author: CURTISS BROWN, Justice.

text:
    Roy M. HUFFINGTON, Individually and Roy M. Huffington, Inc., Appellant, v. Haden UPCHURCH, Appellee.
    No. 1083.
    Court of Civil Appeals of Texas, Houston (14th Dist.).
    April 2, 1975.
    Rehearing Denied April 30, 1975.

      Alfred H. Ebert, Jr., Paul E. Harris, Thomas L. Schubert, Andrews, Kurth, Campbell & Jones, Houston, Frank G. Harmon, Baker & Botts, Houston, for appellant.
    Fred Parks, Houston, Sloan B. Blair, Howard G. Barker, Cantey, Hanger, Gooch, Cravens & Munn, Fort Worth, for appel-lee.
   CURTISS BROWN, Justice.

Appellant, Roy M. Huffington, (Huf-fington) and appellee, Haden J. Upchurch, (Upchurch) are business acquaintances and friends of long standing. Huffington is a well-educated and competent geologist. He also is a talented business man and fund raiser. Upchurch is a licensed lawyer but has never practiced law. He is an experienced landman as that term is understood, in the oil industry. Huffington is joined as appellant by the corporation Roy M. Huffington, Inc. (Inc.) which he formed in 1958. From formation (until at least 1970) Huffington was its sole and only stockholder. He served as Chairman of the Board, President, and Treasurer of the corporation. The other directors were either attorneys or employees of the company. Under the circumstances it is not surprising that Huffington dominated his wholly owned corporation.

Inc. became involved in a number of activities including shrimping, a processing plant, real estate and oil and gas programs. In the latter connection, Inc. would put together oil and gas “prospects” which it regarded as worthwhile and secured funds principally from those in a position to obtain tax benefits under our income tax laws. In general, these drilling programs provided for a certain portion of the money to be allocated to Inc. to cover its expenses. In the event the property proved productive, Inc. would obtain a reversion-ary interest upon pay-out of the original investment. Inc. was permitted to and did invest its own funds on occasion in the drilling programs it presented to its investors. Huffington contacted Upchurch in 1963 for his advice as to some competent landman that he might consider for employment. Upchurch suggested himself and became an employee of Inc. that year. R. E. Warren was already with the company as Chief Geologist and in 1964 Mr. Paul T. Scott joined Inc. as Production Engineer.

As an incentive to its key employees (Huffington, Upchurch, Warren and Scott) Inc. entered into written agreements giving such employees a percentage of the earned reversionary interests.

In 1965 the Fifth Circuit decided a case which was subject to the debatable interpretation that the entire reasonable value of the reversionary interest earned by the employees of Inc. could be taxed as current income to the employee in the year of vesting even though no significant moneys had actually been realized. There is a dispute in the evidence as to the significance of this case in bringing about the formation of the partnership between the parties. Appellants contend that concern oyer this tax case was the sole reason for the formation of the partnership. Appellee takes the position that although the tax decision may have to some extent initiated discussions of the manner in which the parties had been doing business that inquiry revealed that there was no justifiable fear of the application of the Frazell case to Inc.’s manner of operation. Appellee asserts that the partnership was formed to go into the oil and gas business and not solely for tax reasons.

As we view it, this dispute becomes somewhat academic, because it is undisputed that Huffington, Upchurch, Warren and Scott entered into a written partnership agreement. This partnership agreement is set out in full as an appendix following this opinion. In accordance with its terms it was renewed in writing for the years 1966, 1967 and 1968. It was not renewed in 1969 and the partnership expired by its own terms at midnight December 31, 1968. It was, however, in force during the critical year of 1968.

As retained consultants for Inc., the members of Huffington Associates (the partnership) continued very much as they had as employees of Inc. Each occupied the same office and performed the same functions and were compensated by partnership draws in the same amount as their previous salary. Also, the interest in the partnership was established so as to permit each of the partners to share in the earned reversionary interest at the same rate as they had enjoyed previously.

In early 1968, Huffington learned that General Sproul of Virginia International Company (Vico) had contacts in the Indonesian Ministry dealing with oil and gas matters. Huffington and Sproul arranged a series of meetings in Indonesia. During these negotiations Huffington Associates, the partnership, and Inc. were trying to conduct business as usual. No doubt, both the partnership and Inc. were somewhat handicapped by the absence of Huffington, their respective Managing Partner, President, Chairman of the Board, and Treasurer. Following one of Huffington’s early trips to Indonesia, Upchurch faced him with the direct question as to whether the partnership was in the Indonesian deal. He replied “Yes.” He later undertook to explain this by stating that he had in his mind that “we could work out something.” He stated that he had no conception of how that could be done but “we would see if we could get an interest in the project for each of them.”

There is much detailed evidence of the negotiations in Indonesia. The operative fact is that on August 8, 1968, during the existence of the partnership, the managing partner, Huffington, procured a production sharing contract in the name of Inc. and for its benefit. Vico also, of course, had an original fifty percent interest in the production sharing contract. There is also much evidence concerning Inc.’s handling this interest after obtaining the concession. Essentially, Inc. entered into a joint venture agreement in May of 1969, effective August 8, 1968, as a result of which Inc. retained: (a) a 10% working interest; (b) a 1% overriding royalty interest; and (c) a right and option to convert the 1% overriding royalty interest to a working interest as defined and provided for in said joint venture agreement.

Throughout this controversy, Upchurch has stoutly maintained his entitlement to his partnership share in the oil and gas production sharing agreement obtained by the Managing Partner of his partnership and placed in the name of the corporation wholly owned and controlled by such partner individually.

Upon refusal of his last demand, appel-lee instituted this suit. Briefly stated Up-church asserted breach of the partnership contract; breach by Huffington of the fiduciary relationship of a partner (especially a managing partner); fraud and conspiracy to defraud; breach of the trust relationship between Inc. and Associates; and that the production sharing contract was a partnership asset by virtue of the terms of the partnership contract and that Inc. holds legal title to the asset as agent and nominee of Associates under the terms of the partnership contract. Other allegations were made, but are not essential to the disposition of this appeal.

The case was tried to a jury on special issues as follows:

SPECIAL ISSUE NO. 1
Do you find from a preponderance of the evidence that it was the intent of the parties to the partnership agreement, as evidenced by their conduct, that during the existence of Huffington Associates, Roy M. Huffington, Inc., acting through its President, Roy M. Huffington, could no longer engage in any new oil and gas activity for its own benefit and that any such activity entered into thereafter by Roy M. Huffington, Inc. had to be undertaken solely for the benefit of Huf-fington Associates?
Answer “We do” or “We do not”.
Answer “We do”.
SPECIAL ISSUE NO. 2
Do you find from a preponderance of the evidence that after the formation of the partnership it was the intention of the parties thereto, as evidenced by their conduct, that any partnership interest in any particular new oil and gas venture would be covered by a separate agreement between the partnership and other parties or entities.
Answer “We do” or “We do not”.
Answer “We do not”.
SPECIAL ISSUE NO. 3
Do you find from a preponderance of the evidence that Haden J. Upchurch offered to pay his share, if any, of the expenses incurred in connection with negotiations leading up to the execution of the Production Sharing Contract prior to August 8, 1968?
Answer “We do” or “We do not”.
Answer “We do”.

The trial court impressed and enforced a constructive trust in favor of Upchurch of a 14.285% share in and to all of the interest created or retained by the joint venture agreement above mentioned standing in the name of Inc. including but not limited to: (a) 10% working interest; (b) 1% overriding royalty interest; (c) a right and option to convert the 1% overriding royalty interest to a working interest as defined and provided for in said contract along with same percentage share of all obligations, duties, responsibilities, expenses or payments attributable to the interests of Inc. created or retained by the joint venture agreement.

Appellants requested no special issues and did not object to the charge except to special issue number 3 on grounds not material to this appeal.

Appellants have assigned points making the following contentions: Appellants should have prevailed as a matter of law because (1) they owed no duty to appellee and (2) the partnership in general and ap-pellee in particular could not and would not have accepted the project. Appellants further contend that their motion for new trial should have been granted because (a) the special issues submitted were not controlling; (b) appellee waived essential grounds of recovery; (c) appellee objected to issues number 1 and 2 and is estopped from recovering on them; (d) appellee having filed a motion for new trial as well as appellant the trial court was obligated to grant same; (e) that the partners not claiming an interest in the Indonesia project were necessary parties; (f) since ap-pellee had historically been entitled to one-eighth interest in the properties earned by the associates, his recovery (if any) here should be limited to that percentage. Appellants also attack the legal sufficiency of the evidence to sustain special issue number 1.

Appellee, on the other hand, has properly assigned a cross-point contending that the trial court should have included in the judgment a constructive trust upon his proportionate share of the Indonesian venture that resulted from the withdrawal of two of the partners. Appellee has also assigned a number of cross-points which might properly be characterized as protective in nature.

The parties do not greatly differ as to the law governing this case. However, they reach different conclusions based upon the circumstances, issues submitted by the court and tactics used by the parties. The Supreme Court spoke in Smith v. Bolin, 153 Tex. 486, 271 S.W.2d 93 (1954) at page 96:

In the case of Meinhard v. Salmon, supra, Salmon negotiated and obtained for himself a new lease on certain property which had been under lease by Salmon and Meinhard operating under a joint venture agreement. Salmon was the sole manager of the property. The new lease included some adjoining property not included in the original lease. The court sustained Meinhard’s suit to establish his interest in the property, both the original and the adjoining property, on the theory of constructive trust for his benefit. The court, in an opinion by Chief Justice Cardozo, said [249 N.Y. 458, 164 N.E. 546]:
“Joint adventurers, like copartners, owe to one another, while the enterprise continues, the duty of the finest loyalty. Many forms of conduct permissible in a workaday world for those acting at arm’s length, are forbidden to those bound by fiduciary ties. A trustee is held to something stricter than the morals of the market place. Not honesty alone, but the punctilio of an honor the most sensitive, is then the standard of behavior. As to this there has developed a tradition that is unbending and inveterate. Uncompromising rigidity has been the attitude of courts of equity when petitioned to undermine the rule of undivided loyalty by the ‘disintegrating erosion’ of particular exceptions. Wendt v. Fischer, 243 N.Y. 439, 444, 154 N.E. 303. Only thus has the level of conduct for fiduciaries been kept at a level higher than that trodden by the crowd. It will not consciously be lowered by any judgment of this court. * * * »
As managing partner of their partnership enterprise, respondent owed his partners even a greater duty of loyalty than is normally required. In the Meinhard v. Salmon case, supra, the court said: “Salmon had put himself in a position in which thought of self was to be renounced, however hard the abnegation. He was much more than a coadventurer. He was a managing coadventurer. * * * For him and for those like him the rule of undivided loyalty is relentless and supreme.” MacDonald v. Follett, 142 Tex. 616, 180 S.W.2d 334.

