author: AKIN, Justice.

text:
    HANSON SOUTHWEST CORPORATION and Hanson Development Company, Appellants, v. DAL-MAC CONSTRUCTION COMPANY, Appellee.
    No. 19008.
    Court of Civil Appeals of Texas, Dallas.
    March 30, 1977.
    Rehearing Denied July 6, 1977.

      Joel Held, Simon, Twombly & Held, L. Vance Stanton, Strother, Davis, Stanton & Levy, Dallas, for appellants.
    Robert H. Thomas, Strasburger & Price, Dallas, for appellee.
   AKIN, Justice.

Hanson Southwest Corporation and Hanson Development Company appeal from an adverse judgment rendered in favor of Dal-Mac Construction Company for damages allegedly arising from the breach of a construction contract. The contract was between Dal-Mac and Hanson Southwest for the construction of a shopping center known as Masters Village. Dal-Mac worked on the center for approximately two and one-half months, but stopped because it had not been paid. Dal-Mac then sued Hanson Southwest on the contract and its parent corporation, Hanson Development, on an alter-ego theory. Acting on a jury verdict, the trial court rendered judgment against both defendants jointly and severally for $422,504.36, plus $87,500.00 in attorneys’ fees. Both defendants appeal. Because we hold that the jury findings and the evidence fail to support a judgment against the parent corporation, we reverse and render with respect to Hanson Development. Because we also hold that attorneys’ fees are not recoverable on the contract, we likewise reverse and render with respect to the recovery of attorneys’ fees allowed by the trial court. With respect to the claim of Dal-Mac against Hanson Southwest, we reverse and remand for a new trial because the damages awarded are unsupported by evidence.

Alter Ego

Dal-Mac asserts, and the jury found, that Hanson Southwest was the alter ego of Hanson Development and, therefore, liable to it in damages resulting from Dal-Mac’s contract with Hanson Southwest. To support the findings with respect to alter ego, Dal-Mac relies on Hanson Development’s guaranty of the purchase-money loan for the site, Hanson Development’s control of the flow of funds to Hanson Southwest, Hanson Development’s ownership of all of the stock of Hanson Southwest, and representations made to third parties that Masters Village was owned by Hanson Development or by the “Hanson Companies” (an umbrella term used to refer to a number of related companies, although no legal entity by that name exists). We cannot agree that these factors, even if established, make Hanson Southwest the alter ego of Hanson Development. There must be some ground in addition to mere unity of financial interest, ownership, and control for a court to treat them as one in law and make each responsible for the torts and contracts of the other. That additional ground turns on whether there was good faith and honesty in the use of a subsidiary corporate entity for legitimate ends. Generally, it is determined by whether the subsidiary corporate entity is so controlled and manipulated by the parent for the parent’s own interests that it prejudices innocent third parties or is in contravention of the public welfare. See State v. Swift & Co., 187 S.W.2d 127, 133-34 (Tex.Civ.App.—Austin 1945, writ ref’d); Pelletier, Corporations, Annual Survey of Texas Law, 21 S.W.L.J. 134, 141-42 (1967); Ballantine, Parent and Subsidiary Corporations, 14 Cal.L.Rev. 12, 19 (1926). The general rule is that courts will not disregard separate legal entities because of identity of ownership, directors and officers unless the purpose of the relationship is to defeat public convenience, protect fraud, defend crime, or justify wrongs, such as violation of anti-trust laws. Bell Oil & Gas Co. v. Allied Chemical Corp., 431 S.W.2d 336, 339 (Tex.1968).

Much confusion exists in determining the criteria for disregarding the corporate entity. This confusion exists partially because of the words used to describe the condition. Courts have used such terms as “dummy,” “sham,” “instrumentality,” “agency,” “adj'unct,” “tool,” “device,” and “business conduit,” to name a few. What these words mean relative to the fact situation of the case is elusive. As Mr. Justice Cardozo, then Associate Judge of the New York Court of Appeals, observed in Berkey v. Third Ave. Ry. Co., 244 N.Y. 84, 155 N.E. 58, 61 (1926):

The whole problem of the relation between parent and subsidiary corporations is one that is still enveloped in the mists of metaphor. Metaphors in law are to be narrowly watched, for starting as devices to liberate thought, they end often by enslaving it. We say at times that the corporate entity will be ignored when the parent corporation operates a business through a subsidiary which is characterized as an “alias” or a “dummy.” All of this is well enough if the picturesqueness of the epithets does not lead us to forget that the essential term to be defined is the act of operation. Dominion may be so complete, interference so obstrusive, that by the general rules of agency the parent will be a principal and the subsidiary an agent. Where control is less than this, we are remitted to the tests of honesty and justice. Ballantine, Parent and Subsidiary Corporations, 14 Cal.L.Rev. 12, 18, 19, 20. The logical consistency of a juridical conception will indeed be sacrificed at times, when the sacrifice is essential to the end that some accepted public policy may be defended or upheld. This is so, for illustration, though agency in any proper sense is lacking where the attempted separation between parent and subsidiary will work a fraud upon the law . . At such times unity is ascribed to parts which, at least for many purposes, retain an independent life, for the reason that only thus can we overcome a perversion of the privilege to do business in a corporate form, [emphasis added]

The problem as delineated by Justice Cardozo is as troublesome today as then because of the metaphors used by our courts to describe the act or acts necessary to trigger the application of alter ego. Courts have generally been less reluctant to disregard the corporate entity in tort cases than in cases of contract because the injured party in contract cases had the opportunity to select the entity with whom he contracted; in a tort case, no such selection is made by a plaintiff. Gentry v. Credit Plan Corp. of Houston, 528 S.W.2d 571, 573 (Tex.1975). Because Dal-Mac’s contract with the subsidiary, Hanson Southwest, is the basis of the claim against the parent, Hanson Development, our further consideration of the alter-ego doctrine will be limited to the more stringent standards applied to contracts. In Bell Oil & Gas Co., at 340, Justice Norvell quoted from Douglas and Shanks, Insulation from Liability Through Subsidiary Corporation, 39 Yale L.J. 193, 210-11 (1929), the following:

The attempt to hold a parent corporation where the claim asserted is of contractual origin presents added difficulties. The very reasonable question must be met and answered why one contracted with the subsidiary and received the promise which he bargained for but who has been disappointed in the fulfillment by the subsidiary of its commitment should then be allowed to look to the parent. As a matter of contract right it is evident he may not. Additional compelling facts must appear.

Justice Norvell also observed that it is difficult, if not impossible, to put these “additional compelling facts” in the form of a “laundry list.” Bell Oil & Gas Co. at 340: see 1 Hildebrand, Texas Corporations § 5 at 43 (1942). Generally, courts find these “additional compelling facts” in cases where the plaintiff has acted to his detriment upon representations made by officers of the parent corporation concerning control and ownership of the subsidiary and the payment of its debts. See 39 Yale L.J. at 211.

Since Dal-Mac cannot hold Hanson Development on its contract with Hanson Southwest merely because it owns and controls the subsidiary, we must review the evidence to ascertain if additional compelling facts exist so as to justify ignoring the corporate entity of Hanson Southwest and to hold Hanson Development liable. Virtually all of the negotiations leading to the contract were between Dal-Mac’s chief executive officer, Herbert McJunkin, and Hanson Southwest’s Vice President, John Notestine. Notestine originally introduced himself as being with the “Hanson Companies.” No-testine was, in fact, an officer of Hanson Southwest only. Notestine also furnished McJunkin with copies of “Topics,” a publication of the “Hanson Companies” directed to potential shopping-center tenants. This publication listed centers as being operated by the “Hanson Companies” regardless of which of several related corporations actually owned the center. McJunkin testified that, prior to execution of the contract, he attempted to obtain a credit report on Hanson Southwest through his bank, but was told that no reports were available. Fearing that Hanson Southwest might be a “shell” corporation, he requested that the contract be guarantied by the Hanson brothers personally or by Hanson Development, but he never received a guaranty. McJunkin admitted that he was told that he would not receive a personal guaranty from the Hanson brothers prior to execution of the contract on May 30, but was uncertain whether he was told that he would not receive a Hanson Development guaranty. At a meeting with Notestine on June 25, McJunkin was told that a “financial assurance” (either a Hanson Development guaranty or a copy of a loan commitment) was in the mail. Despite never receiving this assurance, Dal-Mac continued construction until August 12.

Under these facts, Dal-Mac has not answered Professor Shank’s question of why the claimant who contracted with the subsidiary and is disappointed should be permitted recovery from the parent. Dal-Mac entered into the contract with Hanson Southwest realizing that it might not be financially sound and despite fruitless efforts to obtain a guaranty from the parent company. Although efforts to secure Dal-Mac’s position failed, Dal-Mac relies upon Notestine’s representation of June 25 that a “financial assurance” was in the mail. Since Notestine was not an officer of Hanson Development, this representation, even if false when made, is of no avail to Dal-Mac in its attempt to hold Hanson Development liable on the contract. Furthermore, this representation that “financial assurance was in the mail” is not tantamount to a representation that Hanson Development would be financially responsible for the project since a loan commitment would have been a financial assurance which would not have obligated Hanson Development. Finally, this representation was made after Dal-Mac had entered into the contract and had begun performance. Consequently, this is not an “additional compelling fact” justifying imposition of liability on Hanson Development.

The authorities referred to above establish that courts will not disregard a corporate entity unless it is employed to defraud existing creditors of the shareholder, to evade an existing obligation, to circumvent a statute, to achieve or perpetuate a monopoly or to protect crimes. None of these extraordinary situations exists here to justify disregarding Hanson Southwest’s separate corporate entity. We reverse, therefore, the judgment of the trial court with respect to Hanson Development and render judgment that Dal-Mac recover nothing from Hanson Development.

