different values for much of the community property, there are no findings by the Court as to the values placed either individually or collectively upon the various items of property awarded to each party. Without such findings, this Court cannot determine if the property was divided evenly, or if disproportionately, how much so and for which party.

In Gaulding v. Gaulding, 503 S.W.2d 617 (Tex.Civ.App.—Eastland 973, no writ), the trial court awarded wife a one-half interest in Appellant’s Civil Service Retirement benefits even though a substantial portion of the benefits were earned during the time the parties lived in common-law property states. The appellate court held this was error but said:

“Another reason such error is harmless is because appellant does not attack the judgment by a point of error that the judgment is not ‘just and right, having due regard to the rights of each party’.”

We must necessarily reach the same results under the facts in this case. The Appellant’s three points of error are overruled. The judgment of the trial Court is affirmed.


text:
    Ricardo DELFIN, Appellant, v. The STATE of Texas, Appellee.
    No. 6501.
    Court of Civil Appeals of Texas, El Paso.
    Dec. 17, 1975.
    Rehearing Denied Jan. 14, 1976.
    Second Rehearing Denied Feb. 4, 1976.

      Calamia & Mallín, Joseph A. Calamia, Charles M. Mallin, El Paso, for appellant.
    George N. Rodriguez, Jr., Co. Atty., Jerry Tanzy, James H. Luckett, Asst. County At-tys., El Paso, for appellee.
   OPINION

OSBORN, Justice.

CASE SUMMARY

This case involves the question of whether there may be a waiver of a jury in a temporary commitment case of a proposed patient believed to be mentally ill, and who stands charged with a criminal offense. Having concluded that such right may not be waived, the judgment of the trial Court is reversed.

FACTS

The Appellant was indicted by a Grand Jury for causing serious bodily injury to a child. A District Court jury determined that Appellant was incompetent to stand trial and that there was no substantial probability that he would attain the competency to stand trial within the foreseeable future. The District Court then ordered Appellant transferred to the El Paso County Court for civil commitment proceedings. Article 46.02, § 6(a), Tex.Code Crim.Proc. Ann. Proceedings were then instituted under the provisions of Article 5547-31 et seq., Tex.Rev.Civ.Stat.Ann. At the time of the hearing, Appellant was represented by his court appointed attorney ad litem and a court appointed guardian ad litem. They executed a Waiver of Trial by Jury. The State offered in evidence certain exhibits including the indictment and order of the District Court and physicians’ certificates. Two psychiatrists testified as to the Appellant’s mental condition and his need for further confinement and additional treatment. Following the hearing, the trial Court entered an order on October 30, 1975, finding Appellant to be mentally ill and committing him to the Rusk State Hospital for observation and treatment.

By a single point of error, it is contended that there may be no waiver of a jury in temporary commitment proceedings where the proposed patient stands charged with a criminal offense.

ISSUE

In a hearing on an application for temporary hospitalization, may there be a waiver of a jury for a proposed patient believed to be mentally ill who is charged with a criminal offense?

DECISION

Conclusion — There may be no waiver of a jury in a hearing on an application for temporary hospitalization where the proposed patient believed to be mentally ill is charged with a criminal offense.

The provision for temporary hospitalization of a person mentally ill, as first enacted, applied only where the person was not charged with a criminal offense. Article 5547-31, Tex.Rev.Civ.Stat.Ann. Article 5547-36(e) originally provided that “The hearing shall be before the court without a jury, unless a jury is demanded by a person authorized to make such demand or by the proposed patient or by the court.” As enacted, the statute obviously permitted the court to make the determination as to whether to commit a proposed patient for observation and treatment, but a right to trial by jury was preserved, although not mandatory.

The Sixty-Fourth Legislature amended Article 5547-31 to permit the filing of an application for temporary hospitalization both in cases where the proposed patient is not charged with a criminal offense, and in cases where the proposed patient is charged with a criminal offense and has been transferred to the court for civil commitment pursuant to Section 6 of Article 46.02, Tex. Code Crim.Proc.Ann. At the same time, the Legislature amended Article 5547-36(e) by adding the following sentence:

“Provided, however, the hearing must be before a jury in the case of a proposed patient who is charged with a criminal offense.”

This added provision is consistent with the amendment added to Article 5547-45, with regard to an indefinite commitment, which provides: “There shall be no waiver of trial by jury in the case of a proposed patient who is charged with a criminal offense.” When the Legislature provided that “the hearing [must] be before a jury”, it used language of a mandatory effect. Samuell v. American Mortgage Corporation, 78 S.W.2d 1036 (Tex.Civ.App.—Dallas 1934), aff’d 130 Tex. 107, 108 S.W.2d 193 (Tex.1937). In Hodges v. Coke County, 196 S.W.2d 935 (Tex.Civ.App.—Amarillo 1946, motions to certify overruled 197 S.W.2d 886), the Court said:

“Volume 27 Words and Phrases, Permanent Edition, pages 884 et seq. and Vol. 39 pages 91 et seq., in discussing the usages in various jurisdictions of the words ‘Must’ and ‘Shall,’ says both words are usually mandatory when used generally in statutes and certainly so when the use of either word pertains to legal rights that ought to be exercised.”

To hold otherwise here would be to give no effect whatsoever to the amendment to Article 5546-36(e). Prior to the amendment, a right to trial by jury existed but was not mandatory unless requested. If the amendment does not mean that a trial by jury is mandatory as to one charged with a crime, then the rule would remain the same as it was prior to the amendment, and a jury trial would still be permitted but not be mandatory.

Appellee suggests that since all the evidence offered at the hearing was to the effect that a necessity existed for the commitment, and no evidence was offered to the contrary, Appellee was entitled to an instructed verdict and therefore there is no reversible error in these proceedings since there was no issue for a jury to determine. See Brown v. Seltzer, 424 S.W.2d 671 (Tex.Civ.App.—Houston (1st Dist.) 1968, writ ref’d n. r. e.). While the rule relied on may be correct, “ * * * opinion of experts, even when unanimous and without contradiction, is not conclusive but only raises a question of fact for determination by the finder of facts.” Bond v. Snow, 422 S.W.2d 842 (Tex.Civ.App.—Eastland 1967), aff’d 438 S.W.2d 549 (Tex.1969). Thus, a fact issue did exist for a fact finder, which in this case was required to be a jury.

Thus, we reach the conclusion stated above. The judgment of the trial Court is reversed and the case is remanded for trial before a jury. The District Court order transferring Appellant to the County Court has not been appealed and it remains in effect.

ON MOTION FOR REHEARING

The Appellant urges that because of the provisions in Article 5547-37, Tex.Rev. Civ.Stat.Ann., which permit the court to make findings upon the basis of the Certificates of Medical Examination for Mental Illness, the requirement of a jury trial in Article 5547-36(e), Tex.Rev.Civ.Stat.Ann., is not mandatory unless requested, and is a right that can be waived. We cannot agree. Article 5547-37 now has application only where the proposed patient is not charged with a criminal offense.

Appellant also again urges that since this was a trial on the merits and not a summary judgment proceeding, the case of Bond v. Snow, 422 S.W.2d 842 (Tex.Civ. App.—Eastland 1967), aff’d 438 S.W.2d 549 (Tex.1969), is not applicable and that the harmless error rule should apply. We cannot agree. Opinion evidence is only evidential and is not binding upon the trier of facts. Hood v. Texas Indemnity Ins. Co., 146 Tex. 522, 209 S.W.2d 345 (1948); Board of Firemen’s Relief & Retirement Fund Trustees of Houston v. Marks, 150 Tex. 433, 242 S.W.2d 181 (1951); Luttes v. State, 159 Tex. 500, 324 S.W.2d 167 (1958).