Justice Greenhill in Omohundro v. Matthews, 161 Tex. 367, 341 S.W.2d 401 (1960) stated:

Constructive trusts have been held to apply where there have been oral promises, or in spite of oral promises, in a number of related situations. Perhaps the most conspicuous of such cases are those dealing with partnership property. Id. at 407.

In connection with this latter holding, the Supreme Court cited with approval the Texas Juris quotation:

Land will be regarded as held in trust for the firm by agreement or by operation of law where it has been brought into the partnership * * * though title be held by the members as cotenants or by some and not all of them. Id. at 407 n. 7.

We are unable to agree with appellants’ contentions that there was no evidence that the appellants breached any duty owing to the appellee. It is undisputed that the written partnership was in full force and effect for the calendar years 1966, 1967, and 1968 by virtue of the provisions of the instrument and written extensions voluntarily entered into between the partners. Huffington conceded that upon execution of the written partnership agreement, he fully understood and intended that:

Each of the parties hereto hereby agrees that they will become partners and do hereby associate themselves as partners in the art, trade and business of acting as consultants and engaging in the business of exploring, drilling, developing and producing oil, gas and other minerals and acquiring minerals and royalty interests as hereinafter more particularly set out.

He further acknowledged that Article III of the written partnership agreement stated:

The purpose of the partnership shall be to acquire, own, develop and operate oil, gas and mineral leases, mineral interest and royalty interest, properties and prospects and to produce therefrom, and treat, transport, and market oil or gas, or both of them, or production derived therefrom.

The purpose clause also set forth thirteen specific activities of Huffington- Associates, section 1 reading:

1. the purchase of working interests or undivided interests therein in oil or gas properties, leases, farmouts, prospects, mineral interests and royalty interests, which are producing or are capable of producing oil and gas, or either of them, in commercial quantities, as the managing partner herein named shall deem advisable and shall approve

Section 4 reads:

4. acting as a consultant for others for a fee either in the form of cash or an interest by virtue of a sharing arrangement or agreement in connection with any of the matters set out in the paragraphs of this Article.

Article VI of the written partnership agreement appoints Huffington as the managing partner with the right to determine policy, method of operation and supervision of the management of the business. Subsection 12 of Article III expressly contemplates holding property in the name of Inc.:

12. The holding of title to partnership properties in the name of Roy M. Huffington, Inc., or any subsidiary of, or successor to, Roy M. Huffington, Inc., or such other nominee as the managing partner may determine.

The parties themselves in writing in the agreement defined the scope of permissible activities outside of the oil and gas business by the provision reading:

Notwithstanding the foregoing enumeration of the purposes of this partnership, it is understood and agreed that this partnership is for the purpose only of conducting an oil and gas business and that each of the partners are free to conduct, in their individual capacities, or in association with others, any other business transactions not directly related to the business of acquiring mineral leases and other mineral or royalty interest and the exploration for and production of oil, gas and other minerals. (Emphasis ours)

Appellants clearly were in a fiduciary relationship to Upchurch. Appellants clearly owed a duty to appellee. The imposition of a constructive trust was fully justified, based on the taking of the Indonesian oil and gas prospect for the benefit of Inc. to the exclusion of appellee. Johnson v. Peckham, 132 Tex. 148, 120 S.W.2d 786 (1938); Fitz-Gerald v. Hull, 150 Tex. 39, 237 S.W.2d 256 (1951).

Appellants argue that the trial court failed to submit any controlling issues and that appellee failed to request such issues and that, therefore, appellee waived all grounds of recovery. Texas Rules of Civil Procedure 277, 279. We do not agree with either contention. This appears to be a case in which the often used but rarely correct characterization of the charge being that of the “court” is appropriate. The protective cross-points of ap-pellee and the transcript reflect numerous requested issues by Upchurch. No issues were requested by appellants. Without undertaking to read the mind of the trial court, the record would lead to the conclusion that it believed that the only possible fact issue in the case was whether the evidence relating to the tax reasons for the formation of the partnership, the similarity of the work and compensation before and after formation of the partnership, the fact that Inc. had entered into some of the program for its own account and other evidence may have constituted some evidence of an intent of the parties contrary to the partnership agreement. Since the burden of proof generally fell upon appellee, the court framed the issue in such fashion as to place the burden of proof upon him. Special Issue No. 2 had a similar purpose based upon the fact that the programs from year to year would vary in various specifics and Inc. might or might not take a portion of such program for its own benefit. Appellants objected neither to the form nor substance of these issues. Therefore, under Tex.R.Civ.P. 274 appellants have waived any objection to them. While we may have worded the issue differently, it is clear that the court intended to inquire if the parties to the partnership agreement intended that Huffington be precluded from operating Inc. for his own benefit to the exclusion of his partners. Thus, however imperfectly, it seeks a finding of a fiduciary relationship between Huffington, Upchurch and a nom-inor/nominee relationship between Inc. and Associates. A negative answer to those issues may have posed a question as to the applicability of the Parol Evidence Rule. We believe the issues meet the requisites of Tex.R.Civ.P. 277 in the absence of objections by appellants.

Appellants contend that there was no evidence of a breach of fiduciary relationship. It is undisputed that Huf-fington took the Indonesian oil and gas prospect in the name of his individually wholly owned corporation. The appellants’ claim that they had established as a matter of law that the partnership could not and would not have undertaken the project is also without merit. Appellants did not object to the charge on the grounds that fact issues were presented in connection with these contentions. Consequently, if the issues of fact were presented, they would be deemed as found by the trial court in such manner as to support its judgment. Tex. R.Civ.P. 279. There is ample evidence that appellee consistently asserted his right to his interest in the oil and gas prospect, and that the nature of the project was such as to require some outside funding in any event. The jury found that Upchurch offered to pay his share of the expenses incurred in connection with the negotiations. No objection was made, nor special issue requested, as to whether appellee was ready, willing and able to accept his partnership share in the oil and gas project.

We also overrule appellants’ ingenious contention that since appellee filed objections to the court’s charge he is es-topped to rely on the verdict. The mere fact that a party has exercised his right to object to the court’s charge under the provisions of Rule 272 cannot be made the basis of judicial estoppel. Frequently, both parties object to all issues submitted. Under appellants’ view the court in such a case would be estopped from rendering judgment on the verdict for either party. It is well settled, of course, that if one is entitled to one of several inconsistent remedies and makes an election and prosecutes such remedy to final judgment and receives anything of value under the claims tfius asserted, he is estopped from adopting a contrary position in later litigation. Seamans Oil Co. v. Guy, 115 Tex. 93, 276 S. W. 424 (1925, opinion adopted). Such judicial estoppel requires that a party be successful in maintaining a position before it is estopped from later attacking the same. Smith v. Chipley, 42 S.W.2d 645 (Tex.Civ. App. — Amarillo 1931, writ ref’d). Certainly the doctrine has no application to an objection by a party to the court’s charge.

Appellants take the position that because both parties filed motions for new trial in the trial court, such court was compelled to grant one of them. Appellants have found no authorities to support this startling proposition and we have been unable to find any. The taxpayers of this State and County have some legitimate interest in the finality of judicial processes. The trial court is not compelled to grant a new trial simply because motions for same are filed by all the litigants.

Scott and Warren withdrew from the partnership and executed letters listing the properties in which they claimed an interest. The Indonesian oil and gas prospect was not among them. They, in effect, abandoned any claim with respect to this prospect. Appellants contend that they are indispensable parties under Tex. R.Civ.P. 39. Appellee’s trial pleadings sought relief only against appellants. In Cooper v. Texas Gulf Industries, Inc., 513 S.W.2d 200 (Tex.Sup.1974), the Supreme Court construed amended Rule 39, Tex.R. Civ.P. (1971) and announced a departure from Petroleum Anchor Equipment, Inc. v. Tyra, 406 S.W.2d 891 (Tex.Sup.1966). The Supreme Court decided that the principal factor in determining this question now is whether the court ought to proceed with those who are present. One of the practical matters the Court took into consideration is the fact that the case actually had been tried as to those parties who were present and there was no objection at the trial level concerning the nonjoinder of a party. In this case there was no such objection until after verdict. No preliminary plea in abatement or other motion attacking the court’s jurisdiction has been brought forward. Furthermore, the former partners who were not.parties to this action assert no claim to the project in question. We therefore conclude, as did the Supreme Court in Cooper, supra, that the court ought to have proceeded with those present in this case as it in fact did.

Appellants’ final point and ap-pellee’s first cross-point will be considered together. Appellants argue that equity compels Upchurch receive no more than 12.5% interest. This position is based upon their demonstration that the practical effect of the agreements between Associates and Inc. was to vest Upchurch with a ⅛⅛ interest in the earned revisionary interest of the projects promoted by Inc. and Associates. Appellee points out that the partnership agreement clearly provides that his interest be 14.285%. In his cross-point he contends that he is entitled to his proportionate partnership share of the interest in the Indonesian project abandoned by Warren and Scott by the execution of the letters above referred to. We sustain this cross-point. We perceive of no reason why Huffington would be entitled to all of the interests abandoned by Warren and Scott. It is equitable that the partners share in this interest prorata. The parties stipulated that in the event Upchurch is entitled to his proportionate part of the interest of the other partners that the percentage would be Huffington 80% and Up-church 20%. The judgment is therefore modified to provide that the constructive trust impressed and enforced in favor of Upchurch is a 20% share in and to all of the interests created or retained by the joint venture agreement of May 19, 1969, effective August 8, 1968 standing in the name of Roy M. Huffington, Inc., including but not limited to: (a) a 10% working interest; (b) a 1% overriding royalty interest; (c) a right and option to convert said 1% overriding royalty interest to the working interest as defined and provided for in said contract along with the same percentage share of all obligations, duties, responsibilities, expenses or payments attributable to the interests of Roy M. Huf-fington, Inc. created or retained by the joint venture agreement. As modified, we affirm. All of appellants’ points have been carefully considered and are overruled. Appellee’s protective cross-points need not be considered.