Agency Theory

Although the agency theory was pleaded as a part of alter ego, and apparently submitted as such, Dal-Mac now argues that Hanson Development’s liability on the contract is established because the jury found that Hanson Southwest was the agent of Hanson Development in its dealings with Dal-Mac. We cannot agree. The evidence here is insufficient to support a true principal-agent relationship so as to hold Hanson Development liable on the contract of its subsidiary. The general rule is that one who deals with an agent has the burden of proving the authority of the agent. Buchoz v. Klein, 143 Tex. 284, 184 S.W.2d 271 (1944). The power of a corporate agent to bind the corporation depends upon the authority conferred by the bylaws, charter, and resolutions of the directors, as well as the general rules governing the relation of principal and agent. This relationship may be established by the express authority of the principal or by implied authority. Since there is no evidence here to show any express authority of Hanson Southwest to act as the agent for Hanson Development, the question then turns on whether Hanson Development impliedly granted Hanson Southwest authority. To determine this we must again look to the facts. Prior to contracting with Hanson Southwest, Dal-Mac knew that it was one of the “Hanson Companies,” but also knew that it was not Hanson Development. Dal-Mac was also aware that Hanson Development had a substantial net worth, but that no financial report on Hanson Southwest was available. Prior to contracting, Dal-Mac attempted to obtain a guaranty from Hanson Development without success. Nevertheless, it proceeded to contract with Hanson Southwest alone. Under these facts, the law will not imply a principal-agent relationship for the purpose of binding the parent because there was no evidence tending to show that Hanson Development consented to Hanson Southwest’s acting as its agent in signing the contract. Indeed, the evidence is to the contrary. Nor is this a situation in which the subsidiary was cloaked with the apparent authority of the parent since Dal-Mac was obviously aware that Hanson Southwest was acting on its own behalf.

Contractual Liability of Hanson Southwest

After commencing work, Dal-Mac submitted four “draw requests” to Notestine for payment for work performed and materials supplied during construction, but never received payment from Hanson Southwest. Hanson Southwest now asserts numerous grounds as to why the contract should not be enforced against it. Most of these grounds assert that Dal-Mac has failed to comply with conditions precedent set forth in the contract.

Hanson Southwest first contends that payment of the monthly draw requests was conditioned upon approval by an inspecting architect and that since an architect’s approval was never obtained by Dal-Mac, Dal-Mac is not entitled to payment pursuant to the contract. On the other hand, Dal-Mac argues that approval by an inspecting architect was necessary only if Hanson Southwest obtained financing through a lender who required approval by an architect. The contract provides:

4. The Contractor shall .
(b) Provide the on-site inspections of a licensed architect acceptable to the Owner and the mortgage lenders for the purpose of examination of the progress of the work and its adherence to the contract documents and for the certification of trade breakdowns if required by the construction and/or permanent lender.
6. The Contractor shall submit monthly statements to the Owner for work performed and in place at the site as of the 25th day of each month, setting forth in detail the various percentages of completion of the work. Within twenty (20) days after its receipt of each monthly statement, the Owner shall pay directly to the Contractor the appropriate amounts for which request for payment is made therein, less 10% to be retained by the Owner until final settlement. Upon substantial completion, retainage to be reduced to 5% of the contract amount.
Said progress payments shall be made to the Contractor in accordance with certificates of approval by the architect and the lending institution from which construction funds are to be obtained. The Contractor agrees to be bound by and accept the reasonable estimate of said architect as to the quantity and quality of the work performed.
In the event the Owner wishes to object to the reasonableness of the payment of work approved by the architect, it shall do so in writing within 96 hours of receipt of the architect’s certificate. Owner may then withhold from regular progress payments an amount equal to the difference between the value as established by the architect and the value as established by Owner. The dispute shall then be submitted to arbitration, . for final determination and the Contractor shall continue with the work during arbitration, [emphasis added]

The “General Notes,” attached to and made a part of the contract, provide:

Construction Cost Breakdown:
Allowance for Architectural Supervision, if required $10,853
Variations to Drawings & Specifications:
4. No additional architectural or engineering fee included except allowance for supervision of construction if required by mortgage lender, [emphasis added]

An elementary rule of contract construction requires us to construe the entire contract in such a manner that the various provisions are harmonious, not repugnant, if possible. Myers v. Gulf Coast Minerals Management Corp., 361 S.W.2d 193, 197 (Tex.1962). The construction cost breakdown contained in the “General Notes” consists of four categories: general construction (including buildings and bond premium), sprinkler systems, architectural supervision allowance and utilities construction. The sole reference to funds allocated for architectural supervision or inspection is expressly conditioned upon this inspection being required by some party. The notation under “Variations” clarifies that it is the mortgage lender who can require architectural supervision. Thus, as we read the contract, approval of the draw requests by an inspecting architect is necessary only if Hanson Southwest obtained financing through a lender and the lender required an architect’s approval. Absent such requirement, submission of the draw requests for payment and any objection by the owner to the amounts would be governed by other provisions in the contract; approval by an architect or lender would not be necessary. To construe the contract as Hanson Southwest advocates would render the language “if required” meaningless because an architect’s inspection would be absolutely required despite the fact that the requirement is referred to in the contract as conditional.

The next condition precedent asserted is that a construction loan would be obtained by Hanson Southwest before DalMac would be paid. In support of this contention, Hanson Southwest relies upon two contract provisions:

4. The Contractor shall provide .
(b) . . . the on-site inspections of a licensed architect acceptable to the Owner and the mortgage lenders .
6. . Said progress payments shall be made to the Contractor and the lending institution from which construction funds are to be obtained.

Thus, it is clear that the contract contemplates that a construction loan will be obtained. Whether a clause constitutes a condition precedent, however, must be determined from the contract as a whole and the surrounding circumstances; conditions are not favored, and a clause will be construed as a covenant only if it is reasonably subject to that interpretation. Hohenberg Bros. Co. v. George E. Gibbons & Co., 537 S.W.2d 1, 3 (Tex.1976). These clauses are subject to the interpretation that they are references to the anticipated source of funds and are merely designed to set out Dal-Mac’s responsibilities to the lender once a loan is obtained. This is especially true in view of Hanson Southwest’s instructions to Dal-Mac to secure a building permit and to order critical materials since Dal-Mac’s time for completion of the contract began to run as soon as the building permit was obtained.

Hanson Southwest next argues that its approval of all major subcontractors and purchase orders, which was not obtained, was likewise a condition precedent. In this respect, they rely upon paragraph eight of the contract, which provides:

Prior to the letting of any major subcontract or the granting of any purchase order, the Contractor will submit the same for Owner’s review. Owner may recommend a substitution for any subcontractor or purchase order, which recommendation shall not be binding upon the Contractor.

We fail to see how a provision giving the owner an opportunity to recommend subcontractors can be construed as a condition precedent to payment under the rule stated in Hohenberg Bros., when the contractor is free to disregard any recommendations so made.

The last condition precedent asserted is that Dal-Mac was required to furnish a subordination of its mechanic’s lien interest with each draw request. The contract provides in paragraph seven:

The Contractor agrees that, simultaneously with any requisition for payment, it will deliver to the Owner a fully executed and acknowledged form, whereby any mechanics lien interest it may have shall be subordinate to the construction mortgage to the extent of the amount of the moneys received.

We need not pass on whether this is a condition or a covenant because no construction mortgage existed. Indeed, the lack of a construction mortgage precipitated this controversy.

Hanson Southwest also attacks the jury finding that an officer of Hanson Southwest authorized Dal-Mac to begin construction on the ground that there is insufficient evidence to support it. It concludes, therefore, that Dal-Mac was not entitled to recover because no such authorization to commence was given. We cannot agree. As noted supra, Notestine expressly authorized Dal-Mac to order critical materials and to secure the building permit, from which the jury could infer that Dal-Mac was authorized to commence construction since the contract provided that the time for construction started as soon as the building permit was obtained. Additionally, a letter from Notestine to an officer of Hanson Development, dated June 7, states that Notestine had authorized construction to begin. Although this letter was admitted without objection, Hanson Southwest now contends that it is hearsay and is of no probative value. We cannot agree because the letter was written by an officer of Hanson Southwest and is, consequently, admissible as an admission. We conclude, therefore, that this jury finding is amply supported by evidence.

Since we have concluded that Hanson Southwest’s attacks are without merit with respect to its liability under the contract with Dal-Mac, Dal-Mac is entitled to recovery on the contract if the damages found by the jury have support in evidence. We turn, therefore, to Hanson’s contentions concerning the admissibility of evidence to support the findings on damages.

Damages

The only special issue relating to damages was as follows:

. what do you find to be the fair and reasonable cash value, if any, in Dallas, Texas, of the services performed and the labor and materials furnished or ordered by Dal-Mac on the Master Village project?
Answer: $422,504.36.