The Appellant’s motion for rehearing is overruled.


author: RAY, Justice.

text:
    Frankie RHYMES, Appellant, v. FIDELITY & CASUALTY COMPANY OF NEW YORK, Appellee.
    No. 8354.
    Court of Civil Appeals of Texas, Texarkana.
    Dec. 30, 1975.
    Rehearing Denied Feb. 24, 1976.
    Wilson F. Walters, Denison, for appellant.
    Henderson, Bryant & Wolfe, Sherman, for appellee.
   RAY, Justice.

This suit involves the uninsured motorist provision of an automobile accident policy. Appellant (plaintiff), Frankie Rhymes, brought suit against appellee (defendant), Fidelity & Casualty Company of New York, seeking recovery of her damages under the uninsured motorist provision of her mother’s automobile insurance policy. Appellant was a passenger in an automobile that was struck by an uninsured vehicle. The only defense presented by appellee was that the policy had been cancelled prior to the date of the accident.

The jury found that a cancellation notice had been mailed to Mary Rhymes, mother of Frankie Rhymes, prior to the accident. The trial court accordingly entered its judgment in favor of appellee.

Appellant submits only one point of error for our consideration which is as follows:

“The trial court erred in granting a judgment upon the affirmative answer to Special Issue No. 1 which was the only-issue answered by the jury.”

That issue and its answer are as follows:

“SPECIAL ISSUE NO. 1: Do you find from a preponderance of the evidence that Fidelity & Casualty Company of New York mailed to Mary Rhymes a cancellation notice bearing date of 11/14/72?
Answer ‘We do’ or ‘We do not.’
ANSWER: We do.”

The automobile collision occurred on January 13, 1973.

Appellant contends that the jury or trier of fact must not only find that notice was properly mailed, but that it was also received and that the policy could not be cancelled until the insured received the notice.

Appellee states there is a distinction between cancellation under “giving” notice provisions as contrasted with “mailing” notice provisions, and that the policy here involved requires only that appellee insurer prove that it mailed its notice of cancellation. The pertinent portion of the cancellation provision is as follows:

“This policy may be canceled by the company by mailing to the insured named in Item 1 of the declarations at the address shown in this policy written notice stating when not less than ten days thereafter such cancelation shall be effective. The mailing of notice as aforesaid shall be sufficient proof of notice.”

An identical provision was contained in the policy in question in Sudduth v. Commonwealth County Mutual Insurance Company, 454 S.W.2d 196 (Tex.1970). There the court stated “Whenever the question has arisen, our Courts of Civil Appeals have followed the majority rule that a policy containing these provisions may be can-celled by the proper mailing of notice in accordance with the terms of the policy even though the notice is never received by the addressee. See United States Fire Ins. Co. v. Fletcher, Tex.Civ.App., 423 S.W.2d 89 (wr. ref. n. r. e.), and authorities there cited. Their conclusion in this respect is sound, because the provisions of the policy are plain and must be enforced as written. See Annotation, 64 A.L.R.2d 982, 1000.”

The trier of fact, in this case the jury, had before it proof of the mailing of the cancellation notice. Testimony that the letter was not received by the insured is only evidence that the notice may never have in fact been mailed. The jury in the present case had the duty of weighing the evidence supporting the mailing of the notice against the evidence of the non-arrival of the notice in deciding the issue presented to it of whether appellant Fidelity & Casualty Company of New York mailed its cancellation notice to its insured, Mary Rhymes. The jury found in favor of the insurance company.

The instant case is controlled by Sudduth v. Commonwealth County Mutual Insurance Company, supra. The judgment of the trial court is affirmed.


author: DUNAGAN, Chief Justice.

text:
    AMERICAN PRODUCE & VEGETABLE COMPANY, Appellant, v. J. D. CAMPISI’S ITALIAN RESTAURANT et al., Appellees.
    No. 870.
    Court of Civil Appeals of Texas, Tyler.
    Dec. 31, 1975.
    Appellant’s Motion for Rehearing Granted with Written Opinion Feb. 5, 1976.
    Appellee’s Rehearing Denied Feb. 26, 1976.

      Samuel B. Paternostro, Dallas, for appellant.
    Jerry W. Biesel, Dallas, for appellees.
   DUNAGAN, Chief Justice.

This suit on a sworn account was instituted in the 193rd Judicial District Court of Dallas County, Texas, by appellant, American Produce & Vegetable Company, against J. D. Campisi’s Italian Restaurant, a Texas Corporation, and Alvin Zidell, individually. The only answer filed was by the defendant Zidell. Trial was to a jury. At the conclusion of the testimony, the court submitted to the jury twelve special issues inquiring as to the liability of the defendant, Zidell, based, upon partnership and sole proprietorship theories. The jury answered favorably to the appellant on the theory of partnership and answered in favor of appellee Zidell on the theory of sole proprietorship. This appeal is from the trial court’s granting of appellee Zidell’s motion for judgment non obstante veredicto. The judgment was in favor of appellant and against J. D. Campi-si’s Italian Restaurant in the sum of $8,836.80, together with the sum of $500 in attorneys’ fees, costs of court and statutory interest until judgment is satisfied. The judgment further decreed that appellant “recover nothing of and from the Defendant Alvin Zidell, individually, and that the Defendant Zidell go hence with his costs of court.” From this judgment appellant has duly perfected its appeal. Defendant, J. D. Campisi’s Italian Restaurant, is not a party to this appeal.

Subsequent to the return of the jury’s answers to the issues, appellee Zidell filed his motion to disregard the jury answers to all the special issues, except No. 7 which was answered favorably to him, and for judgment non obstante veredicto on the grounds that there was “no evidence” or “the evidence was insufficient” and there were no pleadings to support the jury’s answers to said issues complained of. Ap-pellee’s objections to the submission of those issues were on substantially the same grounds and were overruled. Seven days after appellee filed his motion for judgment non obstante veredicto appellant filed a motion for permission to file a trial amendment to plead the question of partnership in more particularity to better conform to both the proof and special issues submitted by the court.

Appellant, by its original and supplemental brief, is before this court on twelve points of error; however, he presents argument only under points of error 1 and 12. Points 2 through 11, not being briefed, were waived and will not be considered by this court. West Texas Utilities Company v. Bergstrom, 458 S.W.2d 548 (Tex.Civ.App.-Eastland 1970, writ ref’d n. r. e.); Employers’ National Life Insurance Co. v. Willits, 436 S.W.2d 918 (Tex.Civ.App.-Amarillo 1968, writ ref’d n. r. e.); Watson v. Godwin, 425 S.W.2d 424 (Tex.Civ.App.-Amarillo 1968, writ ref’d n. r. e.); Inman v. Parr, 311 S.W.2d 658, 704 (Tex.Civ.App—Beaumont 1958, writ ref’d n. r. e.) and Rule 418, T.R.C.P.

Appellant has predicated its point of error No. 1 on the contention that there is evidence of probative force to support the jury’s answer to Special Issue No. 1 and therefore the trial court erred in granting appellee’s motion for judgment non obstan-te veredicto on the ground that there was either no evidence or insufficient evidence and no pleading to support the jury’s answer to Special Issue No. I. By its point of error No. 12 it asserts that the trial court erred in not allowing it to file a trial amendment pleading in more particularity the question of partnership so as to have better conformed to both the proof and the special issues submitted by the court.