Modified and affirmed.

APPENDIX

PARTNERSHIP AGREEMENT OF HUFFINGTON ASSOCIATES

THE STATE OF TEXAS COUNTY OF HARRIS }

THIS AGREEMENT made and entered into on this 28th day of December, 1965, by and between ROY M. HUFFINGTON, HADEN J. UP-CHURCH, R. E. WARREN and PAUL T. SCOTT, all residents of Houston, Harris County, Texas,

WITNESSETH:

ARTICLE I.

Each of the parties hereto hereby agrees that they will become partners and do hereby associate themselves as partners in the art, trade and business of acting as consultants and engaging in the business of exploring, drilling, developing and producing oil, gas and other minerals and acquiring mineral and royalty interests as hereinafter more particularly set out, under the firm name and style of HUFFINGTON ASSOCIATES, effective as of and commencing on the first day of January, 1966, upon the terms and conditions hereinafter set out in this agreement.

ARTICLE II.

The principal office of such partnership shall be located at 2210 Tennessee Building, Houston, Texas 77002, or at such other place or places as the partners may hereafter mutually agree upon for that purpose.

ARTICLE III.

The purposes of the partnership shall be to acquire, own, develop and operate oil, gas and mineral leases, mineral interests and royalty interests, properties and prospects and to produce therefrom and treat, transport and market oil or gas, or both of them, or production derived therefrom. Such purposes shall be accomplished through:

1. the purchase of working interests or undivided interests therein, in oil or gas properties, leases, farmouts, prospects, mineral interests and royalty interests, which are producing or are capable of producing oil and gas, or either of them, in commercial quantities, as the managing partner herein named shall deem advisable and shall approve;

2. the conducting of geological and geophysical investigations on prospective oil and gas properties, including, without limitation, the exploration thereof through the use of seismograph, gravity meter and other scientific means and methods of exploration;

3. the drilling, reworking, equipping, plugging back or deepening either alone or in conjunction with others, of such wells as the managing partner may determine;

4. acting as a consultant for others for a fee either in the form of cash or an interest by virtue of a sharing arrangement or agreement in connection with any of the matters set out in the paragraphs of this Article;

5. the employment of such personnel and the establishment of such facilities as in the judgment of the managing partner may be necessary or advisable;

6. the employment of such legal, accounting, geological, geophysical and engineering services and advice as may be necessary or advisable in the judgment of the managing partner;

7. the operating of producing properties, the entering into of any operating agreement or agreements with others with respect to properties owned by such others or in which the partnership may have an interest, containing such terms, provisions and conditions as the managing partner may approve, and the amendment, revision or termination of any operating agreement;

8. the borrowing of money from banks and other lending institutions for all purposes of the partnership, and the pledging of partnership properties and the production therefrom to secure the repayment of the sums so borrowed as may be approved by the managing partner;

9. the administration of non-producing properties for the partnership or for others;

10. the treating, transporting and marketing of oil and gas, and the execution of division orders, gas sales contracts and other marketing agreements as may be approved by the managing partner;

11. the sale of one or more payments from production from properties owned by the partnership;

12. the holding of title to partnership properties in the name of Roy M. Huffington, Inc. or any subsidiary of, or successor to, Roy M. Huffing-ton, Inc., or such other nominee as the managing partner may determine;

13. without limitation by the foregoing, any acts or activities advisable or necessary in the judgment of the managing partner in conducting the affairs of the partnership.

Notwithstanding the foregoing enumeration of the purposes of this partnership, it is understood and agreed that this partnership is for the purpose only of conducting an oil and gas business, and that each of the partners are free to conduct, in their individual capacities, or in association with others, any other business transactions not directly related to the business of acquiring mineral leases and other mineral or royalty interests and the exploration for and production of oil, gas and other minerals.

ARTICLE IV.

To accomplish the foregoing purposes, each partner has upon this date paid into the partnership, as a capital contribution, the sum of money set out in figures opposite his name as follows:

Roy M. Huffington $571.42
Haden J. Upchurch $142.86
R. E. Warren $142.86
Paul T. Scott $142.86

ARTICLE V.

Each of the partners will at all times during the continuance of this partnership give his attendance to, and to the utmost of his skill and power shall exert himself for, the joint interest, benefit and advantage of said partnership business.

ARTICLE VI.

Roy M. Huffington is hereby designated as the managing partner of said partnership, and as such managing partner shall determine the policy and method of operation of the partnership. Said managing partner shall likewise have supervision of the management of the business and the assignment of duties and shall preside at all meetings of the partnership. In the event of the incapacity of Roy M. Huffington to act as managing partner, then the remaining partners shall, by majority vote, elect a successor managing partner.

ARTICLE VII.

The duties of each of the parties hereto shall be generally as follows:

Roy M. Huffington shall act and have all of the rights and duties as are outlined in this agreement for the managing partner.

Haden J. Upchurch shall be in charge of, and shall perform all of the functions relating to, lease acquisitions, records, rentals and all of the other duties pertaining to the land department of the partnership. He shall also be in direct charge of the supervision of legal matters.

R. E. Warren shall perform the functions of chief geologist and shall be in direct charge of supervision of all geological, geophysical and other exploration work of the partnership.

Paul T. Scott shall perform the functions of chief engineer and shall be in direct supervision and control of any and all matters pertaining to drilling, producing and operating of partnership properties.

ARTICLE VIII.

All profits and losses, if any, during the term of this agreement, and any and all interests acquired by the partnership in producing properties as the result of a sharing arrangement or agreement entered into by and between the partnership and others in connection with any exploration or development program, and any other assets, shall be apportioned and divided among and shall be owned by the partners in the following percentages :

Roy M. Huffington 57.1429%
Haden J. Upchurch 14.2857%
R. E. Warren 14.2857%
Paul T. Scott 14.2857%

ARTICLE IX.

There shall be kept, during the term of this agreement, just and true books of account, which said books shall be used in common by the partners so that either of them may have access thereto without any interruption or hindrance by the others; such books shall be kept at the principal office of said partnership and shall not be removed therefrom by any of the partners, except with the consent of all of the members of said partnership. The books of the partnership shall be audited annually by a reputable firm of certified public accountants, a copy of whose certified report shall be furnished to each of the partners. The books of the partnership shall be kept on a calendar year basis. The partnership funds shall be kept in a Houston bank in a partnership account, and withdrawals therefrom may be made upon the signature of any one of the partners.

ARTICLE X.

The partnership shall continue for a period of one (1) year from January 1, 1966, and for as long thereafter as the partners may, by written agreement, extend said term.

ARTICLE XI.

Each of the partners shall be entitled to an annual drawing account, payable in monthly installments during each calendar year, of an amount to be determined by the managing partner. Unless changed by the managing partner, each partner’s annual drawing account shall be in the following amounts:

Roy M. Huffington $1,500.00
Haden J. Upchurch $1,500.00
R. E. Warren $1,350.00
Paul T. Scott $1,500.00

The total amount of such drawing accounts shall be contingent upon the earnings of the partnership, but shall be charged as a partnership expense prior to the determination of the profits and losses for the year.

ARTICLE XII.

In the event of the death of a partner during any year during which this partnership shall continue in existence, the partnership shall not be dissolved, but shall continue during the calendar year in which the death of such partner occurred, and the personal representatives of the deceased partner shall continue to be entitled to share and receive the interest of the deceased partner in partnership income accruing during the balance of such year. Such personal representatives shall not, however, become partners. At the end of the year in which the death of any partner shall occur, the partnership shall be dissolved, and the personal representatives of the deceased partner shall thereafter have no further interest in the partnership business, the property, capital and effects of the partnership.

In the event any partner shall at any time, for any cause, withdraw from the partnership, then the interest of such partner in any leasehold interest, mineral interest or royalty interest in any producing or non-producing properties theretofore acquired by the partnership shall be thereupon assigned to said withdrawing partner, and such withdrawing partner shall be paid his pro rata share of the book value of all other assets belonging to the partnership, but it is expressly understood and agreed that no value shall be assigned to good will. Thereafter such withdrawing partner shall have no further interest in any other assets or property of the partnership. The withdrawal of such partner shall not have the effect of terminating the partnership. It is further understood and agreed that any losses accrued or incurred by the partnership prior to the time of the withdrawal of any partner shall be shared by the withdrawing partner and all other partners pro rata.

ARTICLE XIII.

At the end of the term of this agreement, or any extension thereof, or earlier termination of said partnership by dissolution, the partners shall each to the other make a true, just and final accounting of all things relating to the partnership business, and the property, capital and effects, as well as the gains and increases thereof, which shall be remaining, shall be divided in proportion to the respective interest of the parties hereto in said partnership properties at the time of such dissolution.

ARTICLE XIV.

This agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, administrators and assigns.

EXECUTED in multiple originals, each of equal dignity, but all of which taken together shall constitute one agreement on this the 28th day of December, 1965, but effective as of the first day of January, 1966.

/s/ Roy M. Huffington_

ROY M. HUFFINGTON

/s/ Haden J. Upchurch_

HADEN J. UPCHURCH

/s/ R. E. Warren_

R. E. WARREN

/s/ Paul T. Scott_

PAUL T. SCOTT

THE STATE OF TEXAS 1 COUNTY OF HARRIS J

BEFORE ME, the undersigned authority, on this day personally appeared ROY M. HUFFINGTON, known to me to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he executed the same for the purposes and consideration therein expressed.