Hanson objected to the issue on the ground that this measure of damage is one of quantum meruit rather than contract. On the other hand, Dal-Mac maintains that although its action is solely grounded in contract, the special issue is phrased in the manner required by paragraph 29 of the contract. We cannot agree with Dal-Mac’s contention. That provision provides:

29. . . .
In the event of the termination of the within agreement due to the fault of the Contractor . . ., the Owner may . complete the work ... in a commercially reasonable manner. .
In the event that the unpaid balance of the contract price and extras due Contractor exceed the reasonable expenses paid by the Owner, the difference shall . be paid by the Owner to the Contractor; if such reasonable expenses paid by the Owner exceed the balance due Contractor, the difference shall . be paid by the Contractor to the Owner.
In the event the Contractor shall terminate the . . . agreement and declare the same null and void, neither party shall thereafter be under further obligation to the other, except that the Contractor shall have the right to receive and the Owner shall be obligated to pay all sums due to the Contractor for work previously performed and materials previously supplied to or ordered for the project. . . . [emphasis added]

It is apparent from the above language that “reasonable value” is a contractual measure of damages only if the contractor breaches the agreement. Where, as here, breach is asserted against' the owner, the contract provides that the measure of damages will be “all sums due to the Contractor for work previously performed and materials previously supplied to or ordered for the project.” We sustain, therefore, Hanson’s point of error with respect to this issue. On retrial, the damage issue should be worded to inquire what amount, if any, Dal-Mac reasonably expended for work performed and materials supplied to or ordered for the Masters Village project prior to the termination of the contract. This sum should be reduced by the value of the unused materials on hand. See 5 Corbin, Contracts § 1094, p. 511 (1964).

Hanson also argues that the trial court erred in admitting into evidence plaintiff’s exhibit 47, which is the only evidence that would support a judgment in the exact amount found by the jury. Plaintiff’s exhibit 47 is a sheet kept by the comptroller of Dal-Mac and updated monthly. On this sheet, he recorded bills received by Dal-Mac for the Masters Village project. He was able to identify the invoices attributable to a given project by reference to delivery tickets attached to the invoices. This sheet was part of a system maintained by Dal-Mac on each project. Dal-Mac urges that plaintiff’s exhibit 47 is a business record and, therefore, is admissible under Tex. Rev.Civ.Stat.Ann. art. 3737e (Vernon Supp. 1976). Before a record is admissible under this article, the trial court must find that:

(a) It was made in the regular course of business;
(b) It was the regular course of that business for an employee or representative of such business with personal knowledge of such act, event or condition to make such memorandum or record or to transmit information thereof to be included in such memorandum or record;
(c) It was made at or near the time of the act, event or condition or reasonably soon thereafter, [emphasis added]

The comptroller testified that the record was made in the regular course of business, and it is at least arguable that the monthly record was made “reasonably soon” after the invoices were received. The second requirement, however, presents a problem with respect to this record. The “personal knowledge” of the comptroller who prepared the record is limited to the fact that various subcontractors billed Dal-Mac for the labor and materials; he has no independent knowledge that such services or materials were, in fact, rendered or supplied in connection with this project, and he was not furnished such information by employees of Dal-Mac. We conclude, therefore, that plaintiff’s exhibit 47 is not admissible under article 3737e to prove the value of the services rendered and materials expended on the Masters Village project because the underlying invoices supporting the exhibit were not admissible.

Dal-Mac asserts, however, that this evidence is admissible under the authority of University Savings & Loan Ass’n v. Security Lumber Co., 423 S.W.2d 287 (Tex.1967). In that case the supreme court held invoices of Security Lumber Company to fall within the ambit of article 3737e and, therefore, admissible. However, Security Lumber’s president testified to all of the prerequisites set forth in the statute. Dal-Mac is attempting to introduce an exhibit based upon invoices prepared by employees of subcontractors rather than upon invoices prepared by employees of Dal-Mac. Obviously, Dal-Mac’s custodian of the records cannot say that invoices of a subcontractor were prepared by an employee of that subcontractor who had personal knowledge of the statements contained in the document or that it was made at the time of the transaction. Consequently, Security Lumber Company is not controlling here.

Neither is exhibit 47 admissible as a summary. The supreme court, in Black Lake Pipe Line Co. v. Union Construction Co., 538 S.W.2d 80 (Tex.1976), established a three-pronged test for the admission of summaries. Before a summary may be admitted, the proponent must show that the records from which it was prepared are voluminous, admissible, and accessible to opposing counsel. Id. at 93-94. The determinations of what is “voluminous” and whether opposing counsel has been afforded adequate opportunity to inspect the records are in the discretion of the trial court. Id. at 93. Here, the record shows that the invoices produced at trial constituted a one-inch stack. There were other invoices which were not brought to court, but the number of these is unclear. If the trial court believed that the summary was necessary to expedite the trial, we cannot say that it abused its discretion. Counsel for Dal-Mac offered to produce any additional records requested by opposing counsel; no request was made. Likewise, we cannot say that the trial court abused its discretion in determining that opposing counsel had adequate opportunity to inspect the underlying records. The problem is, however, that the admissibility of the underlying records was not established. There is no showing that the invoices were prepared in the usual course of the various subcontractors’ business by an employee who had personal knowledge of the facts recited or that the materials and services were supplied in connection with the project in question. The underlying invoices would be, therefore, hearsay and inadmissible to show the materials expended and services rendered on the Masters Village project. Cooper Petroleum Co. v. LaGloria Oil and Gas Co., 436 S.W.2d 889, 891 (Tex.1969). Since hearsay will not support a jury finding, the damages found were not supported by evidence. Consequently, under Tex.R.Civ.P. 434, we must remand the entire cause with respect to Hanson Southwest for a new trial.

Attorneys’ Fees

Dal-Mac argues that attorneys’ fees are properly recoverable because this is a suit for “services rendered, labor done and materials furnished” under Tex.Rev.Civ. Stat.Ann. art. 2226 (Vernon Supp.1976). On the other hand, Hanson Southwest contends that any services rendered, labor done and materials furnished were by third parties in the construction of a product, the shopping center, rather than by Dal-Mac for the benefit of Hanson Southwest. We agree with Hanson. The supreme court in Tenneco Oil Co. v. Padre Drilling Co., 453 S.W.2d 814, 820 (Tex.1970) held that a corporation was incapable of rendering “personal services” within this statute; any services a corporation renders would, of necessity, be rendered by its agents or employees. It construed the statute to mean that the person who sought attorneys’ fees must have rendered these services himself. The statute was amended, however, in 1971 to delete the word “personal” before “services,” thereby enabling corporations to recover for services rendered. Howard v. French-Brown Floors, 542 S.W.2d 709, 712 (Tex.Civ.App.—Dallas 1976, no writ). We conclude, however, that the holding in Tenneco is still authoritative insofar as it precludes recovery of attorneys’ fees under article 2226 in a suit based on a contract for construction of a finished product by the use of materials and services provided by others, as in the present case. This is evident from the discussion in Tenneco regarding materials furnished, which was unaffected by the amendment. The court held that article 2226 did not cover materials used by the plaintiff in constructing the product, an oil well, since these materials were furnished to the plaintiff rather than to the defendant. Tenneco, at 820-21. If article 2226 will not support a recovery of attorneys’ fees for materials furnished to plaintiff in constructing a product for defendant, then neither will it support recovery of an attorney’s fee in a suit for services rendered to plaintiff in constructing a product for defendant. As interpreted by Tenneco, article 2226 permits recovery of attorneys’ fees only against the party to whom the services, labor or materials are furnished. Here, the bulk of the services, work and materials were supplied to Dal-Mac, which expected to use them in fulfilling Dal-Mac’s contract with Hanson Southwest to construct a shopping center. We conclude, therefore, that Dal-Mac is not entitled to attorneys’ fees under article 2226. Tenneco, at 820-21; Alpert v. Jarrell Carpentry Co., 510 S.W.2d 136, 140-41 (Tex.Civ.App.—Dallas 1974, no writ).

Our conclusion here is compelled by ■ the language of the supreme court in Tenneco, which we consider to be still authoritative under the 1971 amendment to article 2226, except that corporations or other entities may recover attorneys’ fees for services rendered by its employees or materials directly furnished by it. If we were construing amended article 2226 initially, we might arrive at a different result than that here by giving article 2226 a liberal, rather than a strict, construction. In this respect, counsel for Dal-Mac has furnished to us and to opposing counsel an article by Mr. Orrin W. Johnson, entitled “Article 2226 Revisited: Penetrating the Juridical Labyrinth,” to be published in the May 1977 Texas Bar Journal. In that article, Mr. Johnson urges that article 2226 should be liberally construed, rather than strictly, in view of Tex.Rev.Civ. Stat.Ann. art. 10 § 8 (Vernon 1969), which expressly abolishes the rule that statutes in derogation of the common law must be strictly construed and provides that all statutes be liberally construed with a view to effect their objectives and to promote justice. Although we agree with Mr. Johnson that the courts, in applying a strict construction to article 2226, have apparently overlooked article 10, our holding here is compelled by Tenneco and its antecedents.

Reversed and rendered in part and reversed and remanded in part.

ON MOTION FOR REHEARING

In its motion for rehearing, Dal-Mac contends that we erred in stating that Hanson objected to the special issue concerning damages on the basis that it required the jury to pass on a quantum meruit rather than a contract measure of damages. After reviewing the record, we must concede that Hanson did not properly object on that basis to the special issue submitted. The objection was made to a proposed special issue proposed by Dal-Mac which was similar although not identical, to the issue actually submitted. The reversal of the judgment was, however, based upon the court’s error in admitting the exhibit on which the jury apparently based its finding of damages. Consequently, our discussion of the special issue is for the purpose of aiding the trial court in the event of a retrial.

We also note that in our discussion of the measure of damages we did not construe the contract with respect to any profits that Dal-Mac may have had on the contract. Dal-Mac now asserts that it is entitled to a profit of eleven percent on all work performed and services rendered. We cannot agree. First, there is no evidence that Dal-Mac would have made a profit on the contract had it not been terminated by Dal-Mac for nonpayment of draw requests by Hanson Southwest. Second, the contract provision under which Dal-Mac seeks recovery does not specifically provide for profits. That provision states:

In the event the contractor shall terminate the . . . agreement and declare the same null and void, neither party shall thereafter be under further obligation to the other, except that the con tractor shall have the right to receive and the owner shall be obligated to pay all sums due to the contractor for work previously performed and materials previously supplied to or ordered for the project. (Emphasis added).