A judgment contrary to the verdict cannot be granted on the ground of factually insufficient evidence to support the verdict. Therefore, appellant is limited in this appeal to “no evidence” points. Bellaire General Hospital, Inc. v. Campbell, 510 S.W.2d 94 (Tex.Civ.App.-Houston, 14th Dist., 1974, writ ref’d n. r. e.). Moreover, a defect in the pleadings constitutes no ground for a judgment non obstante vere-dicto under Rule 301, T.R.C.P.; 4 McDonald, Texas Civil Practice, Sec. 17.32 at 207. For a judgment non obstante veredic-to to be upheld, it must appear that there is no evidence of probative force in support of the disregarded jury finding. Bellaire General Hospital, Inc. v. Campbell, supra; Garza v. Alviar, 395 S.W.2d 821 (Tex.1965); Hays v. Nelson, 400 S.W.2d 12 (Tex.Civ.App.-Fort Worth 1966, n. w. h.). Thus, appellant’s burden on appeal is to point out some evidence of probative force in support of these findings.

Appellant does not seem to have briefed that portion of its point of error complaining of the trial court’s action in sustaining appellee’s motion for judgment non obstan-te veredicto on the grounds of no evidence. The thrust of appellant’s argument under its point of error No. 1 is directed to its complaint that the trial court erred in not permitting it to file a trial amendment. Appellant in its original brief states “The only two entities left after piercing the corporate veil would be as either a partnership or a sole proprietorship, both of which are implied in Paragraph IV of the Plaintiff’s Original Petition.” It also asserts in its original brief that these entities were well known to the defendant-Zidell and that he claimed no surprise during the trial and made no objections to appellant’s cross examination concerning these two entities. It also states that appellee offered evidence in an attempt to counter these two entities. At this point in its original brief appellant does refer this court to certain pages in the statement of facts apparently for the purpose of showing that the question of partnership was tried by implied consent. The evidence referred to certainly can be of no comfort to appellant as it is the evidence of Zidell denying any partnership. Therefore, the only evidence that appellant has pointed out to us in the statement of facts supports the appellee’s allegation in his motion for judgment non obstante veredicto that there is no evidence to support the jury’s answer to Special Issue No. 1.

Appellant does not point out any evidence in the record that would support the jury’s answer to Special Issue No. 1. This court is not required to search the entire statement of facts, consisting of 219 pages, for the purpose of finding evidence that may, or may not, sustain appellant’s point of error. The burden is upon appellant to point out and demonstrate to this court by proper references to the statement of facts, that there was evidence to support the finding. This, appellant has failed to do. Mid-Conti nent Supply Co. v. Conway, 240 S.W.2d 796, 806 (Tex.Civ.App.-Texarkana 1951, writ ref’d n. r. e.); Gowan v. Reimers, 220 S.W.2d 331, 335-336 (Tex.Civ.App.-Fort Worth 1949, writ ref d n. r. e.); McDaniel v. Thompson, 195 S.W.2d 202, 204 (Tex.Civ.App.-San Antonio 1946, writ ref’d); May v. Consolidated Underwriters, 170 S.W.2d 295 (Tex.Civ.App.-Fort Worth 1943, writ ref’d w. o. m.). If the references to the statement of facts were for the purpose of demonstrating to us that there was evidence to support the jury’s finding to Special Issue No. 1 they totally failed to do so. If they were only for the purpose of showing that appellee was not surprised by the substance of the trial amendment, then appellant has failed to brief the portion of the first point of error asserting that the trial court erred in granting appellee’s motion for judgment non obstante veredicto on the ground there was “no evidence” to support the jury’s answer to Special Issue No. 1. Therefore, that portion of appellant’s point of error No. 1 is waived. Rule 418, T.R.C.P.

In view of our disposition of this appeal, it is unnecessary for us to pass on appellant’s point of error No. 12. If the trial court erred in refusing to permit appellant to file a trial amendment it would be harmless error and judgment would be affirmed as appellant (1) has not briefed his contention that the trial court erred in granting appellee’s motion for judgment non obstan-te veredicto on the ground of “no evidence” to support the jury’s answer to Special Issue No. 1 or (2) has not pointed out or demonstrated to this court by proper references to the statement of facts any evidence to support the jury’s answer to Special Issue No. 1.

We sustain the trial court’s judgment for the reasons herein stated.

Judgment affirmed.

ON MOTION FOR REHEARING’

Appellant, by its motion for rehearing, has now directed us to evidence which it contends supports the jury’s answer to the special issues in question. The appeal will now be disposed of on the merits.

As stated in our original opinion, this suit on a sworn account was instituted by appellant, American Produce & Vegetable Company, against J. D. Campisi’s Italian Restaurant and Alvin Zidell. Defendant Zidell, pursuant to Rule 169, T.R.C.P., admitted that J. D. Campisi’s Restaurant was a corporation of which Alvin Zidell was an officer and the principal backer. This corporation was unable to pay the account owing to appellant in the amount of $8,386.80.

Appellant’s original petition sought recovery from Zidell on two grounds, to-wit: that he had assured various agents of appellant that if appellant would continue to extend credit to J. D. Campisi’s Italian Restaurant, Zidell would personally see to it that these debts were paid; and that Zidell was the alter ego of J. D. Campisi’s Italian Restaurant and therefore the court should pierce the corporate veil and hold Zidell accountable. Appellant’s agents testified that Zidell told them that he would pay the account and that the restaurant was a partnership. Zidell denied making such representations and said that the reason for incorporation was to limit his liability.

The jury’s responses to special issues were as follows: that Zidell had represented to appellant’s agent that the restaurant was a partnership and that Zidell would be responsible for the restaurant’s account with appellant; that based upon these representations, appellant extended credit to the restaurant; that an account arose out of business dealings between appellant and the restaurant; that an account arose out of business dealings between appellant and the partnership; that an account did not arise out of business dealings between appellant and Zidell individually; that systematic records had been maintained and all just and true credits had been allowed on the account; and that the amount of $8,386.80 was due and owing on the account.

Zidell’s motion for judgment non obstan-te veredicto attacked the answer to each special issue on the grounds that there was no pleading and no evidence to support these answers. Various arguments were made in support of each attack. Judgment was rendered that appellant recover from the J. D. Campisi’s Restaurant but not from Zidell. Campisi’s Restaurant did not appeal. The take nothing portion of the judgment was “based on the evidence as found by the Trial Court, the answers to the special issues and the motion for judgment non obstante veredicto.” That portion of the judgment did not specify which ground, or arguments in support thereof, in the motion for judgment non obstante veredicto it was based upon. With the record in this condition we must presume that the trial court sustained the motion for judgment non ob-stante veredicto on each and every ground therein stated, including the ground that there were no pleadings to support the answers of the jury to the issues which were favorable to the appellant.

This appeal was briefed under the supposition that the jury had answered favorably to appellant, and against Zidell, on the theory that the restaurant was a partnership composed of Zidell and J. D. Campisi. This court in its original opinion stated that while a judgment non obstante veredicto cannot be granted on the ground of insufficiency of pleadings, such a judgment is proper when there is no evidence to support the jury’s answers. Bellaire General Hospital, Inc. v. Campbell, 510 S.W.2d 94 (Tex.Civ.App.-Houston, 14th Dist., 1974, writ ref’d n. r. e.); 4 McDonald, Texas Civil Practice, Sec. 17.32 at 207. We affirmed the judgment non obstante veredicto originally hecause appellant did not point out to us any evidence to support a recovery against Zidell under a partnership theory.

We are still of the opinion that there was no evidence that the restaurant was a partnership between Zidell and J. D. Campisi; indeed, the corporate nature of the restaurant is uncontroverted. We are of the opinion, however, that the jury answers which were favorable to appellant and against Zidell were as follows: that Zidell represented to appellant’s agent that the restaurant was a partnership; that based upon this representation, appellant extended credit to the restaurant; and that the account arose out of business dealings between appellant and the restaurant. The judgment non obstante veredicto was proper only if there was no evidence to support these answers. Bellaire General Hospital, Inc. v. Campbell, supra.