GIVEN UNDER MY HAND AND SEAL OF OFFICE this the 28th day of December, 1965.

/s/ Rosa Lea Spaugh_

Notary Public in and for Harris County, Texas

THE STATE OF TEXAS 1 COUNTY OF HARRIS J

BEFORE ME, the undersigned authority, on this day personally appeared HADEN J. UPCHURCH, known to me to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he executed the same for the purposes and consideration therein expressed.

GIVEN UNDER MY HAND AND SEAL OF OFFICE this the 28th day of December, 1965.

/s/ Charlene Williams

Notary Public in and for Harris County, Texas

THE STATE OF TEXAS 1 COUNTY OF HARRIS J

BEFORE ME, the undersigned authority, on this day personally appeared R. E. WARREN, known to me to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he executed the same for the purposes and consideration therein expressed.

GIVEN UNDER MY HAND AND SEAL OF OFFICE this the 28th day of December, 1965.

/s/ Charlene Williams

Notary Public in and for Harris County, Texas

THE STATE OF TEXAS ~l COUNTY OF HARRIS j

BEFORE ME, the undersigned authority, on this day personally appeared PAUL T. SCOTT, known to me to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he executed the same for the purposes and consideration therein expressed.

GIVEN UNDER MY HAND AND SEAL OF OFFICE this the 28th day of December, 1965.

/s/ Charlene Williams

Notary Public in and for Harris County, Texas

      . United States v. Frazell, 335 F.2d 487 (5th Cir.1964), cert. denied 330 U.S. 961, 85 S.Ct. 1104, 14 L.Ed.2d 152 (1965).


source: Caselaw Access Project

author: BARROW, Chief Justice.

license: Public Domain

text:
    Olivia GARZA, Independent Executrix, Appellant, v. C-G-R, INC., et al., Appellees.
    No. 15399.
    Court of Civil Appeals of Texas, San Antonio.
    March 19, 1975.
    Rehearing Denied April 16, 1975.
    Cobb, Thurmond, & Bain, Inc., Earle Cobb, Jr., San Antonio, for appellant.
    Remy, Schiller & Bayern, William E. Remy, Arthur H. Bayern, San Antonio, for appellees.
   BARROW, Chief Justice.

Olivia Garza, Independent Executrix of the Estate of Gilbert R. Garza, deceased, has perfected her appeal from a take-nothing judgment entered after an instructed verdict in her suit to recover funds allegedly owed the estate under a Stock Purchase and Redemption Agreement entered into by Gilbert R. Garza and appellees, Daniel A. Cerna and Larry J. Raba, at the time C-G-R, Inc. was incorporated.

Prior to January 12, 1971, Cerna, Raba and Garza were in a partnership engaged in performing architectural and engineering services. On that date they incorporated as C-G-R, Inc., and in connection therewith, entered into a Stock Purchase and Redemption Agreement to restrict the transfer of the stock of each of the three stockholders. Paragraph No. 5 relates to “Death of Stockholder” and provides in substance that on the death of a stockholder, his legal representative shall be obliged to sell to the corporation the decedent’s stock at a price equal to the adjusted book value as of the last day of the month preceding his death plus a pro rata share of 90 per cent of the accounts receivable at such time, provided, however, that in the event that the corporation’s certified public accountant determines that such value is less than $70,000.00, the corporation shall be obliged to purchase the shares of decedent for the sum of $70,000.00 cash. To carry out this agreement, the corporation carried life insurance policies on each of the three stockholders in the face amount of $70,000.00 each.

Gilbert R. Garza died on November 11, 1972, and his widow qualified as independent executrix. Andrew J. Beaver, Jr., a certified public account (CPA) had handled the corporation’s books from the outset, and prior thereto, had handled the books for the partnership. After Garza’s death, Beaver made an unaudited report as of October 31, 1972, and determined that the value of Garza’s stock as per the agreement was $36,683.52. This value was not satisfactory to Mrs. Garza, and she had Beaver make an audited report of the company’s financial condition. Based on this audited report, he determined that the value of Garza’s stock was slightly less than the unaudited value. The sum of $70,000.00 was paid Mrs. Garza and the stock transferred to appellees with the understanding that her acceptance of this amount was without prejudice to her claim for a greater sum.

This suit was originally filed against ap-pellees wherein it was alleged that Beaver’s audit did not properly reflect the value of the corporation in that certain assets were omitted or understated and certain expenses were overstated. By a supplemental petition, Mrs. Garza joined Beaver as a defendant and alleged that he had rendered a false, misleading or mistaken account and that his acts constituted negligence as well as a breach of contract. It was also alleged in the supplemental petition that defendants had concealed and withheld information as to assets and that they had intentionally and with the intent to deprive appellant of her rights, understated the value of all assets. The trial court severed the claim against Beaver from the suit against appellees and proceeded to trial before a jury on the claim against appellees. At the close of appellant’s case, the trial court granted appel-lee’s motion for an instructed verdict that plaintiff take nothing.

Appellant asserts fifteen points of error. Eleven of these points complain of procedural matters relating to the trial of the case, and she concedes that any error is harmless unless appellant has introduced evidence either in the record or by bill of exception that the value of Garza’s stock as of October 31, 1972, is in excess of $70,000.00. Appellant seeks to establish this value by her points Nos. 7-10, and we will therefore consider them at the outset.

These points relate primarily to the meaning of “adjusted book value” as used in the Agreement. Appellant asserts that Beaver erred in considering only the cash surrender value of the three life insurance policies in lieu of the face amount of the policy on Garza’s life. Also, she urges that no consideration was given by Beaver to the value of the corporation’s goodwill. It is also asserted that Beaver understated the value of the corporation’s physical properties by using their depreciated value rather than their market value and that an excessive amount of income was deferred for future tax liability.

The term “book value” has a definite meaning in the accounting profession; however, there was no testimony as to the specific meaning of “adjusted book value.” Rather, it is apparent that, as indicated by the testimony of Beaver and appellant’s expert witness, the meaning of this term varies from account to account depending on what items are to be adjusted. The Agreement of the parties clearly contemplated that this value would be determined in this matter by the corporation's CPA, that is, by Beaver. The evidence establishes that he had handled the corporation’s books for several years and that the term “adjusted book value” had a definite meaning to him and to the parties to the Agreement. Beaver testified that the adjusted book value was computed at the close of each corporate year and that he determined the adjusted book value as of October 31, 1972, in the same manner as he had determined it in prior years. Specifically, he adjusted the book value primarily as follows: by correcting any posting errors of the bookkeeper, by computing the annual depreciation of all physical assets, and by adding the increase in cash value of the corporation’s life insurance policies. He also deducted all sums drawn during the year by each stockholder. The uncontra-dicted record is that these same adjustments were made to the book value at the close of each prior year of the corporate or partnership business.

Appellant called Mr. Derflinger, a certified public accountant, as an expert witness, and he testified by bill of exception that the above method of arriving at the value of Garza’s stock did not measure its true value. He valued Garza’s stock as somewhere between $95,485.25 and $132,-844.41. Derflinger’s increase over Beaver’s valuation was largely brought about by his considering the face amount of Garza’s life insurance policy in lieu of the cash surrender value of all corporate policies, by increase in the valuation of physical assets by estimating the market value of same in lieu of the depreciated value which was used for tax purposes, by considering the value of work in progress but unbilled at the time of Garza’s death, and by reducing the reserve for deferred income tax liability. He admitted that in doing so, he actually determined the “fair market value” of the stock rather than its “adjusted book value.”

It is seen that the Agreement specifically authorizes the corporation’s CPA to add to the adjusted hook value a sum equal to the deceased stockholder’s pro rata share of 90 per cent of the accounts receivable as of the last day of the month preceding the date of death. There is no authority given by the Agreement for consideration of any sum for the value of work in progress, but unbilled. In view of the specific agreement regarding accounts receivable, the trial court did not err in excluding the testimony as to the value of the work in progress.

The trial court also properly excluded testimony as to the face value of the policy on Garza’s life. The Agreement expressly provides for computation of the adjusted book value as of the last day of the month preceding the stockholder’s death. At this time the policy on Garza’s life, as well as the other policies owned by the corporation had only a cash surrender value.

None of the other alleged understatement of assets or overstatement of liabilities would make any significant difference in the value of Garza’s stock as of October 31, 1972, in that it increased by approximately $18,000.00 at the most. The value of Garza’s shares would thus remain substantially below the $70,000.00 heretofore paid appellant. Therefore, it is unnecessary to determine if Beaver erred in considering the depreciated value of the physical assets, as well as the amount of deferred income tax. Reversible error is not shown by appellant’s points seven through ten.

The other eleven points complain of procedural errors which are harmless error unless she can show potential value in excess of $70,000.00 for Garza’s stock. She has failed to do so; therefore, it is unnecessary to consider these points.

The judgment of the trial court is affirmed.

      . “5. DEATH OE STOCKHOLDER, (a) On the death of a Stockholder while owning stock in the Corporation, his executors or administrators shall be obliged within 30 days after their qualification to offer to sell to the Corporation all the stock of the decedent at a price equal to the adjusted book value of the deceased Stockholder’s shares as of the last day of the month preceding the date of death of the deceased Stockholder plus 90% of that portion of the accounts receivable as of the last day of the month preceding the date of death of the deceased Stockholder as the number of shares of stock of the Corporation owned by that Stockholder bears to the total number of shares of stock of the Corporation then outstanding, provided, however, that in the event that the Corporation’s certified public accountant determines that such price is less than $70,000.00 the Corporation shall be obliged to purchase all of the shares of the decedent for $70,000.00 cash. Said price shall be delivered to the executors or administrators of the decedent within 60 days after the receipt of such offer and the executors or administrators of the decedent shall vote, and take any other necessary action, in accordance with the election of the majority of the remaining Stockholders.
      (b) In the event the Corporation’s certified public accountant has determined the price to be in excess of $70,000.00, the $70,000.00 cash will be paid as provided in subparagraph (a) above and the excess over $70,000.00 shall be paid in not less than 4 equal annual installments beginning with one year from the date that the $70,-000.00 cash is 'paid to the decedent’s executors or administrators. The Corporation reserves the right at any time to prepay without penalty all or any part of said excess over $70,000.00. Interest at the rate of 6% per annum shall accrue on the unpaid balance of the purchase price in excess of $70,000.00 from and after the date of payment of the $70,000.00 cash.”