As we read this language, it only provides for restitution to the contractor “for work previously performed and materials previously supplied to or ordered for the project." No mention is made of profits. We conclude, therefore, that profits are not included within its provision. We do not pass, however, on the question of whether the contract excludes the usual measure of damages for breach by the owner, namely, the loss of the contractor’s anticipated profit if the job had been completed (contract price, less expenditures allowing for materials on hand). Dal-Mac has not pleaded for such a recovery in this case or even for a pro rata profit on the work done, and there is no proof that such a profit would have been realized if the job had been completed.

Dal-Mac also attacks our holding that exhibit 47 was not admissible because its comptroller did not have knowledge that the services and materials represented by the invoices were actually furnished to the Masters Village project. It argues that this information was furnished to the comptroller by other Dal-Mac employees through the delivery tickets attached to the invoices, citing University Savings & Loan Ass’n v. Security Lumber Co., 423 S.W.2d 287 (Tex.1967). Assuming that it was shown that all invoices had delivery tickets attached, Dal-Mac still failed to satisfy the requirements of article 3737e. There is no testimony that a Dal-Mac employee with personal knowledge that the materials were furnished or the services were rendered made any notation on the delivery tickets or transmitted information to another employee for notation on the delivery ticket, nor is there any testimony that delivery tickets are made in the regular course of Dal-Mac’s business. At best, the evidence shows that delivery tickets were attached to some invoices. This evidence is hearsay as to Hanson, without proof that they meet the requirements of article 3737e. By contrast, there was testimony in Security Lumber Co. concerning the usual course of business and the knowledge of employees preparing the documents.

Dal-Mac contends that Hanson did not object to plaintiff’s exhibit 47 on the basis that the underlying documents were hearsay and that it has, therefore, waived the objection. Prior to offering plaintiff’s exhibit 47, Dal-Mac’s attorney questioned the comptroller concerning a few of the larger invoices which were summarized in plaintiff’s exhibit 47. The first invoice which the comptroller testified about was from Southwest Steel and exceeded $170,-000. When the comptroller attempted to testify concerning this invoice, Hanson’s counsel objected on the basis that he was testifying from documents not in evidence. The trial judge asked the witness if he was testifying from the records of his company and, when the witness said yes, overruled the objection. Hanson’s attorney then objected that the invoices were the records of Southwest Steel, rather than of Dal-Mac. After the trial court overruled this objection, Hanson’s attorney specifically called the trial court’s attention to the fact that the invoices had not been proved up under article 3737e. We hold that a sufficient hearsay objection was leveled at this invoice. To the extent that plaintiff’s exhibit 47 was based on this invoice, which was for almost half the total amount of plaintiff’s exhibit 47, it stands on no better ground than the invoice itself. Once the objection was raised that the invoice was not shown to be a record of Dal-Mac but rather that of Southwest Steel, Hanson was not required to object again as to the summary insofar as the summary was based on this invoice. Cooper Petroleum Co. v. LaGloria Oil & Gas Co., 436 S.W.2d 889, 891 (Tex.1969). Since the verdict appears to have been based directly on plaintiff’s exhibit 47 and that exhibit is only a summary of various invoices, including this $170,000 invoice from Southwest Steel, we adhere to our holding that admission of this exhibit was reversible error. It is, therefore, unnecessary to discuss whether a proper objection was raised as to the remaining underlying invoices.

Accordingly, we adhere to our original opinion and overrule Dal-Mac’s motion for rehearing.


source: Caselaw Access Project

author: BISSETT, Justice.

license: Public Domain

text:
    Jimmie WOODARD, d/b/a Tu J Refrigeration, Appellant, v. HOPPERSTAD BUILDERS, INC., Appellee.
    No. 1171.
    Court of Civil Appeals of Texas, Corpus Christi.
    May 12, 1977.
    Rehearing Denied June 30, 1977.

      Lee Arnett, Arnett & Church, Brownsville, for appellant.
    Benjamin S. Hardy, Hardy, Sharpe & Rodriguez, Brownsville, for appellee.
   OPINION

BISSETT, Justice.

This is an appeal from a judgment which granted a Bill of Review and set aside a former judgment. Jimmie Woodard, d/b/a Tu J Refrigeration, hereinafter referred to as “Woodard,” filed suit on sworn account against Hopperstad Builders, Inc., hereinafter called “Hopperstad,” in the District Court of Cameron County, Texas, on March 29,1971. Hopperstad timely filed a verified original answer. Hopperstad did not appear at the trial and judgment was rendered for Woodard against Hopperstad on January 3, 1972 for $6,379.84, plus attorneys’ fees in the amount of $2,500.00. Hop-perstad, after the time for filing a motion for new trial had expired, filed a petition for a Bill of Review. A hearing on the petition was held before the trial court, sitting without a jury. By agreement of the parties, the issues raised by Hopperstad in its petition for a Bill of Review as well as the evidence relating to the action on sworn account were presented to the trial court. The court, after having considered the issues and evidence, granted the petition for a Bill of Review and rendered judgment which decreed: 1) the judgment rendered on January 3, 1972 “is hereby set aside and held for naught”; and 2) “Jimmy Woodard, d/b/a Tu J Refrigeration have and recover naught from Hopperstad Builders, Inc.” Woodard has appealed from the judgment which granted the Bill of Review and set aside the former judgment.

Hopperstad, in its petition for a Bill of Review, alleged in substance: 1) it filed a verified answer to Woodard’s petition on April 8, 1971, wherein it was stated that “Woodard had been paid for all the services that he had rendered and that the work performed by him as alleged in the petition was not true”; 2) the case was set for trial for the week of November 22, 1971, with notice to all parties; 3) Thomas G. Sharpe, Jr., counsel for Hopperstad, was in trial in another case in Edinburg, Texas, on November 22, 1971, and he was advised that the case would be passed; 4) counsel for Woodard, “by some means induced the court without notice” to Hopperstad or its counsel, to specially set the case for a trial on the merits for January 3, 1972; 5) neither Hopperstad nor its counsel had any knowledge of such setting, and neither Woodard, nor its counsel, nor the Clerk of the District Court of Cameron County notified counsel for Hopperstad of the resetting; 6) counsel for Woodard caused a judgment to be rendered on January 3, 1972 with full knowledge that he had not notified Hopperstad or its counsel of the resetting, which was “deceitful and deceptive” and was done with full knowledge that the notice of special setting had not been sent to counsel for Hopperstad, as provided for in the Local Rules of Civil Procedure Rule 5(4); 7) counsel for Woodard did not notify Hopperstad or its counsel of the rendition of the judgment, nor did he send a copy thereof to either Hopperstad or its counsel; 8) the District Clerk did not mail a copy of the judgment to either Hopperstad or its counsel; 9) the failure to mail a copy of the judgment to Hopperstad or its counsel deprived Hopperstad of its right to file a motion for new trial, because the trial court had lost jurisdiction of the case before it learned of the rendition of the judgment; 10) Hopperstad has a meritorious defense to the action brought against it by Woodard and pleaded the same in the answer which it filed in defense to that action; 11) Hop-perstad was prevented from presenting any evidence in its defense to the action brought against it by Woodard since it did not receive notice of the special setting of the case, and the failure to receive the notice and to appear in court on the day appointed was not the fault of or due to the negligence of either Hopperstad or its counsel, but was due to a deliberate move on the part of the counsel for Woodard “to be deceptive”; 12) on January 3, 1972, counsel for Hopperstad was in his office at Brownsville, Texas, when the judgment was rendered; 13) the evidence introduced at the trial on January 3,1972 will not support the judgment, “because it is not in accord with the pleadings . . . the invoices were not made to “Hopperstad Builders, Inc.”; 14) the judgment recites that the “cause was set for trial by regular setting when in truth and in fact the setting was a special setting which required notice under Local Rules . . . and by Rule 247, T.R.C.P.”

It is established by the evidence the case was originally set for trial the week of November 22, 1971, with notice to all parties. Counsel for Hopperstad, Mr. Thomas G. Sharpe, Jr., however, was in trial at about the same time in another case at Edinburg, Texas. On Friday, November 19, 1971, Sharpe informed the bailiff for 197th District Court of Cameron County, Texas, where the cause was then pending, that he would be in trial in the District Court of Hidalgo County, Texas, in Edinburg, Texas on November 22, 1971, and left a note at the office of the District Judge of that Court. Sharpe, in the note, advised the judge that he would be in trial in Edinburg on November 22, 1971 and that Judge Garza (the federal judge at Brownsville) had reset “all my November cases for January, 1972. Sharpe further stated: “Since the case will be reset, I anticipate it being called at the February Docket.”

At the request of Mr. Franklin T. Graham, who was then the attorney of record for Woodard, the District Court of Cameron County reset the case for trial for January 3,1972. It was further proved that neither Graham, Woodard nor the District Clerk notified either Hopperstad or Sharpe of the resetting.

Graham testified that the trial judge instructed his bailiff to inform counsel for Hopperstad of the resetting. It was stipulated that the bailiff had no independent recollection of the matter, one way or another. Graham further testified that he did not notify Sharpe that the cause had been reset for trial on January 3, 1972, because the judge ordered the bailiff to notify him.

The trial court heard the case on the merits on January 3,1972, in the absence of Hopperstad or its counsel. After hearing evidence, the court then rendered the aforesaid judgment against Hopperstad.

Sharpe testified that he was in his office in Brownsville, Texas, on January 3, 1972, and that he had no notice of the setting of the case for trial at any time prior to that date. He further testified that he did not learn of the rendition of the judgment until it was too late to file a motion for new trial.