Appellant’s credit manager, Mark Kapka, testified that Zidell told him on July 16,1973, that the restaurant was a partnership between J. D. Campisi and Zidell. Zi-dell’s Exhibit No. 1 shows that the Articles of Incorporation of the restaurant were filed with the Secretary of State on May 14, 1973. Kapka also testified that credit was extended to the restaurant based upon a credit check of Zidell. Kapka testified that he did not learn that the restaurant was, in fact, a corporation until August 1974 when he and Zidell discussed payment of the account sued upon. We conclude that this testimony constituted some evidence of such a misrepresentation as would justify holding Zidell liable on the account and the trial court erred in rendering judgment non obstante veredicto. Appellant in its original petition, however, did not plead this misrepresentation.

Appellee in his objection to the court’s charge for the first time raised the objection that there were no pleadings or insufficient pleadings to support the issues. This objection was overruled and the case was submitted to the jury. After the jury returned its verdict, answering all issues favorable to appellant, with the exception of Special Issue No. 7, the appellee filed a motion for judgment non obstante veredicto alleging substantially the same grounds as set out in his objection to the charge. The court at this stage of the proceedings reversed itself and sustained appellee’s motion for judgment n. o. v. which included a ground that there was no evidence or insufficient evidence to support the issues submitted. His objection to the court’s charge ■ also included this ground.

Subsequent to appellee’s motion for judgment non obstante veredicto appellant filed a motion for permission to file a trial amendment to meet appellee’s objections to the pleadings. This motion was denied. Appellant by its point of error No. 12 contends that the court erred in refusing to permit the filing of the trial amendment. We agree.

Application of Rules 66 and 67, T.R.C.P., relating to amendment of pleadings during trial is within the sound discretion of the trial judge. While it is true that the application of these rules is within the sound discretion of the trial judge, nevertheless, the interpretation followed by both the Federal and Texas appellate courts is that such discretion is to be exercised liberally in favor of justice. City of Houston v. Hagman, 347 S.W.2d 355, 359 (Tex.Civ.App-Houston 1961, writ ref’d n. r. e.) and Shaw v. Tyler Bank & Trust Co., 285 S.W.2d 782, 790 (Tex.Civ.App.-Texarkana 1955, writ ref’d n. r. e.).

In Vermillion v. Haynes, 147 Tex. 359, 215 S.W.2d 605 (1948), the Supreme Court held that the trial court abused its discretion in refusing to permit a trial amendment pleading limitations, where the facts relative to same were already in evidence. The Court said: “ * * * The rule directs that the court shall ‘freely’ allow an amendment if to do so will subserve the ‘presentation of the merits of the action’ and the other party fails to satisfy the court that the amendment will prejudice him in maintaining his action or defense on the merits,” The court also noted that the opposing parties by their objection did not suggest nor hint that they were in any manner surprised or that the amendment would otherwise prejudice them in maintaining their action on its merits. The court then said: “Under those circumstances, we think that both the spirit and intent of Rule 66 require that the amendment be permitted.” The court reversed and remanded the case to the trial court for a new trial. In the instant case appellee made no objection that the filing of the trial amendment would prejudice him in maintaining his defense nor plead surprise or that the amendment would otherwise prejudice him in maintaining his defense. As a matter of fact, the record does not show that appellee made any objection to the filing of the trial amendment. Neither did he object to any of the testimony on the ground of the lack of sufficient pleadings.

The evidence supporting the jury’s findings in controversy here was fully developed. The trial amendment did not come too late. An amendment may be allowed after verdict and before judgment. Shaw v. Tyler Bank & Trust Co., supra, and Milam v. Cooper Co., 258 S.W.2d 953 (Tex.Civ.App.—Waco 1953, writ ref’d n. r. e.). We believe that the trial court abused its discretion in refusing to permit the filing of the trial amendment so as to conform the pleadings to the evidence previously introduced without objection.

It is further our opinion that this error amounted to such a denial of the rights of appellant as was reasonably calculated to cause and probably did cause the rendition of an improper judgment and requires a remand of this case. Rule 434, T.R.C.P.

The motion for rehearing is granted. That portion of our original opinion affirming the judgment of the trial court and the judgment of this court thereon are withdrawn. There being no appeal taken by J. D. Campisi’s Italian Restaurant from the judgment rendered against it, that portion of the judgment is final. The portion of the judgment that appellant “recover nothing of or from” the appellee Zidell only is reversed and the cause is remanded to the trial court. Aubin v. Hunsucker, 481 S.W.2d 952, 957 (Tex.Civ.App.-Austin 1972, writ ref’d n. r. e.).

Reversed and remanded.

      . Do you find from a preponderance of the evidence that on or about July 16, 1973, Alvin Zidell represented to Mark Kapka of American Produce and Vegetable Company that J. D. Campisi’s Italian Restaurant was a partnership composed of J. D. Campisi and Alvin Zidell?
      Answer “We do” or “We do not”
      Answer: We do.

      . No attack was made upon the failure to find that an account arose out of business dealings between appellant and Zidell individually.


author: DIES, Chief Justice.

text:
    W. O. HAIR, Appellant, v. PENNSYLVANIA LIFE INSURANCE CO. et al., Appellees.
    No. 7760.
    Court of Civil Appeals of Texas, Beaumont.
    Dec. 31, 1975.
    Rehearing Denied Jan. 22, 1976.
    Richard R. Burroughs, Cleveland, for appellant.
    Richard L. Josephson, James H. Leh-mann, Jr., Mike D. Gibbs, Dallas, Richard Morrison, Liberty, Michael G. Terry, Houston, for appellees.
   DIES, Chief Justice.

W. 0. Hair, plaintiff below, sued Pennsylvania Life Insurance Company, The Combined American Insurance Company, J. C. Penney Life Insurance Company, National Life and Accident Insurance Company, and Prudential Insurance Company of America, alleging a cause of action by virtue of Article 21.23 of the Insurance Code, for the death of his son, Rufus Hair, the insured, under the policies issued by the insurance companies above listed. The companies urged a motion for summary judgment, which was granted by the trial court and from which the father seeks this review.

In reviewing a summary judgment we are guided by the rules laid down by our Supreme Court in Gibbs v. General Motors Corporation, 450 S.W.2d 827 (Tex.1970).

Rufus Hair, the insured, was shot to death by his wife Jonell, the designated beneficiary under the policies. Tex.Ins. Code Ann. art. 21.23 (1963) provides:

“The interest of a beneficiary in a life insurance policy or contract heretofore or hereafter issued shall be forfeited when the beneficiary is the principal or an accomplice in willfully bringing about the death of the insured. When such is the case, the nearest relative of the insured shall receive said insurance.”

In a criminal proceeding the District Court had previously determined that Jo-nell was insane at the time of the killing. This finding was admitted in the proceeding we review, and appellees argue this prevents Jonell from “willfully bringing about” the death of her husband.

The following statement by our Supreme Court clearly makes this prior finding of insanity not dispositive.

“A prior adjudication of an issue in a criminal matter is not res judicata or estoppel by judgment to a subsequent civil action involving the same fact issue.” State v. Benavidez, 365 S.W.2d 638, 640 (Tex.1963).

See also, Shook v. Peters, 59 Tex. 393 (1883); Landa v. Obert, 78 Tex. 33, 14 S.W. 297 (1890); Pittman v. Stephens, 153 S.W.2d 314 (Tex.Civ.App., Eastland 1941, writ ref’d w. o. m.).

The finding made by the trial court in the criminal proceedings did not establish as a matter of law in the present case that Jonell Hair was not the principal or an accomplice in willfully bringing about the death of the insured.