      . The trial court concluded that the parties were bound by the findings of the corporation’s OPA in the absence of fraud or had faith, and excluded most of this witness’ testimony.


author: COULSON, Justice.

text:
    McCANE SONDOCK DETECTIVE AGENCY, Appellant, v. PENLAND DISTRIBUTORS, INC., Appellee.
    No. 1038.
    Court of Civil Appeals of Texas, Houston (14th Dist.).
    April 30, 1975.

      James Limmer, William Book, Pomeroy & Tekell, Houston, for appellant.
    Ronald Tucker, Powell, Tucker, Kain & Reedy, Houston, for appellee.
   COULSON, Justice.

Appellant, McCane Sondock Detective Agency, was sued for negligently failing to fulfill its obligations under a contract with the appellee, Penland Distributors, Inc.

Appellant is in the business of providing theft protection through electronic burglar alarm systems. The contract between the parties in this case was entered into on November 19, 1962. By the terms of the agreement, the appellant was to install and maintain a burglar alarm system on the ap-pellee’s premises. The appellee was obligated to pay a monthly fee for the service and to notify the appellant of any defects promptly. The contract limited the appellant’s liability to $25 “in case of loss . resulting by reason of failure of the performance of the alarm system to operate. . . . ” The appellant contends that this provision limiting liability should be operative in this case.

The burglar alarm system which was installed by the appellant is referred to as a “loop” system. The loop system consisted of a string of ten to fourteen transmitters at different locations linked together by telephone lines. Those lines lead into an electronic monitor called a “McCullouch Panel” located in the McCane Sondock alarm center. Each transmitter was connected to one or more electric contacts which, when activated, would send an electrical signal through the loop system to the appellant’s monitor. To be operative the system had to be set by the appellee’s employees. The loop system is distinguishable from a “direct line” system in that a group of customers are tied into a loop system, whereas, a direct line system links a single customer directly to a monitor in the McCane Sondock alarm center.

The contract between the appellant and the appellee did not specify any obligations other than those of installation and rental payment. However, the critical aspect of the system was the appellant’s response to the signals which were transmitted through the loop system to the monitor in the Mc-Cane Sondock alarm center. The appellant maintained a service force of repairmen and investigators as well as a direct line with police headquarters. Upon receiving an alarm, the appellant normally contacted the police and simultaneously dispatched its own personnel to the location in question.

Sometime during the night of May 5, 1966, the appellee’s warehouse storing alcoholic beverages was broken into and 409 cases of liquor were stolen. The warehouse was protected by the appellant’s burglar alarm system (hereinafter the loop system). It can be reasonably concluded from the evidence that prior to entering the warehouse, the burglar or burglars cut the telephone line to the warehouse which linked its transmitter to the loop system. This act resulted in a flashing light on the monitor in the McCane Sondock alarm center warning of trouble on the loop. However, no indication that a contact had been activated was received on the monitor. The flashing light on the monitor indicating trouble on the loop did not pinpoint from where the trouble originated. The appellant determined that the trouble was “telephone company” trouble. The appellant, upon observing the light indicating trouble on the loop, did not contact the police department nor dispatch its own investigator or repairman. There was conflicting evidence on the question of whether the telephone company was contacted as soon as the light indicating trouble on the loop was observed, or eight hours later as is indicated by telephone company records.

In response to special issues, the jury found that the alarm system leased by the appellee operated on the night of the burglary; that, upon receipt of notice of trouble on the loop system, the appellant negligently failed to send a repairman or repairmen to check out the trouble on the loop; and that such negligence was a proximate cause of the loss suffered by the appellee. The jury found that $5,000 would reasonably compensate the appellee for the damages it suffered. On January 28, 1974, based upon the jury verdict, the trial court entered a final judgment for Penland Distributors, Inc. against McCane Sondock Detective Agency in the sum of $5,000, together with interest and costs. McCane Sondock Detective Agency has perfected its appeal from that final judgment.

The appellant has raised thirteen points of error on this appeal.

The third and sixth points of error urge that the trial court erred in submitting special issues number 1 and 2. Those issues sought to determine whether the burglar alarm system operated on the night in question, and whether the defendant was negligent in failing to respond to the flashing light giving notice of trouble on the loop system. A finding that the system did operate on the occasion in question was essential to the appellee’s case. Without such a finding the contract provision limiting the appellant’s liability to $25 would have been applicable. The appellant contends that there were no pleadings to support the submission of those issues.

The appellee was granted leave to file a trial amendment. The appellant has not challenged the validity of that trial amendment on appeal. The amended pleading reads in part:

. . . that Defendant McCane-Son-dock Detective Agency failed to send a McCane-Sondock repairman or repairmen to check out the loop on the Mc-Cullouch panel which Penland Distributors, Inc. was on after receiving a signal on said burglar alarm system which would indicate that an irregularity had occurred on said loop and that such failure to dispatch said repairman or repair-, men of McCane-Sondock Detective Agency was negligent and a proximate cause of the damages suffered by Plaintiff herein.

This pleading raises the pertinent questions. The operation of the loop system on the occasion in question is alleged by the statement that the defendant received a signal on the burglar alarm system. The negligence issue is raised in the allegation that failure to send repair personnel was negligence. The pleadings need not be drawn with absolute precision. It is sufficient if the language of the pleadings gave the defendant notice as to what issues were on trial. These pleadings meet that test. Morris v. J. I. Case Credit Corporation, 411 S.W.2d 783 (Tex.Civ.App.—San Antonio 1967, writ ref’d n. r. e.); Mr. Eddie, Inc. v. Ginsberg, 430 S.W.2d 5 (Tex.Civ.App.—Eastland 1968, writ ref’d n. r. e.).

Points of error one and two deal with the sufficiency of the evidence on the first special issue finding that the alarm system operated on the night of the burglary. Appellant argues that the evidence on this point was either legally or factually insufficient.

The court cannot say that the evidence on this point is so weak that the ultimate fact issue cannot be reasonably inferred from it. Calvert, “No Evidence” and “Insufficient Evidence” Points of Error, 38 Tex.L.Rev. 361, 363 (1960). Nor can we say that the decision of the jury is so against the great weight and preponderance of the evidence as to be clearly wrong or unjust. In re King’s Estate, 150 Tex. 662, 244 S.W.2d 660 (1952).

The evidence shows that Mr. Son-dock, appellant’s president, testified that a signal was received in the alarm center of McCane-Sondock on the night of the burglary. This signal admittedly indicated that there was some kind of trouble, presumably telephone trouble, on the loop which served the appellee. The appellant’s employee, Brannon, testified that telephone lines connect the appellee’s location with the alarm center and that when trouble arose on those lines a signal was received on the appellant’s monitor. It is within the domain of the jury to draw reasonable inferences from the evidence. Apparently, the jury determined that the telephone lines were an integral part of the appellant’s operation and that the burglar alarm system would not be a system without those lines. Therefore, when the warning light at appellant’s monitor indicated trouble on the telephone line, the system was operating. This is a reasonable inference from the evidence presented before the jury.

Appellant’s fourth, fifth, seventh and eighth points of error focus on the sufficiency of the evidence on the issues of negligence and proximate cause. The main thrust of the appellant’s argument is that its actions could not be a proximate cause of the loss suffered by the appellee as it was the action of some third party which caused the loss. The appellant contends that it is pure speculation to determine that any action on its part could have had any effect upon the burglar’s success or failure. Vastola v. Connecticut Protective System, 133 Conn. 18, 47 A.2d 844 (1946) and an annotation in 165 A.L.R. 1254 are cited by the appellant as authorities for the proposition that a burglar alarm systems company should not be held liable, in spite of a showing of negligence, because the question of whether or not a loss would have occurred but for such negligence cannot be answered with any degree of certainty.

We do not agree with the reasoning offered by the appellant. The evidence is sufficient to present a jury question as to whether the appellant’s negligence was a proximate cause of the appel-lee’s loss. In Better Food Markets v. American Dist. Tel. Co., 40 Cal.2d 179, 253 P.2d 10 (1953), the California Supreme Court found that, where there had been a nine minute delay between the reception of a signal on a burglar alarm system and the reaction of the burglar alarm system’s personnel to the alarm, there was a question for the jury on the issue of proximate cause. In this case, there is evidence that the alarm system operated by indicating that there was trouble on the loop system. The appellant did not dispatch a repairman. There is testimony that the telephone company was not called until eight hours after trouble on the loop system was indicated to employees of McCane Sondock Detective Agency at its monitoring óenter. In addition, there was evidence that the burglar or burglars were on the appellee’s property between an hour and hour and forty-five minutes. This evidence is sufficient to support the finding of the jury that the appellant was negligent in failing to respond to the notice of trouble, and that such negligence was a proximate cause of the loss suffered by the appellee. See, Braitman v. Overlook Terrace Corp., 132 N.J.Super. 51, 332 A.2d 212 (App.Div.1974).

Appellant’s ninth point of error complains that there was no special issue inquiring as to whether or not the employees of McCane Sondock Detective Agency were working in the course and scope of their employment. This point is overruled. Texas Rules of Civil Procedure, rule 272 states that “objections [to submission of special issues] shall in every instance be presented to the court in writing before the charge is read to the jury, and all objections not so made and presented shall be considered as waived.” Tex.R. Civ.P. 279 puts the burden upon the party complaining of the insufficiency of the issues submitted to object in clear written form. No such objection was made by the appellant in accordance with Rule 272 and Rule 279.