At the request of Woodard, the following findings of fact were made and filed by the trial judge:

“I.
The Plaintiff, HOPPERSTAD BUILDERS, INC. and its attorneys were not guilty or negligent in any manner in failing to appear upon the date set for trial upon the merits on November 22, 1971, and received no notice of the subsequent setting for January 3, 1972.
II.
The Clerk of this Court did not give notice as required by Rule 306d, T.R.C.P.
III.
The Plaintiff, HOPPERSTAD BUILDERS, INC. had a meritorious defense to the items of account sued upon and claim of the Defendant as to the monies owed.
IV.
The setting of January 3, 1972, did not comply with the requirements of the Local Rules of Civil Procedure.
V.
The failure of the Plaintiff to file a Motion for a new trial within the time allowed by its Rules of Civil Procedure was not caused by an intentional act or conscious indifference.
VI.
The granting of a Motion for a new trial would not have caused the Defendant to suffer; he was still in the immediate vicinity and could have presented his claim.
VII.
Upon issue of execution, Counsel for Plaintiff, acted immediately and expeditiously in filing a Petition for Temporary Ini unction and Bill of Review.
VIII.
Defendant offered no evidence that he would be injured by granting the Bill of Review or that his claim was just and true, and no effort was made to introduce any such evidence.”

Only finding of fact number IV relating to the failure of the setting of January 3, 1972 to comply with the requirements of the Local Rules of Civil Procedure is challenged by defendant on appeal. Woodard did not request additional findings of fact.

McDonald, in Texas Civil Practice Vol. 4 § 18.24 P. 311 (1970), states:

“A bill of review is an independent action of an equitable nature brought by a party to the former action and seeking to set aside a judgment therein which is not void on the face of the record and which has become final by reason of the expiration of the periods allowed for motion for new trial or appeal. . . .”

Bills of Review, however, are looked upon with caution by the courts, and the pleading and proof requirements for them are very strict. The plaintiff’s petition in a Bill of Review must allege under oath: 1) a meritorious defense; 2) he was prevented from asserting his meritorious defense by the fraud, accident or wrongful act of the opposite party and 3) that this failure was unmixed with any fault or negligence of his own. Petro-Chemical Transport, Inc. v. Carroll, 514 S.W.2d 240, 243 (Tex.Sup.1974).

Woodard contends in points 1, 2, 3, 6 and 7 that the trial court erred in granting the Bill of Review because Hopperstad had an adequate remedy at law at the time it filed the petition for a Bill of Review; that it failed to plead or prove that it did not have an adequate legal remedy at that time; that Hopperstad failed to plead or prove that it availed itself of those adequate legal remedies; that the judgment was not supported by findings of fact that Hopperstad did not have an adequate remedy at law at the time the petition for a Bill of Review was filed; that Hopperstad failed to plead or prove that it used due diligence to avail itself of the adequate legal remedies that it had; and that the judgment was not supported by a finding that Hopperstad exercised due diligence to avail itself of adequate legal remedy which existed against the former judgment. Woodard argues that an appeal by Writ of Error, a legal remedy, was available to Hopperstad, and that Hopperstad was required “to seize upon all legal remedies still available, including Writ of Error to the Court of Civil Appeals,” and that since it did not do so, it was reversible error for the trial court to grant any relief under the petition for Bill of Review, an equitable remedy. We do not agree.

Rule 329b, T.R.C.P., in part, provides: “ . . . After the expiration of thirty (30) days from the date the judgment is rendered or motion for new trial overruled, the judgment cannot be set aside except by bill of review for sufficient cause, filed within the time allowed by law. ...”

In this case, the judgment was valid on its face, and there is nothing in the record before the petition for a Bill of Review was filed which indicates that either Hopperstad or its counsel had notice of the January 3, 1972 setting. Our Supreme Court, in factual situations similar to the case at bar, has repeatedly held that where the judgment of the trial court has become final, the trial court was thereafter without jurisdiction to set the same aside, except by a bill of review. See Plains Growers, Inc. v. Jordan, 519 S.W.2d 633, 645 (1974); Bridgman v. Moore, 143 Tex. 250, 183 S.W.2d 705, 706 (1944); Wichita Falls & S. R. Co. v. McDonald, 141 Tex. 555, 174 S.W.2d 951, 953 (1943); Phil H. Pierce Co. v. Watkins, 114 Tex. 153, 263 S.W. 905 (1924).

Any confusion which may have existed as to when a party should proceed under the Writ of Error procedure or under the Bill of Review procedure after a judgment has become final was set at rest in McEwen v. Harrison, 162 Tex. 125, 345 S.W.2d 706 (1961). There, the Court cautioned that Rule 329b, T.R.C.P., should be construed in such a manner that it aid in the administration of justice in order that a diligent defendant with a meritorious defense will have “every opportunity to protect himself against an unwarranted default judgment.” The Court said:

“If he [a defendant] does not learn of the judgment within 30 days after its rendition but does learn of it within six months, and the invalidity of the judgment is disclosed by the papers on file in the case, he may obtain relief by prosecuting writ of error to a Court of Civil Appeals.”

However, the Court further said:

“If the judgment is one which the court had jurisdictional power to render but it is invalid, he may obtain relief by bill of review as provided in Rule 329-b whether the invalidity is or is not disclosed by the papers on file in the case. Only if a court has no jurisdictional power to render the judgment should a negligent defendant or one with no meritorious defense to the suit be able to relieve himself of the burdens and consequences of a default judgment.”

In the instant case, the invalidity of the judgment was not disclosed by the papers on file in the case at the time the petition for a Bill of Review was filed. There is no reason why Hopperstad, under the circumstances presented, should not have had the right to establish its defense in a trial, which could only be accomplished if it had timely notice of the setting.

Finally, Woodard’s argument is foreclosed against him by the recent decision of the Supreme Court of Texas in Rogers v. Searle, 544 S.W.2d 114 (Tex.Sup. 1976). There, the trial court rendered judgment on December 9, 1974, which became final thirty days thereafter. A petition for a Bill of Review was filed on January 15,1975. The Supreme Court, in remanding the cause to the trial court for a trial on the matters raised by the petitioner in her petition, necessarily held that the trial court’s judgment could be attacked by a Bill of Review that was filed less than six months after the judgment became final.

There is nothing in the record that restricts Hopperstad to an appeal by Writ of Error. The Bill of Review was proper in this case and was timely filed. Points 1, 2, 3, 6 and 7 are overruled.

Woodard says in point of error 12 that there is no evidence to support the finding that the January 3, 1972 setting did not comply with the Local Rules of Civil Procedure. The point cannot be sustained.

The Local Rules of Civil Procedure were not introduced in evidence. However, a Court of Civil Appeals may take judicial notice of the Local Rules of Civil Procedure of the District Courts of this State. Canavan v. Truss-Tex Component Company, 511 S.W.2d 318, 320 (Tex.Civ.App.—Houston [1st Dist.] 1974, writ ref’d n. r. e. ); Investors Diversified Services, Inc. v. Bruner, 366 S.W.2d 810, 815 (Tex.Civ.App.—Houston 1963, writ ref’d n. r. e.). We take judicial notice of the Local Rules of Civil Procedure for the District Courts of Cameron County, Texas. Rule 5(4) of such “Rules” provides:

“Cases not reached for trial on the date set for trial will be passed unless reset for trial by agreement.”

It is undisputed that Hopperstad did not receive any form of notice of the January 3, 1972 resetting. It is obvious that Hopperstad could not have agreed under the facts existing to a resetting for January 3, 1972. The resetting is, therefore, in violation of Local Rule 5(4) of Cameron County District Courts. Point 12 is overruled.

Woodard, in his remaining points of error, asserts that Hopperstad failed to plead or prove that neither it nor its counsel was guilty of any fault or negligence in not appearing for trial on January 3, 1972, or that it was prevented from presenting its defense by reason of fraud, accident or mistake of either Woodard or its counsel; that there were no findings of fact that the former judgment was rendered due to such fraud, accident or mistake; and that Hop-perstad waived any ground for the granting of a Bill of Review because of any such fraud, accident or mistake since it did not request additional findings of fact with respect thereto. The points have no merit.

The pleadings of Hopperstad, which have already been summarized, allege that neither it nor its counsel were negligent or at fault in failing to appear for trial on January 3, 1972, and further sufficiently allege that Hopperstad was prevented from presenting its defense to Woodard’s action by reason of fraud, accident or mistake on the part of Woodard’s attorney. It is established by the evidence that it was the custom of the Cameron County Bar that an attorney who obtains a special setting should notify opposing counsel of the date for the setting. The attorney for Woodard did not comply with this custom. Graham explained that he did not notify Sharpe, counsel for Hopperstad, of the setting, since the trial judge had told his bailiff to do so. There is no evidence that the bailiff ever notified Hopperstad or Sharpe of the setting. There is a sufficient showing of mistake or accident where opposing counsel overlooks compliance with an established local custom of notifying the opposite counsel of settings. Peaslee-Gaulbert Corporation v. Hughes, 79 S.W.2d 149, 151 (Tex.Civ.App.—Dallas 1934, writ ref’d); McDonald, Texas Civil Practice § 18.27.4 p. 326 (1970). See also, Cotten v. Stanford, 169 S.W.2d 489, 492 (Tex.Civ.App.—Amarillo 1943, no writ). In this case, attorney Graham’s failure to notify Sharpe of the resetting was, at least, a factor which prevented Hopperstad from presenting its “meritorious” defense. Central Airlines, Inc. v. Kahle, 419 S.W.2d 873, 876 (Tex.Civ.App.—Fort Worth 1967, writ ref’d n. r. e.).