Appellees urge there is yet another ground on which the court’s summary judgment may stand. Tex.Ins.Code Ann. art. 3.48 (1963) provides:

“Whenever any person shall procure the issuance of a policy of insurance on his or her life in any legal reserve life insurance company, and designate in writing filed with the company the beneficiary to receive the proceeds thereof, the company issuing such policy shall, in the absence of the receipt by it of notice of an adverse claim to the proceeds of the policy from one having a bona fide legal claim to such proceeds or a part thereof, pay such proceeds becoming due on the death of the insured to the person so designated as beneficiary, and such payment so made, in the absence of such notice received by the insurance company prior to the date of the payment of the proceeds, shall discharge the company from all liability under the policy.”

To sustain this summary judgment on this ground it was incumbent on appellees to prove as a matter of law they had no notice of the father’s claim (plaintiff below) before they paid Jonell’s guardian. See Oscar Murphy v. Lower Neches Valley Authority, 529 S.W.2d 816 (Tex.Civ.App., Beaumont, October 30, 1975) (not yet reported); see also Swilley v. Hughes, 488 S.W.2d 64 (Tex.1972). This they failed to do.

In oral argument appellees admitted they had knowledge of the killing and waited a year before paying Jonell’s guardian until Judge Cain ruled on Jonell’s sanity. Presumably, they knew from this that art. 21.-23 of the Code (above quoted) might become a factor in determining who would be entitled to the proceeds of the policies. Unfortunately for them they relied on the criminal case finding of her insanity rather than depositing the money in court by way of interpleader.

The affidavit of W. 0. Hair in opposition to the summary judgment states, “Shortly after the death of my son, Rufus Hair, on March 23, 1973, I was interviewed by the representative of three (3) of the insurance companies who have been served in the lawsuit pending under cause No. 26,745. I informed each and every one of the representatives that I intended to contest the matter and that I was the next of kin of the deceased.”

The trial judge’s dismissal of the criminal action — after motion by the District Attorney — -was “for the following reason, to-wit: Due to the findings of Dr. J. A. Hunter, M. D., Director M.S.U., Rusk State Hospital, that Jonell Hair was not capable of willfully taking the life of her husband because of the fact that said Jonell Hair was insane at the time the offense with which she is charged was alleged to have been committed,” etc.

What Dr. Hunter concluded was “[bjecause of a memory loss for events surrounding the alleged offense, it is my opinion that Mrs. Hair is unable to adequately communicate with her attorney at the present time in the preparation of a rational defense and is therefore incompetent to stand trial. It is my opinion further that Mrs. Hair is in need of continued hospitalization and treatment at the present time.”

The affidavit of Grace Kuruc, claim appr-over for Prudential made in Passaic County, New Jersey, that “[a]t no time from July, 1973 to June 19,1974 [when Prudential paid Jonell’s guardian] did Prudential Insurance Company of America receive notice of the possible adverse claim to said proceeds by W. 0. Hair.” It is not sufficient to establish as a matter of law that Prudential’s agents working this claim were all unaware of W. 0. Hair’s claim. See Murphy v. L. N. V. A., above cited. The same is true of Ruth Citron’s affidavit (claim supervisor of Pennsylvania Life in Los Angeles, California). This is likewise the case in the affidavit of George B. Walker, Jr., J. C. Penney Life’s Manager Benefit Department.

This summary judgment proof fails to establish as a matter of law that appellee insurance companies had no knowledge of W. 0. Hair’s claim prior to paying the proceeds of the policies to Jonell’s guardian. The order granting the summary judgment is reversed and the cause remanded for trial.

Reversed and remanded.


author: CADENA, Justice.

text:
    Frances D. SHANNON, Appellant, v. FROST NATIONAL BANK OF SAN ANTONIO, Appellee.
    No. 15404.
    Court of Civil Appeals of Texas, San Antonio.
    Dec. 31, 1975.
    Rehearing Denied March 3, 1976.

      Morriss, Boatwright, Lewis & Davis, San Antonio, for appellant.
    George H. Spencer, Clemens, Weiss, Spencer & Welmaker, San Antonio, for ap-pellee.
   CADENA, Justice.

Plaintiff, Frances D. Shannon, filed this suit for damages resulting from alleged breach of fiduciary duties by defendant, Frost National Bank of San Antonio, trustee under a written inter vivos revocable trust. Plaintiff, trustor and beneficiary under the trust, appeals from the granting of an instructed verdict in favor of defendant.

In this opinion defendant, Frost National Bank, will be referred to as “Bank.”

Prior to September 2, 1971, plaintiff had in her possession the sum of $100,000.00 in cash. She discussed with Bank’s officials the possibility of creating a trust, with plaintiff as trustor and beneficiary, and Bank as trustee. One of Bank’s officials, on learning that plaintiff did not have an attorney, referred her to a law firm for the purpose of having the necessary instrument prepared. A member of the law firm prepared the trust instrument, and on September 2, 1971, plaintiff and Bank executed the trust agreement.

Plaintiff alleged that at various times between September 2, 1971, and March 19, 1973, she attempted to exercise her right under the trust agreement to withdraw funds from the trust estate. According to the petition, Bank, instead of delivering her own trust funds to plaintiff, borrowed the amount requested by plaintiff from itself, executing a note as trustee, payable to itself, for the amount of the requested withdrawal, plus interest. Bank would then deliver to plaintiff the amount it borrowed from itself. When the notes thus executed became due, Bank would pay to itself the principal amount plus interest. Plaintiff alleged that such procedures constituted “self-dealing” on the part of Bank and violations of Bank’s fiduciary duties to plaintiff. These “loans” totalled $40,000.00.

Plaintiff further alleged that on March 19, 1973, she exercised the right, reserved by her in the trust instrument, to revoke the trust in its entirety and demanded that Bank deliver to her all trust funds then held by it. She alleged that Bank wrongfully withheld such trust fund from plaintiff until June 18,1973, at which time Bank delivered to her the sum of $51,560.21. This amount, according to plaintiff, was less than the amount in such trust on March 19, 1973, the date of revocation.

Plaintiff sought recovery of all interest paid by Bank to itself in connection with the repayment of loans; recovery of the correct amount in the trust on March 19, 1973, less the amount delivered to plaintiff on June 18, 1973; recovery of the amount paid to itself by Bank as compensation for acting as trustee; and for recovery of reasonable attorney’s fees. She also sought to compel Bank to render a verified accounting of its management of the trust funds.

Bank’s answer contained a general denial and the following allegations:

1. During the existence of the trust Bank made complete and accurate periodic accountings to plaintiff, and, upon termination of the trust it made a full and final accounting to plaintiff and distributed to her the remainder of the trust estate.

2. As authorized by the trust agreement, the Texas Trust Act, and applicable federal laws and regulations applicable to national banks, Bank invested the trust funds in a common stock fund. Plaintiff was advised of such investment and, by means of periodic accountings during the existence of the trust, of all transactions relating to such investment.

3. The loans of which plaintiff complains in her petition were made with her full knowledge and consent. The exact terms of each loan and of all repayments of principal and payments of interest were fully reported to plaintiff. Such loans were lawfully and fairly made and did not constitute a violation of Bank’s duties as fiduciary.

4. When it received notice of plaintiff’s decision to terminate the trust, the trust money in question was withdrawn from the common stock fund by Bank at the earliest date such withdrawal could lawfully be made pursuant to federal laws and regulations, and all trust funds then remaining were promptly delivered to plaintiff.