In points of error 10 and 12, the appellant urges that the special issues submitted do not make it clear which defendant is being referred to in each question. This point of error is not well founded. The trial amendment made by the appellee at the close of its case specified only one defendant, McCane Sondock Detective Agency. The amended pleadings supersede all earlier pleadings not incorporated by reference. Zock v. Bank of Southwest National Ass’n, Houston, 464 S.W.2d 375 (Tex.Civ.App.—Houston [14th Dist.] 1971). The case went to the jury on the amended pleading wherein only one defendant was named. For that reason, there was no need to have jury findings against a multiplicity of defendants or to have a finding on the question of whether McCane Son-dock Protective Systems, Inc. assumed the liabilities of McCane Sondock Detective Agency.

The eleventh point of error raised by the appellant urges that the trial court erred in refusing to allow the appellant to cross-examine the appellee’s witness, Thad Collier. During the trial, the appellant sought to ask the witness to explain the meaning and intent of two documents entered into evidence by the appellee. The documents were forms requesting the temporary removal of McCane Sondock alarm equipment from the appellee’s warehouse. Collier had signed the directives for the appellee and was qualified to testify about them. The trial judge determined that the items in evidence were clear on their face and that the appellant’s questions were unnecessary.

Although the cross-examination should have been allowed, the denial of cross-examination on this point did not constitute reversible error. It did not amount 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 the case . . . .” Tex.R.Civ.P. 434; Continental Casualty Company v. Thomas, 463 S.W.2d 501 (Tex.Civ.App.—Beaumont 1971, no writ).

The final point of error concerns the trial court’s refusal to include an explanatory instruction on sole proximate cause as requested by the appellant. The doctrine of sole proximate cause constitutes an inferential rebuttable issue, and as such it is no longer submitted to the jury. Tex.R.Civ.P. 277. The trial court is directed by Rule 277 to submit “such explanatory instructions and definitions as shall be proper to enable the jury to render a verdict. . . . ” The sufficiency of the explanations necessary to that end is largely left to the discretion of the trial judge. Gulf Insurance Company v. Vela, 361 S. W.2d 904 (Tex.Civ.App. — Austin 1962, writ ref’d n. r. e.). The denial of the appellant’s requested instruction has not been shown to be an abuse of that discretion.

Each of the appellant’s points of error has been considered and overruled.

Affirmed.


author: PER CURIAM:

text:
    SOUTHWESTERN BELL TELEPHONE COMPANY, Appellant, v. STATE of Texas, Appellee.
    No. 12301.
    Court of Civil Appeals of Texas, Austin.
    May 14, 1975.

      Will Sears, Sears and Burns, Houston, for appellant.
    John L. Hill, Atty. Gen., John W. Odam, Jr., Asst. Atty. Gen., Mike Willatt, Stockton, Fisher & Willatt, Austin, for appellee.
   PER CURIAM:

This is an appeal from the order of the district court of Travis County which temporarily enjoined appellant, Southwestern Bell Telephone Company, from increasing the intrastate long distance telephone rates •charged to its Texas customers. Appellee is the State of Texas. We will reverse the judgment of the district court and here render judgment dissolving the temporary injunction.

The Attorney General of Texas filed the suit in the name of the State of Texas “on behalf of its agencies, departments and citizens.” In its petition appellee alleged that the telephone company announced that it would “restructure” its rates on long distance intrastate telephone calls with a resulting increase in revenues to the company of about forty-five million dollars. By way of relief appellee prayed that the telephone company be temporarily restrained from increasing the intrastate long distance rates charged to its Texas customers; that after notice and hearing the district court enter a temporary injunction likewise enjoining the increase of those rates; that the court appoint a Master in Chancery “to perform those duties as may be required of him by the Court;” and that upon final hearing the court enter a permanent injunction enjoining the telephone company from increasing those said rates.

The appellee pleaded that Southwestern Bell provides service to most of Texas. Appellee declared that the company’s interstate long distance rates are regulated by the Federal Communications Commission, and that in incorporated cities and towns in Texas the company’s local rates are regulated by the governing bodies of those municipalities. Appellee asserted further that the telephone company’s long distance intrastate rates are not regulated directly by any governing body, but instead that the company “ . . . is permitted to set its own rates so long as they [those rates] are just and reasonable.”

As authority for the filing of the suit, appellee averred that the proposed increase in rates was a toll “not authorized by law,” Vernon’s Ann.Tex.St.Const. Art. IV, § 22; and that the proposed increase in rates was in violation of Vernon’s Ann.Tex.Rev.Civ. Stat.Ann. Art. 1125, in that the increase was “excessive and unreasonable.” It was alleged in addition that appellee, its agencies and its citizens would be “adversely affected by” the increased rate because the rate increase was an “unconscionable action or course of action” by the company in violation of Tex.Bus. & Comm.Code Ann., § 17.50(a)(3), V.T.C.A., and finally, that the proposed increase would be “in violation of the public policy and against the public interest of the State of Texas.”

The district court entered a temporary restraining order without notice, and upon notice and hearing, the court entered the temporary injunction order which is the subject of this appeal. That order provided that the company be “ . . . temporarily restrained pending hearing hereon from increasing the intrastate long distance rates charged to its Texas customers

The telephone company assails the judgment by five points of error: (1) the trial court had no jurisdiction to hear and determine the suit as it could not constitutionally fix and determine the rate of any public utility; (2) the Attorney General of Texas had no power to file the lawsuit, and in consequence, the district court had no jurisdiction to hear and determine the suit; (3) the temporary injunction should be dissolved because appellee’s pleadings were “grossly insufficient” to support its entry; (4) the order granting the temporary injunction violated the requirements of Texas Rules of Civil Procedure, rule 683 in that it failed to state the reasons why the injunction was necessary to prevent injury; and (5) the appellee’s proof failed to support the entry of the temporary injunction.

Because we reverse the judgment upon the basis of the telephone company’s first contention, it will be unnecessary to treat the other contentions.

Tex.Const. Art. II, § 1, provides that the powers of government shall be divided into three distinct departments: legislative, executive, and judicial; and except in instances expressly permitted therein, no person or collection of persons, being one of these departments, shall exercise any power properly attached to either of the others. By authority of Art. II, § 1, legislative acts requiring the exercise by the judiciary of legislative functions are unconstitutional. Daniel v. Tyrrell & Garth Inv. Co., 127 Tex. 213, 93 S.W.2d 372 (1936). Likewise, it is settled that a function of government which the legislature cannot delegate directly to the judiciary cannot be conferred indirectly. Key Western Life Ins. Co. v. State Board of Insurance, 163 Tex. 11, 350 S.W.2d 839 (1961); Texas Vending Comm. v. Headquarters Corp., 505 S.W.2d 402 (Tex.Civ.App.1974, writ ref’d n. r. e.).

Rate-making is a legislative power which the judiciary cannot exercise. Railroad Commission v. Weld & Neville, 96 Tex. 394, 73 S.W. 529 (1903); Daniel v. Tyrrell & Garth Inv. Co., supra; Lone Star Gas Co. v. State, 137 Tex. 279, 153 S.W.2d 681 (1941); City of Houston v. Southwestern Bell Telephone Company, 263 S.W.2d 169 (Tex.Civ.App.1953, writ ref’d). The legislature, however, may delegate the rate-making power to governmental agencies, or to municipal corporations with respect to utilities operating within the boundaries of such municipalities. Kousal v. Texas Power & Light Company, 142 Tex. 451, 179 S.W.2d 283 (1944).

Appellee does not question the premise that rate-making is a legislative power which the judiciary cannot exercise. Appellee acknowledges, and in fact pleads, that the telephone company’s long distance intrastate rates are not regulated by any governing body. In the absence of regulation, appellee recognizes that the telephone company may set its own rates. But appel-lee’s position is that the company’s right to set its own rates is limited by “the common law requirement” that the rates be “reasonable” in amount, and that, accordingly, the district court has jurisdiction to enjoin unreasonable rates.

The appellee argues that the district court was not asked to set the rates that the telephone company might charge for intrastate long distance calls, but instead that the district court was asked to determine that the proposed increase in those rates be enjoined because the increase was unreasonably high. The process envisaged by appellee is that, if upon final hearing, the district court concludes that the proposed increase is unreasonably high, “the rates will then be sent back to the Appellant [telephone company], and the Appellant will have the responsibility to set rates that are not unreasonably high.” Thereafter, if no one complains, the dispute will be ended. If, however, someone complains that the new rates are still unreasonably high, the same procedural process will be repeated. In the alternative, the appellee states that if the district court determines that the present rates are the maximum reasonably allowed, then that court should permanently enjoin the company from increasing the present rates.

An examination of the order of the court and appellee’s argument concerning the relief sought from the district court demonstrates that the district court’s order set the company’s present schedule of rates as the lawful one. Appellee claims that the court did not set a rate, but rather the court enjoined the company from increasing the present rate because the increased rate was unreasonably high. It occurs to us that before the district court may determine that a rate is “unreasonably high,” it must necessarily determine what is “reasonably high.” In arriving at what is a “reasonable rate” the court would have to consider the same class of evidence and observe the same rules as an agency legislatively empowered to set rates. In that connection, the Attorney General suggests in a supplemental brief that the district court, in passing upon the reasonableness of the proposed rate increase, considered the “three essential factors” stated in Railroad Commission v. Houston Natural Gas Corp., 155 Tex. 502, 289 S.W.2d 559 (1956) : (1) the reasonable operating expenses of the utility; (2) the present fair value of the property used and useful by the utility in the public service; and (3) a reasonable net rate of return.

In our view, the district court’s order was a determination, in effect, that the existing rate was adequate, and the order fixed that rate to be the future one, all of which was tantamount to judicial rate-making, a procedure not permitted by Tex.Const. Art. II, § 1. Daniel v. Tyrrell & Garth Inv. Co., supra.