Hopperstad was not negligent in failing to present a meritorious defense. Its original answer to the petition filed by Woodard alleges a meritorious defense. The evidence adduced at the trial following the granting of the Bill of Review is proof of such a defense. There is no evidence that Hopperstad or its attorney was negligent at any time with respect to the issues presented by this appeal. Counsel for Hopperstad, upon learning that judgment was rendered on January 3, 1972 acted immediately and expeditiously.

The contentions that the trial court did not make adequate findings of fact to support the judgment which granted the Bill of Review and set aside the judgment of January 3, 1972, and that Hopperstad, in failing to request additional findings of fact waived the grounds necessary to support the judgment cannot be sustained. Rule 299, T.R.C.P., (1967), in part provides:

“Where findings of fact are filed by the trial court they shall form the basis of the judgment upon all grounds of recovery and of defense embraced therein. The judgment may not be supported upon appeal by a presumption of finding upon any ground of recovery or defense, no element of which has been found by the trial court; but where one or more elements thereof have been found by the trial court, omitted unrequested elements, where supported by evidence, will be supplied by presumption in support of the judgment. . . . ”

It will be presumed that any omitted, unrequested findings of fact necessary to support the trial court’s judgment which has been appealed to this Court in the instant appeal were found by the trial court in such a way as to support the judgment. Rule 299, T.R.C.P.; Gasperson v. Madill National Bank, 455 S.W.2d 381, 399 (Tex.Civ.App.—Fort Worth 1970, writ ref’d n. r. e.); O’Benar v. O’Benar, 410 S.W.2d 214, 217 (Tex.Civ.App.—Dallas 1966, writ dism’d); Century Indemnity Company v. First National Bank of Longview, 272 S.W.2d 150, 156 (Tex.Civ.App.—Texarkana 1954, no writ):, McDonald’s Texas Civil Practice § 16.09 p. 25-6 (1970).

We have read the i-cord in its entirety. We have carefully considered all of the remaining points of error (points 4, 5, 8, 9, 10 and 11) brought forward in this appeal by Woodard, the defendant-appellant. Points 4, 5, 8, 9, 10 and 11 are overruled.

The judgment of the trial court is AFFIRMED.


author: CADENA, Justice.

text:
    The CITY OF SAN ANTONIO et al., Appellants, v. Michiko F. CLARK et al., Appellees.
    No. 15878.
    Court of Civil Appeals of Texas, San Antonio.
    May 31, 1977.
    Nelson A. Clare, San Antonio, for appellants.
    Brock Huffman, San Antonio, for appel-lees.
   CADENA, Justice.

Appellant, City of San Antonio, has filed its motion seeking a stay of enforcement of a temporary injunction issued by a district court of Bexar County restraining City and its officers, including Chief of Police, Emil Peters, from enforcing certain provisions of City’s ordinance licensing and regulating the operation of massage parlors. Appel-lees, Michiko F. Clark, Barbara A. Miller, and Cindy Lee Anderson, plaintiffs below, filed this suit for injunction after they had been denied licenses to administer massages because of their failure to meet the educational requirements imposed by the ordinance.

The order granting the temporary injunction was entered May 13,1977. On May 16, 1977, City filed its notice of appeal and on that same day filed the record in this Court.

On May 25, 1977, appellees filed, in the court below, their motion to have City adjudged in contempt because of the refusal of City’s agents, charged with enforcement of the ordinance regulating massage parlors, to issue appellees a license. According to the motion for contempt, appellees were denied a license because of their failure to meet the educational requirements of the ordinance.

The district court set the motion for contempt for hearing on May 31, 1977.

Article 1174, Tex.Rev.Civ.Stat.Ann. (1963), permits the City of San Antonio, a home rule city, to perfect its appeal without filing a bond. City’s appeal from the order granting the temporary injunction automatically superseded the order of injunction until disposition of City’s appeal. Ammex Warehouse Co. v. Archer, 381 S.W.2d 478 (Tex. 1964).

The rule of automatic supersedeas applies where a municipality protected by Art. 1174 appeals from an order subjecting it to a temporary injunction. City of West University Place v. Martin, 132 Tex. 354, 123 S.W.2d 638 (1939).

Appellees point out that the Martin case was decided prior to the adoption of our present Rules of Civil Procedure in 1941, and that it can no longer be held controlling in view of the provision in Rule 385(d), Tex.R.Civ. P. (1976 Supp.), to the effect that an appeal from an order granting or refusing a temporary injunction shall not have the effect of suspending the order appealed from unless it shall be so ordered by the judge or court entering the order. This position is untenable.

At the time that Martin was decided the statute then in effect provided that an appeal from an order granting a temporary injunction “shall not have the effect to suspend the order appealed from unless it shall be so ordered by the court or judge who enters the order.” Article 4662, Tex.Rev.Civ.Stat.Ann. (1940). The provision in Rule 385 on which appellees rely, therefore, has changed nothing. It merely embodies the language found in the former statute. The fact that language found in a statute at the time Martin was decided is now embodied in a procedural rule can have no effect on the precedential weight of Martin.

There is a second reason why the trial court cannot enforce its temporary injunction by way of contempt proceedings. Even if the injunction had not been superseded by City’s appeal, it is well settled that, after the appeal was perfected the power to punish for violation of the order lies only in the appellate court. Ex parte Travis, 123 Tex. 480, 73 S.W.2d 487 (1934); Ex parte Kimbrough, 135 Tex. 624, 146 S.W.2d 371 (1941); 31 Tex.Jur.2d Injunctions § 200, at 317 (1962).

Finally, all parties and, apparently, the trial court, interpret the order appealed from as requiring City to issue the permits for which appellees have applied. The alleged contempt is based solely on the refusal to issue such permits. Manifestly, the purpose of the contempt proceedings is to coerce issuance of the permits. Once the permits are issued, whatever order this Court might enter in disposing of City’s appeal would be an exercise in futility. The whole purpose of appellee’s suit would have been accomplished. Article 1823, Tex. Rev.Civ.Stat.Ann. (1964), empowers this Court to issue such writs as may be required to protect its jurisdiction. See City of West University Park v. Martin, supra.

The enforcement of the temporary injunction by the court below is stayed. Ap-pellees are enjoined from taking any further action in the court below in connection with their motion that City or any of its officers be held in contempt for refusing to issue the permits in question.


author: ROBERTSON, Justice.

text:
    SOUTHWEST TITLE INSURANCE CO. et al., Appellants, v. Robert D. PLEMONS et al., Appellees.
    No. 19231.
    Court of Civil Appeals of Texas, Dallas.
    June 3, 1977.
    Rehearing Denied Aug. 11, 1977.

      Eugene J. Pitman, DeLange, Hudspeth, Pitman & Katz, Houston, for appellants.
    David A. Coggin, Gerry N. Wren, Brice & Barron, Dallas, for appellees.
   ROBERTSON, Justice.

This is a suit on a title insurance policy by the insureds, Robert D. Plemons, James W. Hughes, and eight other parties, against the insurers, Southwest Title Insurance Company and Title Insurance Company of Minnesota. The insureds purchased 170 acres of land in Hunt County for $240,000 in March, 1973 and secured a title policy from the insurers. In the fall of that year, the insureds entered into a contract to sell the land to Ward Hunt; however, Hunt refused to consummate the sale because of two easements located on the property. Although the title policy did not refer to these easements and the insureds allegedly called upon the title company to remove them, the insurer refused to take any action. Upon trial before a jury, the insureds received a verdict in the sum of $77,440, together with $25,000 in attorneys’ fees. The title company now appeals. We affirm regarding all points except the amount of damages awarded, and because we find that a portion of the damages were premature and improperly awarded, we modify the judgment to reflect the correct sum.

Motion to Strike

It is necessary that we first address the insureds’ motion to strike points four, five, and eleven of appellants’ brief on the ground that these points are not supported by proper assignment of error in appellants’ motion for new trial. Appellants do not object to the striking of point four and concede that this point of error was not properly preserved. Point five asserts that the trial court erred in submitting special issue number six as there was no pleading to support the submission. In its amended motion for new trial, the objection was merely that “the court erred in overruling each and all of the objections to the charge of the court made by defendants.” Point eleven complains of the trial court’s allowance of testimony by James W. Hughes, an insured, regarding the other insureds’ lack of knowledge of the easements. According to the point, this testimony was necessarily “hearsay or surmi-sal.” In the amended motion for new trial, however, the basis for the error in allowing the testimony was that if the other insureds had known of the easements, they “would have told the plaintiff Hughes.” These assignments of error are not sufficiently clear and certain to preserve points of error on appeal. Tex.R.Civ.P. 320, 321, 322, and 374; Weingarten, Inc. v. Moore, 449 S.W.2d 452 (Tex.1970); Garza v. Alviar, 395 S.W.2d 821 (Tex.1965); Wagner v. Foster, 161 Tex. 333, 341, S.W.2d 887 (1960). Therefore, the motion to strike must be granted.