In determining whether defendant was entitled to an instructed verdict, we must accept as true all evidence which, when liberally construed in favor of plaintiff, tends to support findings as to the existence of facts on which plaintiff relies, or the nonexistence of facts relied on by defendant. In thus evaluating the evidence, the Court must indulge every inference which can reasonably be drawn in favor of plaintiff, discarding all contradictory evidence favorable to defendant. 3 McDonald, Texas Civil Practice Sec. 11.28.2, pp. 235-236 (1970 rev.). Our recital of the “facts” of this case will, under this approach, necessarily be the result of a selective screening of the evidence.

At the time the trust was created, plaintiff was unable to decide whether her money should be invested for “income” or “growth” purposes and Bank, therefore, initially invested the funds in United States Treasury bills. Shortly thereafter, plaintiff told Bank that her income was sufficient to defray her ordinary living expenses and that the money should be invested in order to realize “growth” rather than income. However, she told Bank that it would be necessary for her, from time to time, to withdraw funds for such purposes as payment of income taxes, purchase of a car, and to meet “emergencies” which might arise.

Bank then converted the Treasury bills into cash and invested $99,392.02 in its common stock fund on December 14, 1971, after placing $599.08 in a saving account. Plaintiff testified that she was not told that her money would be invested in Bank’s common stock fund; that she merely believed her money was invested in the “stock market”; and that she did not understand the statements periodically furnished to her by Bank reflecting the common stock fund investment.

From time to time, plaintiff found it necessary to obtain cash in order to meet certain expenses. When she first sought to withdraw part of her funds, Bank’s official who was handling her account told her that, since her money was earning interest at the rate of 11¼% annually, the best course to follow would be to borrow money at a lower rate and repay it subsequently. She agreed, and Bank’s official then executed, on behalf of the trust, a note payable to Bank in 90 days. The commercial loan department of Bank made the loan and the amount requested by plaintiff was then delivered to her. The same procedure was followed on subsequent occasions when plaintiff made known her need for additional money. The notes in question bore interest at a rate of approximately 7¼% annually. When the notes matured, money was drawn from the trust estate for the purpose of paying to Bank the principal and interest on such notes.

At no time was plaintiff told that it was impossible for her to withdraw any part of the trust estate at the time that she requested cash. The only explanation given her for following the borrowing procedure described in the preceding paragraph was that, since her money was earning in excess of 11% annually, it would be in her best interest to borrow money at a lower interest rate rather than withdraw funds from the trust estate.

On March 19, 1973, by telephone, and on March 20, by letter, plaintiff informed Bank that she wished to terminate the trust. By letter to plaintiff dated March 20,1973, Bank informed plaintiff that since the trust funds had been invested in Bank’s common stock fund, and since the “ . Common Stock Fund ... is valued quarterly at the end of February, May, August and November,” funds would not be available for distribution to plaintiff until “ . . . shortly after June 15, 1973.” The letter recited that the value of the trust estate was then $58,124.65. This amount represented the original investment plus earnings, less certain deductions, including withdrawals which had been made from the common stock fund in order to repay the notes representing money lent to the trust by Bank.

On June 18, 1973, Bank paid to plaintiff, by check, the amount of $51,560.21, representing the value of the trust estate as of the end of May 1973. The decrease in value between March 20, 1973, and June 18, 1973, the date of distribution, resulted from a decrease in the value of the stocks and securities held by Bank in the common stock fund.

The Uniform Common Trust Fund Act, adopted in Texas in 1947 and incorporated into the Texas Trust Act in 1969 (Tex.Rev. Civ.Stat.Ann. arts. 7425b-48, 7425b — 48a), permits any bank or trust company qualified to act as a fiduciary in Texas to establish a common trust fund for the purpose of furnishing investment to itself as fiduciary, or to itself and others as cofiduciaries, and to invest funds lawfully held by it in such common trust fund if such investment is not prohibited by the instrument creating the fiduciary relationship. Applicable federal regulations permit national banks to establish and maintain such common trust funds, designated in the regulations sometimes as “collective investment” funds. 12 CFR § 9.18, pp. 208-11 (1975).

The applicable regulation relied on by Bank is § 9.18(4) which reads as follows:

Not less frequently than once during each period of 3 months a bank administering a collective investment fund shall determine the value of the assets in the fund as of the date set for the valuation of assets. No participation shall be admitted to or withdrawn from the fund except (i) on the basis of such valuation and (ii) as of such valuation date. No participation shall be admitted to or withdrawn from the fund unless a written request for or notice of intention of taking such action shall have been entered on or before the valuation date in the fiduciary records of the bank and approved in such manner as the board of directors shall prescribe. No requests or notice may be canceled or countermanded after the valuation date.

The common trust fund maintained by Bank was evaluated every three months at the end of February, May, August, and November. Therefore, since plaintiff’s request for termination of the trust was not received by Bank until March 19, which was after the February valuation date, it was impossible for Bank to withdraw plaintiff’s participation in the common trust fund until the next evaluation date at the end of May.

Under the trust agreement, Bank was granted all “. . . rights, privileges, and powers now or hereafter granted Trustees under the Texas Trust Act and the laws of Texas.” This, of course, includes the power under the Uniform Common Trust Fund Act, to establish and maintain a common trust fund and to invest in such fund money held by Bank as trustee.

In the agreement plaintiff reserved the right to revoke the trust entirely and “to receive from the Trustee all of the Trust Estate remaining after payment, or provision for payment, of all expenses connected with the administration of this Trust to the date of revocation.” She also reserved the right to withdraw all or any part of the trust estate from time to time.

It is plaintiff’s contention that by investing her money in the common trust fund Bank incapacitated itself from complying with its duty to deliver to her, upon her revocation of the trust, all of the trust estate remaining after payment, or provision for payment, of all expenses connected with the administration of the trust at the date of revocation.

We do not agree that the free right of revocation retained by plaintiff can be construed as a prohibition “in the instrument creating the fiduciary relationship” against investment of her trust funds in the common trust by Bank. Under our Trust Act, every trust is revocable by the trustor during his lifetime, “ . . . unless expressly made irrevocable by the terms of the instrument . . . ” creating the trust or by a supplement or amendment to such instrument. Tex.Rev.Civ.Stat.Ann. arts. 7425b-41. If the existence of a power of revocation has the effect of prohibiting investment by a fiduciary bank of trust funds in common trust funds, the result would be to limit such investment to cases involving irrevocable trust. Therefore, the investment by Bank of plaintiffs funds in the common trust fund did not constitute a breach by Bank of its fiduciary duties.

However, it is well settled that a trustee owes a duty to give to the beneficiary upon request complete and accurate information as to the administration of the trust. 2 Scott, Trusts § 173 (3d. ed. 1967). Here, there was no specific request for information by plaintiff concerning the nature of the investment of the trust funds made by Bank. However, her initial request to withdraw funds from the trust estate clearly indicated that she was unaware of the restrictions on withdrawal resulting from investment in the common trust fund. Bank, instead of communicating the actual facts to plaintiff, chose to tell her that prudent management of the trust estate dictated that she should borrow money from Bank instead of withdrawing a portion of the trust estate. Under all the circumstances, this explanation had the effect of concealing from plaintiff vital information concerning her rights in the trust fund. The explanation actually furnished plaintiff, while, perhaps, constituting sound advice, would support a factual conclusion that the Bank failed, under the circumstances, to make a frank and dull disclosure of all the information which it had. 5 Bo-gert, Trusts and Trustees § 544, p. 621 (2d ed. 1960).