We have examined the cases relied upon by the Attorney General and contained in the footnote. In our judgment none of those cases holds that the district court has jurisdiction to enjoin a rate set by a utility upon the basis that it is unreasonably high. United Gas Corp. v. Shepherd Laundries Co., 144 Tex. 164, 189 S.W.2d 485 (1945); City of Texarkana v. Wiggins, 151 Tex. 100, 246 S.W.2d 622 (1952), and Cock v. Marshall Gas Co., 226 S.W. 464 (Tex.Civ.App.1920, no writ), are discrimination cases. In City of Texarkana v. Wiggins, the Supreme Court specifically stated that it was not passing on the question of whether the rates charged by the petitioner, whether within or without its corporate limits, were required to be “reasonable.” In Railroad Commission v. Weld & Neville, supra, the Supreme Court likewise observed that the parties appealing did not complain that the rates charged against them are either unjust or unreasonable.

It is true that in some of those cases there is general language, not necessary to the holdings therein, which could suggest the result argued for by appellee. For example, in City of Houston v. Memorial Bend Utility Company, 331 S.W.2d 418, 421 (Tex.Civ.App.1960, writ ref’d n. r. e.), Justice Bell wrote, “We take it to be established law that until such time as a regulatory body assumes to exercise its authority to fix rates which a utility may charge, that the utility may fix its own rates, provided they are reasonable.” (Emphasis added) The holding of that case is that if a utility consents to a rate ordinance by the city council, no notice of the passage of the ordinance fixing the rates need be given and no hearing need be given the utility. After the council’s ordinance has been adopted, the utility could not itself promulgate an increase in the rate until the existing rates were set aside. The matter of the reasonableness vel non of a rate fixed by the utility was not there involved.

There are two early cases which invalidated attempts by district courts to engage in rate-making. The order of the district court of Brown County, attempting to fix a gas rate by injunction was reversed by this Court in Community Natural Gas Co. v. Natural Gas & Fuel Co., 34 S.W.2d 900 (Tex.Civ.App.1930, no writ), and this Court dismissed the cause for want of jurisdiction in the trial court. This Court held that rate-making is a legislative, not a judicial, function. In Texas Gas Utilities Co. v. City of Uvalde, 77 S.W.2d 750 (Tex.Civ.App.1934, no writ), a gas company in receivership applied through the receiver to the district court for authority to charge gas rates higher than those rates set by the Uvalde city council. The district court entered an order purporting to grant that authority. The appellate court held that district court’s order was a nullity because the setting of gas rates was the exercise of legislative power.

We are aware of the existing view that there is a compelling need in Texas for state-wide regulation of utility rates, including intrastate telephone rates. That thinking is reflected by several bills presently pending in the legislature to effectuate some character of state-wide regulation. The final determination of what form of state-wide utility rate regulation there will be, if any, is a matter necessarily within the legislative prerogative.

The legislature has not elected to regulate intrastate telephone rates in Texas. We are of the opinion that Tex.Const. Art. II, § 1, prohibits the relief which ap-pellee sought. Accordingly, we observe the well established precept that wherein the law provides no remedy, the judiciary cannot create one. Ex Parte Hughes, 133 Tex. 505, 129 S.W.2d 270 (1939). Regarding this precept, the Supreme Court has more recently stated that deficiencies in the law “ . . . will not justify a court’s excursion beyond its proper sphere in order to plug a hole or cure a supposed defect in the legislative scheme of things.” State v. Reyna, 160 Tex. 404, 333 S.W.2d 832 (1960).

The judgment is reversed and judgment is here rendered dissolving the temporary injunction.

Reversed and rendered.

      . As authority for the proposition that the district court has jurisdiction to enjoin a rate set by a utility upon the basis that it is “unreasonable,” the Attorney General relies upon: City of Houston v. Memorial Bend Utility Co., 331 S.W.2d 418 (Tex.Civ.App.1960, writ ref’d n. r. e.) ; United Gas Corp. v. Shepherd Laundries Co., 144 Tex. 164, 189 S.W.2d 485 (1945) ; Hatten v. City of Houston, 373 S.W.2d 525 (Tex.Civ.App.1963, writ ref’d n. r. e.) ; City of Texarkana v. Wiggins, 151 Tex. 100, 246 S.W.2d 622 (1952) ; Railroad Commission v. Weld & Neville, 96 Tex. 394, 73 S.W. 529 (1903) ; Cock v. Marshall Gas Co., 226 S.W. 464 (Tex.Civ.App.1920, no writ) ; City of Carrollton v. Southwestern States Telephone Company, 381 S.W.2d 401 (Tex.Civ.App.1964, writ ref’d n. r. e.) ; General Telephone Company of Southwest v. Cities Littlefield et al., 498 S.W.2d 375 (Tex.Civ.App.1973, writ ref’d n. r. e.) ; Southwestern Bell Telephone Company v. Houston Independent School District, 397 S.W.2d 419 (Tex.1965) ; City of Nassau Bay v. Nassau Bay Telephone Company, Inc., 517 S.W.2d 613 (Tex.Civ.App.1974, writ ref’d n. r. e.) ; Fink v. City of Clarendon, 282 S.W. 912 (Tex.Civ.App.1926, no writ) ; Daniel v. Tyrrell & Garth Inv. Co., 127 Tex. 213, 93 S.W.2d 372 (1936) ; City of Baytown v. General Telephone Company of Southwest, 256 S.W. 2d 187 (Tex.Civ.App.1953, writ ref’d n. r. e.) ; Texas Gas Utilities Company v. City of Uvalde, 77 S.W.2d 750 (Tex.Civ.App.1934, no writ) ; Schenker v. City of San Antonio, 369 S.W.2d 626 (Tex.Civ.App.1963, writ ref’d n. r. e.).


author: EVANS, Justice.

text:
    Glenn E. VAUGHAN, Trustee, et al., Appellants, v. CROWN PLUMBING & SEWER SERVICE, INCORPORATED, Appellee.
    No. 16469.
    Court of Civil Appeals of Texas, Houston (1st Dist.).
    April 3, 1975.
    Rehearing Denied May 22, 1975.

      Richard W. Vaughan, E. Patrick Chau-doir, Jr., Houston, for appellants.
    Mullins, Box & Parish, James T. Mullins, Houston, for appellee.
   EVANS, Justice.

This is an appeal from a temporary injunction, enjoining a deed of trust foreclosure sale.

Crown Plumbing & Sewer Service, Inc. purchased an apartment project from David G. Gayne on May 13, 1974 for a total purchase price of $531,705.08. This sale was subject to, but not in assumption of certain indebtedness having an aggregate unpaid balance of $340,565.17, and secured by liens on the property as follows:

(1) a first lien indebtedness evidenced by promissory note in the principal amount of $400,000.00 payable to Guardian Life Insurance Company of America having an unpaid balance of $276,302.31;
(2) a second lien indebtedness evidence by 24 promissory notes in original aggregate principal amount of $93,879.10 payable to United Properties having an unpaid balance of $38,514.50;
(3) a third lien indebtedness evidenced by two promissory notes, one payable to Richard W. Vaughan in the principal amount of $22,456.23, and the second, of equal dignity, payable to Fred Sullins and Anthony Miglicco in the principal amount of $20,797.28 having an unpaid balance as follows:
Vaughan note $25,748.36
Sullins-Miglicco note 23,790.71

The Vaughan note and the Sullins-Mig-licco note were each dated February 1, 1972, recited accrual of interest at the rate of 8% per annum and provided that both principal and interest would be payable in monthly installments of $250.00 each, commencing February 1, 1974.

At the time of the sale, the May installment on the Vaughan note in the amount of $250.00 had not been paid. Vaughan, however, being Gayne’s attorney, was involved in the sales transaction and knew such payment to be overdue. The May installment was subsequently paid on May 17, 1974, after the closing data on the sale had been gathered together, and subsequent installments on the note were paid as follows:

The $250.00 June installment was paid June 3, 1974, and negotiated through the bank on June 19, 1974;
The July installment was paid July 1, 1974 and negotiated on July 22,1974;
The August payment was made August 5, 1974 and negotiated August 23, 1974.

September 1, 1974 fell on a Sunday and the following day, September 2, was Labor Day. On September 4, 1974, no payment of the September installment having been made, Vaughan delivered to Gayne, with copy to Crown, letter notification that he was accelerating maturity on the note and demanding full payment of its principal amount ($22,456.23) and accrued interest in the amount of $4,636.45. On September 5, 1974 Crown tendered cashier’s check to Vaughan for the amount of the September installment ($250.00) but this tender was refused.

On September 5, 1974 Crown also made payment on the Sullins-Miglicco note in the aggregate amount of $250.00 and such payments were accepted. However, by letter dated September 9, 1974 Sullins and Miglicco advised Crown that they had received notice that the Vaughan note had been accelerated and that they, therefore, accelerated maturity of their note under the provision authorizing them to do so upon default of the Vaughan note.

On September 9, 1974 Glenn E. Vaughan, the trustee under the subject deed of trust, posted notice of foreclosure sale and this suit by Crown seeking to enjoin such sale was filed on September 27, 1974. A temporary restraining order was issued and hearing set for October 3, 1974, but such matter was reset due to lack of service on Sullins and Miglicco. Crown, by letters dated October 3, 1974, tendered the September and October payments due on the Vaughan note, which were refused, and also the October installment due on the Sullins and Miglicco note. The payment mailed by Crown to Sullins was not returned but the payment to Miglicco was returned to Crown by his letter of October 23, 1974.

On October 14, 1974 Glenn E. Vaughan, Trustee, posted three additional notices of trustee’s sale which specified that the sale would be held on November 5, 1974. One of these notices was based upon the alleged default in the Vaughan and Sullins-Miglic-co notes. A second notice was based upon an alleged default in a promissory note in the amount of $11,726.53 dated July 29, 1974 from Gayne to Richard W. Vaughan and a third notice was based upon an account receivable allegedly due by Gayne to Vaughan as of September 1, 1974, in the amount of $2429.93, for professional services rendered.

On November 1, 1974 the trial court, sitting without a jury, temporarily enjoined defendants, Glenn E. Vaughan, Trustee, Richard W. Vaughan, Anthony Miglicco and Fred L. Sullins from foreclosing on Crown’s property, pending final hearing, for any default occurring or allegedly occurring prior to October 1, 1974.