Measure of Damages

On the merits, our first area of concern is whether the proper measure of damages was submitted to the jury. In answer to issues submitted, the jury found that the damages equaled the value of the outstanding interest, as determined by the difference in market value of the entire tract with and without the easements. Both parties apparently agree that the general measure of damages is stated in Southern Title Guaranty Co., Inc. v. Prendergast, 494 S.W.2d 154 (Tex.1973). In that case, the court held that the liability of the title insurance company (x) is to the policy limits (a) as the value of the outstanding interest (b) is to the value of the whole property without the outstanding interest (c), or | = jr. Under the facts of this case, the formula appears in this manner:

Liability of insurer _ Value of outstanding interest $240,000 (policy limit) $240,000 (value of property without easements)

Resolved, the formula renders the liability of the insurer equal to the value of the outstanding interest. In order to reduce the solution to numerical terms, however, the value of the outstanding interest must first be determined. It is at this point the parties take issue. Appellants assert that the value of the easement should be found by an appraisal of its market value as an interest apart from the remainder of the property, while the insureds urge that the value can only be determined by calculating the difference in the market value of the entire property with and without the easements. We agree with the insureds. As a constituent element of the Prendergast formula, the value of the outstanding interest is determined by the difference between the market value of the entire tract with the outstanding interest and the market value of the tract as it would have been but for the outstanding interest. Lawyers Title Ins. Corp. v. McKee, 354 S.W.2d 401, 405 (Tex.Civ.App.—Fort Worth 1962, no writ). This measure must prevail over a mere valuation of the easement itself, for as a channel easement, the interest is not susceptible to market definition. Although appellant cites Stone v. Lawyers Title Insurance Corp., 537 S.W.2d 55 (Tex.Civ.App.—Corpus Christi 1976, writ granted) to support the separate valuation approach, Stone does not support that formulation. Rather, Stone merely disapproves the “income capitalization” method of determining market value of the entire tract (a calculation based upon projected income and expenses), and does not reject overall market valuation as the proper procedure. In the present case, the testimony regarding market value was not based upon projected income and expenses; the appraisal was grounded upon actual sales of comparable property. Accordingly, we hold that the value of the easement was properly determined in this case and that the damages were properly calculated under the Pren-dergast formula.

Notice of Defective Title

The title policy here in question expressly excluded coverage for defects known to the insured at the date of the policy unless the defects were disclosed to the insurer prior to the policy date. As alternative points of error, appellants assert the absence or insufficiency of evidence to support the submission of special issues one and two, which inquired into the insureds’ lack of knowledge or notice of the easements prior to the policy date. Appellants also assert that the jury findings of lack of knowledge and notice pursuant to issues one and two were against the great weight and preponderance of the evidence. We disagree. The issues were properly submitted, and the jury answers were amply supported by the evidence.

One insured, James W. Hughes, who promoted and organized the purchase as an investment transaction, testified that he did not know of the easements and that “to his knowledge” none of the other insureds were aware of the defects. Admittedly, there is no direct testimony regarding each insured’s lack of knowledge or notice; however, this is not necessarily fatal to their recovery. Although “knowledge” is a state of mind which is often difficult and, at times, impossible to prove by direct testimony, its presence or absence may still be proved by circumstantial evidence. Ashby v. State, 283 S.W.2d 270, 274 (Tex.Civ.App.—Dallas 1955, no writ); West v. Jennings, 119 S.W.2d 685, 686 (Tex.Civ.App.—San Antonio 1938, no writ).

Circumstantially, it was shown that the easements were not mentioned, described, or excepted in the title policy, the deed, or the survey undertaken prior to the sale. It was further demonstrated that all insureds except Hughes, the promoter, were passive investors, some of whom never actually saw the property. Indeed, even if each insured had personally inspected the property, the land itself gave no indication of the easements. Even expert surveyors and appraisers could not discover the easements by observation.

In order to give notice to the insureds of the existence of the easements, the drainage channels must have been open and visible. It must be sufficiently apparent to place an observing purchaser on inquiry as to the rights of the easement holder. Shaver v. National Title & Abstract Co., 361 S.W.2d 867, 869 (Tex.1962). In Shaver, our supreme court held that when a purchaser inspecting the premises cannot see any surface indications of an easement, the purchaser is not placed on notice of the outstanding interest. Shaver is precisely on point with the facts of the present case, and, accordingly, we hold that there was sufficient evidence to justify the submission of both issues and that the findings of lack of knowledge or notice were not contrary to the weight of the evidence.

Attorneys’ Fees

The judgment of the trial court awarded the insureds $25,000 as reasonable attorneys’ fees for the prosecution of the suit. Appellants challenge this award on two grounds. Initially, they allege that neither the policy nor any statute authorizes an award of attorneys’ fees in cases brought by the insured to enforce rights under the policy. Alternatively, appellants urge that a proper demand for curative action is a prerequisite to recovery and that there is insufficient evidence of such a demand. We disagree with these assertions.

We recognize that the present policy does not provide for attorneys’ fees in suits brought to enforce rights under the policy. Literally construed, the policy limits recovery to attorneys’ fees incurred by the insured in actions against third parties in which the insurer is obligated to defend the title of the insured. However, a broader construction was adopted in Shaver v. National Title & Abstract Co., supra, wherein our supreme court affirmed an award of attorneys’ fees recovered in a suit brought by the insureds against their title insurer for failure to cure title defects. The court upheld the award even though no suit had been asserted against the insureds which the insurer would have been required to defend. Therefore, under Shaver, we hold that attorneys’ fees were proper in this case.

We must also disagree with appellants’ contention that there is insufficient evidence of a proper demand for curative action prior to suit. While we recognize that Shaver conditioned recovery of attorneys’ fees upon “proper notice and demand” by the insured, we find sufficient evidence of a presuit demand in this case. James W. Hughes, an insured, testified that upon discovery of the easements, he notified appellants of the defects. After no curative or compensatory action was taken, Hughes renewed his requests; however, appellants still failed to act. According to Hughes, this lack of cooperation necessitated the present suit for damages. This testimony was not challenged at trial, and indeed, the issue of demand appears totally uncontroverted. Under these circumstances, we find sufficient evidence of a presuit demand by the insureds.

Modification of the Judgment

Our final consideration is whether the trial court erred in rendering judgment based upon the full value of the policy when one of the insureds had reconveyed part of his interest to the original owner. Under the terms of the original conveyance to the nine insureds, each purchaser was granted an undivided one-tenth interest, with the exception of James W. Hughes, who received an undivided one-fifth. Pursuant to an agreement disclosed at trial, Hughes held half of his interest in trust for Yarber and subsequently conveyed that interest to Yarber before trial was held below. The judgment of the trial court awarded damages based upon the full value of the policy and apparently assumed that Hughes could recover for damages sustained to the entire one-fifth, even though he had conveyed half of the interest after the policy date. Appellants allege that this was error and that the judgment should be modified to disallow recovery for damages to the interest which was conveyed. We agree.

The title policy upon which this suit is based expressly provides that upon the sale of an insured’s interest, the policy automatically becomes a warrantor’s policy. The effect of this provision is to protect an insured who subsequently conveys his interest against any loss occasioned by a defect in the title warranted by the conveyance. The insurer is thus not liable to the vendor under the ownership provisions of the policy; recovery is conditioned upon a claim under the warrantor’s provisions. Cf. Stewart Title Guaranty Co. v. Lunt Land Corp., 162 Tex. 435, 347 S.W.2d 584, 586-87 (1961) (title guarantor is not liable to insured under ownership provisions after sale of the property. Policy provides for successive liabilities). In the present suit, Hughes did not sue under the warrantor’s provisions; rather, the vendee, Yarber, brought suit directly against the title insurer for the defect. While we recognize that Yarber may have an action to recover damages for the defect, his action lies only against Hughes, his vendor, and any recovery by Hughes under the warrantor’s provision is necessarily conditioned upon a claim by Yarber against him as vendor. As the judgment now stands, it permits Hughes to recover indemnity for a warranty claim which was never asserted. Therefore, we hold that such an award is premature and modify the judgment accordingly.

The judgment of the trial court is modified so as to reduce the amount of damages by one-tenth, from $77,440 to $69,696, and, as modified, is affirmed.


author: COULSON, Justice.

text:
    MITSUI & CO. (U. S. A.), INC., Appellant, v. RAMSEY TRUCK LINES, INC., Appellee.
    No. 1543.
    Court of Civil Appeals of Texas, Houston (14th Dist.).
    June 8, 1977.
    Rehearing Denied July 27, 1977.

      Jan T. Steinberg, Robert A. Feltner, Houston, for appellant.
    Victor F. Branch, Bettye J. Lambert, Houston, for appellee.
   ON MOTION FOR REHEARING

COULSON, Justice.

Our opinion issued on June 8, 1977, is withdrawn, and the following opinion, issued subsequently to appellant’s motion for rehearing, is substituted therefor.

Mitsui & Co. (U.S.A.), Inc. (Mitsui) sued Ramsey Truck Lines, Inc. (Ramsey) for damages to steel tubes. A nonjury trial resulted in a take-nothing judgment against Mitsui. We affirm.

Mitsui sold to Hurricane Steel Industries Company (Hurricane) 390 lifts of steel tubes to be delivered “Ex-dock Houston.” Mitsui shipped the steel tubes “freight prepaid” from Kobe, Japan to Houston on the ship Izumi Maru owned by the steamship company Nippon Yusen Kaisha (N.Y.K.). The ship arrived at the dock in Houston on April 3, 1972.

Hurricane retained Ramsey to transport the steel tubes from the ship to Hurricane’s yard. Ramsey is a common carrier operating under a special motor carrier permit issued by the Texas Railroad Commission. The Izumi Maru discharged the steel tubes directly from the ship onto Ramsey’s trucks on April 3, 4, and 5 and departed. Ramsey transported 24 lifts directly from the dock to Hurricane’s yard. It carried the remaining lifts to its agent, Port Warehouse Service (Ramsey’s yard), where the lifts were unloaded and stacked. Ramsey completed delivery of the steel tubes to Hurricane’s yard on or about April 15.