Here, the result of the initial failure to make a full disclosure resulted in a series of loans by Bank, as a lending institution, to itself, as trustee, with both principal and interest to be paid out of funds of the trust estate. The net result, a benefit to Bank in its role as a lending institution. Stated differently, the situation is one in which the fiduciary suggested that the trust borrow from the fiduciary, and, in making such suggestion, withheld facts of which the beneficiary was ignorant. It cannot be said that, as a matter of law, under the facts and circumstances of this case as reflected in plaintiff’s testimony, Bank did not breach its duty to deal fairly with plaintiff and to communicate to her all material facts in connection with the loan transactions which Bank, as trustee, knew. 1 Restatement, Trusts 2d, § 170(2), § 173, comment (d)(1959).

Since the evidence, when viewed in the light most favorable to plaintiff, the opponent of the motion for instructed verdict, was sufficient to raise an issue of fact, the trial court erred in instructing a verdict in favor of defendant.

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


author: COLEMAN, Chief Justice.

text:
    The CITY OF GALVESTON, Appellant, v. Leroy C. "Buster” LANDRUM et al., Appellees.
    No. 16615.
    Court of Civil Appeals of Texas, Houston (1st Dist.).
    Jan. 22, 1976.
    Rehearing Denied Feb. 19, 1976.
    Robert V. Shattuck, Jr., City Atty., Galveston, for appellant.
    Richard Thornton, Galveston, for appel-lees.
   COLEMAN, Chief Justice.

This is an appeal from a declaratory judgment involving the interpretation and application of V.A.C.S. Art. 1269m, Sec. 26 that provides for payment of accumulated sick leave to policemen and firemen who leave the classified service of a city subject to said law. The facts were stipulated. After interpreting the statute in question, the trial court awarded judgment to the plaintiffs, policemen, requiring the City to pay to them the entire amount due for all accumulated sick leave.

Both plaintiffs were employed by the Galveston Police Department and were retired on their 65th birthdays as required by the charter and ordinances of said City. Appellee Landrum had accumulated 252 days of sick leave. Appellee Devries had accumulated 113.75 days of sick leave. On the date they were required to retire, both men were physically able to perform their duties in the Police Department.

At the time of their retirement, V.A.C.S. Art. 1269m, Sec. 26, provided:

“Sec. 26. Permanent and temporary employees in the classified service shall be allowed a total of sick leave with full pay computed upon a basis of one and one-fourth (1¼) full working days allowed for each full month employed in a calendar year, so as to total fifteen (15) working days to an employee’s credit each twelve (12) months.
“Employees shall be allowed to accumulate fifteen (15) working days of sick leave with pay in one (1) calendar year.
“Sick leave with pay may be accumulated without limit and may be used while an employee is unable to work because of any bona fide illness .
“In the event that a Fireman or Policeman for any reason leaves the classified service, he shall receive, in a lump sum payment, the full amount of his salary for the period of his accumulated sick leave, provided that such payment shall not be based upon more than ninety (90) working days of accumulated sick leave. Provided, that in order to facilitate the settlement of the accounts of deceased employees of the Fire or Police Departments, all unpaid compensation due such employee at the time of his death shall be paid to the person or persons surviving at the date of death . . .”

The policemen took the position that the statutory limitation of 90 days’ payment of accumulated sick leave was intended to be applicable only to those who voluntarily terminated their employment with the Police Department. They alleged that they were involuntarily terminated and were entitled to be paid for the total number of sick leave days they had accumulated. The City tendered only payment for 90 days accumulated sick leave.

The trial court’s judgment provided:

“It is, therefore ORDERED, ADJUDGED AND DECREED, and the Court so declares, that Article 1269(m), Section 26, Revised Civil Statutes of the State of Texas, as amended, shall be, and it hereby is, declared to mean that the words ‘leave for any reason’ means voluntary leaving, without compulsion, to abandon, to forsake, or desert, and does not mean, and shall not mean, leaving for involuntary, compulsory or mandatory reasons such as mandatory age retirement of 65 years;
“It is, therefore, ORDERED, ADJUDGED AND DECREED that the limitations of 90 days total accrued sick leave as set forth in the aforedescribed Article 1269(m), Section 26, shall not, and do not, apply to anyone who is forced into involuntary retirement by reasons of age;

In accordance with this interpretation of the statute judgment was rendered in favor of the plaintiffs and against the City for the total number of sick leave days the plaintiffs had accumulated.

The interpretation decreed by the court was made in reliance upon the case of Fort Worth v. Bostick, 479 S.W.2d 350 (Tex.Civ.App.—Fort Worth, 1972, writ ref’d n. r. e.). In Bostick, a 64-year old fireman was involuntarily retired because he was permanently and totally disabled as a result of illness. At the time of his retirement, he had accumulated 205 days of sick leave, but the City of Fort Worth paid him for only 90 of those days. The basic issue considered by the court was whether the provisions of Art. 1269m, Sec. 26, permitting unlimited use of accumulated sick leave with pay where an employee is unable to work because of a bona fide illness conflicted with the provision of the Act limiting payment upon leaving employment to 90 days. The court held that statutory provisions should be construed in such a way as to reconcile conflicting provisions if possible. The court cited substantial authority from other jurisdictions in support of its conclusion that the word “leave”, as used in the statute, refers to a “voluntary termination” or a “voluntary quitting” of the employment. The court then held that the 90-day limit does not apply to those who, at the time of leaving employment, are sick and disabled and desire to use all of their accumulated sick leave before retirement.

The court also held that the provision in the statute stating: “Sick leave with pay may be accumulated without limit and may be used while an employee is unable to work because of any bona fide illness . ” gave the fireman the right to use such sick leave during times that the fireman is unable to work because of any bona fide illness. The court found a potential conflict between this provision of the law and the subsequent provision limiting the payment to a fireman who for any reason leaves a classified service to a total of 90 working days of accumulated sick leave, if such fireman could be involuntarily retired while ill and unable to work. The court then held:

“The first paragraph quoted above of Section 26, Art. 1269m, gave Bostick, under the facts of this case, the right, since he was sick, to use all of his accumulated sick leave, as he wished to do before being retired . . .”

The court further held that a city ordinance which might be construed to give the city the right to retire a fireman who was totally and permanently disabled from fulfilling his duties invalid insofar as it conflicted with the provision of Art. 1269m giving the fireman the right to use all of his accumulated sick leave with pay without limit while unable to work because of a bona fide illness. We think this latter holding is sufficient to sustain the judgment of the Court of Civil Appeals.

The primary rule of construction of statutes is to ascertain and declare the intention of the legislature and to carry such intention into effect to the fullest degree. 73 Am.Jur.2d, Statutes, Sec. 145, p. 351. The same text declares that the proper course in all cases is to adopt that sense of the words which promotes in the fullest manner the policy of the legislature in the enactment of the law and to avoid a construction which would alter or defeat that policy. Ibid. Sec. 153, p. 356.

All parts of a legislative act should be given effect and reconciled if it is reasonably possible to do so. Martin v. Sheppard, 129 Tex. 110, 102 S.W.2d 1036 (1937).

Section 53 of Article 3 of the Constitution of the State of Texas provides that the legislature shall have no power to grant, or to authorize any municipal authority to grant, any extra compensation, fee or allowance to a public officer, agent, servant or contractor, after service has been rendered, or a contract has been entered into and performed in whole or in part. Unless Article 1269m, Sec. 26, be construed to authorize payment to one who has been terminated from his position in the classified service involuntarily, as by enforced retirement by reason of age, death, or dismissal for cause, there is no provision in the statute under consideration for payment of any sum to such person. We would not think that the legislature intended to allow payment of accumulated sick leave to persons voluntarily leaving the classified service but not to those who are required to leave for such reasons. Clearly, the words “for any reason leaves the classified service” may be construed to mean “leaves the classified service, whether voluntarily or involuntarily.” This construction effectuates the intent of the legislature and is the proper construction of the statute.