The Vaughan note contained a provision for the optional acceleration of the entire indebtedness upon default in the punctual payment of either principal or interest and also provided that each maker, surety and endorser expressly waived all notice, demands for payment, presentment for payment, notices of intention to accelerate maturity and notice of protest. It did not provide, however, that the holder’s failure to exercise the option to accelerate upon default would not constitute a waiver of the exercise of the same right upon any subsequent default.

In Bischoff v. Rearick, 232 S.W.2d 174 (Tex.Civ.App.—El Paso 1950, writ ref’d n. r. e.), a vendor’s lien note had been executed by Rearick and Witz, as makers, in the principal amount of $2850.00 dated September 1, 1948 made payable to Mortgage Investment Company of El Paso, and secured by second lien on certain property. The note was endorsed by Bischoff and was assumed by Chotas. The note provided for payment in monthly installments of $34.63 each, and payments were made each month (but not on the due dates) from the fall of 1948 through June, 1949. Chotas was transferred to Japan in July, 1949 and he left the property in the hands of Rearick to collect rents and pay the installments due on the note. Rearick made payment in July, August and September and he believed he was making the payments on the first of the month when they were due. However, on October 7, 1949, when Bischoff, the endorser on the note, paid off the debt to Mortgage Investment Company and the pledged note was returned to him, he discovered that the $34.-63 installment due on October 1 had not been paid. He took the note to his attorney who immediately sent a letter to Rear-ick giving notice of acceleration. Rearick received the letter on October 10 and immediately went to the attorney’s office and made tender of the October installment but the tender was refused. The trial court found that Bischoff was not concerned about the lateness of the payment but merely used that reason as a basis for maturing the debt. Affirming the trial court’s judgment that Bischoff take nothing, the El Paso Court of Civil Appeals, at page 176 said:

“The exercise of the remedy works a forfeiture of the right to pay over a period of time. In the instant case of some eight years. The provision for acceleration of the time of payment is a privilege running in favor of the holder and in many instances a valuable privilege. It is optional with the holder whether he will exercise it or not. The accelerated clause provides against the suffering of obvious hardships by holder of a note or lien. Without the privilege a holder might be required to bring a series of suits, or wait an unreasonable time to collect his debt in cases, for example, where a vendee abandoned premises and defaulted in installments of principal and interest, or one or the other. It might also serve, and in many instances does, to protect the debt or lien in case of wilful or avoidable default. On the other hand, it may be used unjustly and oppressively. We think such is the case here.”

The trial court could have concluded from the circumstances of this case that there was an issue presented as to whether Vaughan’s conduct in permitting prior monthly payments to be made late, without objection to the new owner, Crown, constituted a waiver of his optional right of acceleration of maturity with respect to installments subsequently coming due, absent some notice that short delays were objectionable and that future installments should be timely paid.

“An optional acceleration of maturity of a note can be waived by the acts and words of one who holds right of election, as was held by our Supreme Court in San Antonio Real Estate Bldg. & Loan Ass’n v. Stewart, 94 Tex. 441, 61 S.W. 386, 389, 86 Am.St.Rep. 861, as follows: ‘But, aside from this, while neither party by his separate action or non-action could impair the rights of the other, each could waive his own rights as they accrued from the default in payment of an installment so as to estop him from relying on such default. To accomplish this, it would only be necessary that each should so act as to justify the other in believing and acting upon the belief that the effect of the failure to pay an installment was to be disregarded, and that the contract should stand as if there had been no default. The principle of estoppel by waiver would, we think, have proper application in such a case.’ ” Diamond v. Hodges, 58 S.W.2d 187, 188 (Tex.Civ.App.—Dallas 1933, no writ).

In the case before us, late payments were made and accepted by Vaughan for several months prior to the due date of the September installment. Thus we do not have a case where there was a mere indulgence by the holder after default, nor was there any contractual provision that the holder’s conduct in accepting payments after default would not constitute a waiver of his right of acceleration in the event there should be default in prompt payment of any subsequent installment, as in Whalen v. Etheridge, 428 S.W.2d 824, 829 (Tex.Civ.App.—San Antonio 1968, writ ref’d n. r. e.).

It has been stated by this court and others that “The exercise of the power of acceleration is a harsh remedy and deserves close scrutiny.” Hiller v. Prosper Tex. Inc., 437 S.W.2d 412, 415 (Tex.Civ. App.—Houston [1st] 1969, no writ), citing Parker v. Mazur, 13 S.W.2d 174 (Tex.Civ.App.—San Antonio 1928, err. dism’d) and Bischoff v. Rearick, supra. As stated in Hiller, equity may intervene to preclude acceleration where a delay in payment of an installment is due to the result of accident, mistake or inequitable conduct of the creditor himself. See also Jernigan v. O’Brien, 303 S.W.2d 515 (Tex.Civ.App.—Austin 1957, no writ); Parkview General Hospital, Inc. v. Ashmore, 462 S.W.2d 360 (Tex.Civ.App.—Corpus Christi 1970, writ ref’d n. r. e.); Longbotham v. Ley, 47 S. W.2d 1109 (Tex.Civ.App.—Galveston 1932, writ ref’d).

We cannot agree with Vaughan’s argument that the fact that the property is worth “far more” than the amount of the late installment is immaterial. In the exercise of its equitable powers, the trial court could properly have considered the great disparity between the holder’s loss of use of the overdue installment and the hardship which would result to the owner of the property if immediate foreclosure were permitted.

These matters, together with the circumstances showing the manner in which prior payments had been made and accepted, and the relationship and conduct of the parties both prior to and after the attempt to accelerate maturity, were properly considered by the trial court in determining whether there were issuable facts requiring maintenance of the status quo pending final hearing. Circumstances which tend to show that a holder has exercised the optional right of acceleration, not for the purpose of protecting his debt or preserving the security, but for the purpose of coercing the maker to pay the entire debt or forfeit his property, is relevant with respect to these equitable considerations. Brown v. Hewitt, 143 S.W.2d 223, 227 (Tex.Civ.App.—Galveston 1940, error dism’d); Bischoff v. Rearick, supra, 232 S.W.2d at p. 175.

We next consider Vaughan’s contention that the foreclosure under the deed of trust was appropriate because of Gayne’s alleged default in other indebtedness due to Vaughan, and also because of Gayne’s insolvency.

As previously stated, Gayne executed a note payable to Vaughan dated July 20, 1974 in the principal sum of $11,726.53. This note was payable in installments of approximately $3908.00 each, the first becoming due on August 29, 1974 and the remaining two installments being due on the same day of September and October, 1974. The note recited that it was secured by deed of trust dated February 1, 1972 from Gayne to Glenn E. Vaughan, Trustee. The first installment of $3908.85 was paid and accepted on September 18, 1974 but apparently no subsequent installments had been paid at the time of the hearing on the temporary injunction in November, 1974. Vaughan also contends that at the time of the hearing, Gayne was indebted to him for miscellaneous legal services in the aggregate amount of $2429.93 as evidenced by various statements dated August 1, 1974, and September 1,1974.

Vaughan contends that Gayne’s default in the payment of these items of indebtedness, which admittedly were not in evidence at the time of Gayne’s sale to Crown, constituted a legal basis for foreclosure under the terms of the deed of trust. These alleged debts were not, of course, mentioned in the February 8, 1972 deed of trust, and in fact were not made known to Crown until after the attempted acceleration of Vaughan’s note. However, Vaughan contends that such debts are secured by a typewritten provision in the deed of trust to the effect that its purpose is to secure “the payment of all other indebtedness of the maker of said note to the beneficiaries or any of them presently existing or which may in any manner or means hereafter be incurred by the maker of said note and evidenced in any manner whatsoever, either by notes, advances, overdrafts, bookkeeping entries, accounts receivable or any other method or means . and including any further loans and advancements made by any of said beneficiaries to the maker of said note under the provisions hereof.”

Mortgage clauses which secure future indebtedness “apply only to those debts which were reasonably within the contemplation of the parties.” Wood v. Parker Square State Bank, 400 S.W.2d 898, 901 (Tex.1966); Moss v. Hipp, 387 S.W.2d 656 (Tex.1965). Although the deed of trust may have placed Crown on notice of debts owed by Gayne to Vaughan which were contracted after its execution, it was certainly not notice to Crown and did not secure the alleged indebtedness owed by Gayne to Vaughan which came into existence after the date of the sale of the property. We also hold that Gayne’s insolvency at the time of the hearing on November 1, 1974 did not establish any legal basis for foreclosure precluding the trial court’s entry of temporary injunction.. The evidence does not reflect when this condition first existed and the notices of the trustee’s sale do not state this to be a basis for the foreclosure. Nor is there any provision in the deed of trust which specifies the mortgagee may foreclose upon the occurrence of a grantor’s insolvency after he has parted with title to the property, or upon the mortgagee’s determination that he is insecure in the prospect of payment or performance. See Sec. 1.208 Texas Business & Commerce Code, V.T.C.A.

In reviewing the documentary exhibits in the record, we note an additional basis upon which the trial court’s action in granting temporary injunction may be sustained. The deed of trust from Gayne to Glenn E. Vaughan, Trustee, is dated February 8, 1972 and recites that the Vaughan and the Miglicco and Sullins notes secured thereby are “of even date.” The two notes exhibited in the record and referred to in the acceleration notices are both dated February 1, 1972. There appears, therefore, to be a discrepancy between the dates referred to in the deed of trust and those referred to in the acceleration notices and the trial court may have concluded that an issuable fact existed as to whether Crown was upon notice of the terms of the notes which constituted the basis for the attempted foreclosure under the deed of trust. Waites v. Osborne, 66 Tex. 648, 2 S.W. 665 (1886).

The trial court has broad discretion in determining whether a temporary injunction should issue in a case such as this to maintain the status quo pending final hearing. Diamond v. Hodges, 58 S.W.2d 187 (Tex.Civ.App. — Dallas 1933, no writ). In our opinion the trial court acted properly and well within the bounds of its discretion.

Affirmed.