The steamship clerk who inspected the cargo while still in the hold of the ship notified Hurricane that the tubes had been damaged in transit. Upon learning of the damage, Hurricane engaged David H. McCluskey, a marine surveyor, to determine the amount of the loss and to seek agreement as to the disposition of the loss. At the request of McCluskey, Hurricane gave written “notice of survey” to be held April 18 to Mitsui and to the agent for the ship Izumi Maru. Hurricane, Mitsui, and the Izumi Maru, through their respective agents and representatives, participated in the survey. Ramsey was not notified of the survey, did not know of the survey in advance, and did not participate in the survey. Ramsey properly objected to the introduction into evidence of the damage report based on this survey, because the report was hearsay as to Ramsey. Compagnie De Navigation, Etc. v. Mondial United Corp., 316 F.2d 163, 170 (5th Cir. 1963).

The survey of the Shipment of steel tubes was made in Hurricane’s yard. The surveyors agreed upon a process of examination. Random sample lifts were selected as representative of the whole shipment, each sample lift was opened and each tube in the sample was examined for damage, and thereafter a percentage of damage was agreed upon by the surveyors and that percentage was applied to the whole shipment. The total tubes determined to have been damaged pursuant to the formula were discounted 50 percent from the invoice price, and a factor of $5.00 for each of the 390 lifts was allowed for opening, removing and replacing damaged tubes, and restrapping the lifts. Based upon the surveyors’ conclusions, Mitsui allowed Hurricane a credit adjustment of $9,481.57 on its invoice, and all matters between Hurricane and Mitsui were compromised.

On June 28,1973, Mitsui sued N.Y.K. and Ramsey for $10,000.00 for damage to the steel tubes and $3,000.00 for attorney’s fees. Prior to trial, Mitsui and N.Y.K. settled and an order of dismissal with prejudice was entered as to N.Y.K.

The case against Ramsey was tried on Mitsui’s original petition. At the close of Mitsui’s evidence and after Mitsui rested, the court granted Ramsey’s motion for judgment.

Upon granting Ramsey’s motion, the judge indicated that if there was any idea that Ramsey was involved in the damages, Ramsey should have been invited to join the survey. The court further indicated that since McCluskey was concerned only with the total damages, McCluskey could not segregate the damages between the Izumi Maru and Ramsey, nor could the court determine the subrogated damage to Mitsui. In addition to the recorded comments of the judge, separate findings of fact and conclusions of law were filed.

The appellant asserts 12 points of error attacking specific findings of fact by the trial court or attacking the refusal of the trial court to make requested findings of fact and challenging the court’s conclusions of law.

A review of the evidence reveals that it is impossible to determine what parties caused what damage to the cargo. Therefore, the party with the burden of proof to apportion the damages cannot prevail.

Mitsui contends that Ramsey is subject to the legal presumption that when a consign- or shows that the shipment was in good condition when delivered to the carrier and in a damaged condition when delivered to the consignee, the carrier is presumed to have caused the damage and has the burden to prove that he is not liable for all of the damage to the cargo.

Appellant relies upon Missouri Pac. R. R. v. Elmore & Stahl, 368 S.W.2d 99 (Tex.Sup.1963), aff’d, 377 U.S. 134, 84 S.Ct. 1142, 12 L.Ed.2d 194 (1964), in which the Texas Supreme Court held that after the shipper had made a prima facie case of carrier liability by showing that the shipment was in good condition when delivered to the carrier at place of origin and in a damaged condition when delivered by the carrier at destination, the carrier could not exonerate itself by showing that all transportation services were performed without negligence; the carrier had to go further and establish that the damage was caused solely by an act of God, the public enemy, the fault of the shipper, or the inherent nature of the-goods. 368 S.W.2d at 101. We hold that since Mitsui failed to prove that the shipment was in good condition when delivered to Ramsey, there is no presumption that Ramsey caused the damage.

The steel tubes were made out of soft steel, which was very susceptible to damage in transit. Each lift consisted of numerous tubes bound in a hexagonal bundle by steel straps. With the exception of the ends of the tubes, only the exterior tubes in the bundles could be inspected without removing the straps. Only the sample lifts selected by the surveyors were examined in this fashion.

The receiving agent for Mitsui, the steamship clerk who noted the damage in stow, Hurricane’s purchasing manager, and McCluskey testified at the trial. McClus-key was the only expert witness to testify. McCluskey testified that he “was retained by Hurricane Steel for the purpose of determining the total amount of damages and at that point we didn’t care who did it, we wanted Mitsui to pay for all of it . . .” He also testified that no one knew how many pieces of pipe were damaged before the load was discharged from the ship; he did not pay much attention to what percentage of the damage was attributable to rough seas; the unloading process from the ship frequently causes damage; and he did not know how much forklift damage was done in loading and unloading the ship, or how much sling damage was done by the stevedores.

When the shipment was examined at Hurricane’s yard, tubes on the interior of the bundles were dented, “white rusted,” corroded, gouged and scraped. Exterior tubes were bent, gouged and dented. McCluskey was able to segregate some of the damage. He testified that the large tubes were probably bent by the stevedores; there was evidence of damage from the cargo shifting which should be assessed against the ship; there was evidence of factory defects and some denting of tubes before the tubes were bundled; evidence of sling damage probably done during discharge from the ship; and considerable damage from moving the tubing with forklifts. He testified that dunnage is often used by shippers and carriers to prevent forklift damage. No witnesses could recall whether there was dunnage separating the lifts in the hold of the ship. Ramsey did not use dunnage on the load of tubing it carried directly to Hurricane’s yard, but was instructed by Hurricane to use dun-nage on subsequent loads. There was some dunnage used when the lifts were stored at Ramsey’s yard. Ramsey used forklifts to load the tubing at its yard, and Hurricane’s employees used forklifts to unload the tubing at its yard. There was evidence of damage done in both the loading process at Ramsey’s yard and the unloading process at Hurricane’s yard.

Hurricane’s purchasing manager testified that he did not know of any damage done by any particular handler, but he did see Ramsey damage one load at Ramsey’s yard. The steamship clerk testified that he did not see any damage inflicted by Ramsey when the cargo was discharged from the ship. Sometimes forklifts are used to move cargo around in the hold of a ship, but the clerk could not recall whether a forklift was used in this particular instance to put the tubing into the slings which were used to hoist the tubes out of the hold. There was evidence of damage by steel slings, but the clerk could not recall whether steel slings were used on this shipment. He testified that the only way to assess the true damage is to take the straps off of the bundles at the time of discharge, but that this was not done in this case nor is it done in the ordinary course of business.

McCluskey first saw the shipment of tubing at Ramsey’s yard. Prior to that examination, the tubing had been handled at the factory, was loaded onto the ship in Japan, possibly encountered rough seas in transit, was discharged from the ship by stevedores, and was transported by Ramsey to its yard. No examination of the interior tubes was made until the shipment was at Hurricane’s yard. Pictures taken at Ramsey’s yard showed that some bundles had been broken open, probably due to rough handling, but McCluskey testified that there was no way to determine who broke the bundles. McCluskey testified that his examination of the shipment revealed that it had factory defects, forklift damage, bent tubing, and end damage before it was ever in Ramsey’s possession.

The printed dock receipt forms signed by Ramsey’s drivers contain a statement that the shipment was “received in good order and condition.” The steamship clerk made notations on the receipts of the damage he could ascertain by examining the exterior of the bundles. As stated earlier, there was considerable damage which could be discovered only by opening the bundles. To this extent, the lifts of tubing were analogous to goods shipped in a sealed container.

We agree with appellant that if the tubes were in good condition when received by Ramsey, it was Ramsey’s burden to apportion the damages. Thompson v. Bob Tankersley Produce Co., 289 S.W.2d 840, 842 (Tex.Civ.App.—San Antonio 1956, writ ref’d n. r. e.). However, no presumption exists that the tubes were in good condition when delivered to the carrier. Strickland Transp. Co. v. Cummins Supply Co., 488 S.W.2d 181, 183 (Tex.Civ.App.—Fort Worth 1972, no writ); Yeckes-Eichenbaum, Inc. v. Texas Mexican Ry., 263 F.2d 791, 793 (5th Cir. 1959).

In order for a consignee or shipper to recover from a motor carrier for concealed damage, there must be proof that the shipment was in good condition when accepted by the motor carrier. Strickland Transp. Co. v. Cummins Supply Co., 488 S.W.2d at 183. Cf. T. I. M. E.-DC, Inc. v. Southwestern Historical Wax Museum Corp., 528 S.W.2d 901, 903 (Tex.Civ.App.—Waco 1975, no writ). Receipt in apparent good order by the carrier, coupled with the inability to ascertain defects by visual inspection, does not preclude a holding that a commodity was not in good condition when received by the carrier. Thompson v. Bob Tankersley Produce Co., 289 S.W.2d at 841. The printed statement on the dock receipts that the tubes were in good order and condition merely suffices to establish prima facie the condition of the exterior tubes visible to the steamship clerk and truck driver; it does not establish the condition of the entire shipment. Red Arrow Freight Lines, Inc. v. Howe, 480 S.W.2d 281, 285 (Tex.Civ.App.—Corpus Christi 1972, writ ref’d n. r. e.); Texas & Pac. Ry. v. George, 466 S.W.2d 659, 661 (Tex.Civ.App.—Fort Worth 1971, no writ).

The evidence conclusively establishes that this shipment was materially damaged before its acceptance by Ramsey. Ramsey could not determine the extent of damage before it accepted the shipment. It is impossible to apportion the damage among the numerous parties responsible therefor. Mitsui failed to prove its prima facie case, and under the facts of this case, we cannot hold Ramsey responsible for all of the damage.

In light of our holding, any errors possibly committed by the trial court were harmless. Tex.R.Civ.P. 434. Appellant’s motion for rehearing is overruled.

Judgment affirmed.

Judgment rendered, and original Opinion filed June 8, 1977.

Appellant’s motion for rehearing overruled, former Opinion ordered withdrawn.

Affirmed, and substitute Opinion on motion for rehearing filed July 27, 1977.