If we adopt the reasoning of the court in Bostick that a city cannot terminate an employee who is sick and desires to use accumulated sick leave until it is fully used, there is no conflict within the statute and a fair and reasonable result is reached. The provisions of Article 1269m must be considered as a part of the contracts of employment between the city and its firemen. The payment of accumulated sick leave after retirement is not, therefore, the payment of extra compensation after service has been rendered. City of Orange v. Chance, 325 S.W.2d 838 (Tex.Civ.App.—Beaumont, 1959, no writ history).

The plaintiffs have stipulated that they have received payment for 90 days accumulated sick leave. The judgment of the trial court is reversed and judgment is here rendered that plaintiffs take nothing by their suit.


author: PEDEN, Justice.

text:
    Phil P. MOSS et al., Appellants, v. METROPOLITAN NATIONAL BANK OF HOUSTON, Texas, Appellee.
    No. 16616.
    Court of Civil Appeals of Texas, Houston (1st Dist.).
    Jan. 22, 1976.
    Rehearing Denied Feb. 19, 1976.

      Sheinfeld, Maley & Kay, Larry L. Evans, Houston, for appellants.
    Hutcheson & Grundy, Thomas T. Hutche-son, Houston, for appellee.
   PEDEN, Justice.

This is an appeal from the granting of a summary judgment in favor of Metropolitan National Bank on its suit on two promissory notes. Defendants Phil P. Moss and Arthur Moss had filed a defensive pleading alleging usury.

We review the bank’s petition. It states that on or about July 26, 1974, Phil P. Moss executed and delivered to appellee a promissory note for $30,000 bearing ten per cent interest. It was due on demand or, if no demand was made, on or before October 19, 1975, and provided that it was to be reduced every ninety days by payment of $6,000 plus accrued interest. On December 2, 1974, although he was in default, he made some payments. On February 10, 1975, the bank made a written demand for payment of the principal and interest due, but Phil Moss failed and refused to pay, and as of March 26,1975, the balance due on this note was $22,100.31. The bank’s petition also alleged that on or about December 12, 1974, Phil P. Moss and Arthur Moss executed and delivered to the bank a promissory note for $22,500.00 bearing interest at ten per cent. This note was due on demand or, if no demand was made, on or before January 26, 1975. On February 10, 1975, the bank also made a written demand for payment of the principal and interest due on this note, but the appellants failed and refused to pay it.

The Mosses initially answered the bank’s suit by a general denial. The bank filed a motion for summary judgment with a supporting affidavit sworn to by Mr. Joseph S. Bracewell, executive vice president of Metropolitan National Bank. Although his affidavit contains mixed statements of facts and conclusions of law, there are enough factual statements to support the motion for summary judgment.

Appellants responded by filing a sworn answer setting up a counterclaim for usury, and Phil P. Moss filed this affidavit in opposition to the bank’s motion for summary judgment:

“Metropolitan National Bank, Affiant, and Arthur Moss entered into a loan agreement in 1974 whereby Affiant and Arthur Moss executed promissory notes payable to Metropolitan National Bank, with interest stated on the face of the promissory notes of ten (10%) percent per annum. In addition to the stated rate of interest of ten (10%) percent per annum, a further consideration and charge for the loans by Metropolitan National Bank was the agreement by Affiant and Arthur Moss to place a compensating balance in the amount of Fifty Thousand and No/100 ($50,000.00) in Metropolitan National Bank. Metropolitan National Bank required as a condition to making the loans Affiant’s and Arthur Moss’ agreement to place in Metropolitan National Bank the $50,000.00 compensating balance.
“Due to the inability of Affiant and Arthur Moss to provide a $50,000.00 compensating balance, Affiant and Arthur Moss paid three (3) other parties One Thousand Two Hundred Fifty and No/100 ($1,250.00) Dollars to make a $50,-000.00 deposit in Metropolitan National Bank. This compensating balance was purchased by Affiant and Arthur Moss and a $50,000.00 Certificate of Deposit was placed in Metropolitan National Bank on December 18, 1974, for a period of six (6) months. The purchase of the compensating balance and the depositing thereof in Metropolitan National Bank was pursuant to the requirement and condition set by Metropolitan National Bank as a part of the loan agreement between Metropolitan National Bank and Affiant and Arthur Moss.”

The appellants’ first three points of error are that the trial court erred 1) in granting a summary judgment to the bank on the whole case in that the summary judgment proof raised material issues of fact and the bank failed to negate the existence of material fact issues as to the appellants’ counterclaim, 2) in finding that the appellants’ counterclaim raised no material issues of fact, and 3) in finding that the facts contained in their affidavit in opposition to the motion for summary judgment established as a matter of law that the bank has not contracted for, charged, or received usurious interest. The appellants do not challenge the bank’s claim as to the validity of the notes but rely solely on their pleading of usury.

They seek to impose the penalties for usury provided in Arts. 5069-1.01 — 1.04, 1.06, Vernon’s Texas Civil Statutes. Sec. 1.06 provides in part:

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

Interest is defined in Art. 5069-1.01(a) as the compensation allowed by law for the use or forbearance or detention of money; provided however, this term shall not include any time price differential however denominated arising out of a credit sale.

The appellants raised their usury plea in their amended answer, labeling it as a further answer and as a counterclaim. There is nothing in the record to indicate that by raising the affirmative defense of usury the appellants can do more than assert an offset against the bank’s recovery on the notes.

The “pleading of an affirmative defense will not, in itself, defeat a motion for summary judgment by a plaintiff whose proof conclusively establishes his right to an instructed verdict if no proof were offered by his adversary in a conventional trial on the merits.” Nichols v. Smith, 507 S.W.2d 518 (Tex.1974). “There is one situation where the opponent of a summary judgment motion must come forward himself to raise a fact issue by proof rather than allegation, the movant having presented no proof on the issue, and that is to support the nonmovant’s own affirmative defense.” Gulf, Colorado & Santa Fe Ry. v. McBride, 159 Tex. 442, 322 S.W.2d 492 (1958).

One who uses the defense of usury in a suit on a note that does not call for usurious interest on its face has the obligation to establish that there was a corrupt agreement or scheme to cover usury and that such agreement or scheme was in full contemplation of the parties. Richards v. Moody, 422 S.W.2d 200 (Tex.Civ.App.1967, writ ref. n. r. e.). In our case the appellants concede, and the judgment recites that the parties to this suit have stipulated that the “three other parties” who received $1,250 to supply the $50,000 compensating balance were not agents of the bank. Generally, where the lender does not receive the service charge paid for third parties to make a compensating balance deposit, such charge does not constitute interest. Commerce Savings Association of Brazoria County v. GGE Management Co., (Tex.Civ.App.1975, opinion filed December 31, 1975).

In our case the appellants have neither alleged nor submitted competent summary judgment proof that the parties entered a corrupt agreement or scheme to cover usury.

In their fourth point of error the appellants complain about the granting of “reasonable” attorney’s fees on the promissory notes in the summary judgment proceeding in point of error, saying that there was no competent summary judgment proof on attorney’s fees or their reasonableness. Both notes contained the following provision:

“And in the event of default in the payment of this note at maturity and it is placed in the hands of an attorney for collection, or suit is brought on same, then an additional reasonable amount of not less than ten per cent on the principal and interest of this note shall be added to the same as collection fees.”

In summary judgment proceedings on promissory notes, the holder is prima facie entitled to recover the amount certain stipulated herein for attorney’s fees when the note is in default. Kuper v. Schmidt, 161 Tex. 189, 338 S.W.2d 948 (1960). The notes in this case provide for a minimum percentage of ten per cent, which was granted by the trial court. We find no error.

Affirmed.