author: McCLOUD, Chief Justice.

text:
    George ALLEN and Norma F. Allen, Appellants, v. GREAT LIBERTY LIFE INSURANCE COMPANY, Appellee.
    No. 4740.
    Court of Civil Appeals of Texas, Eastland.
    March 14, 1975.
    Rehearing Denied April 11, 1975.

      Charles P. Storey, Dallas (Storey, Armstrong & Steger, Dallas), for appellant.
    Stephen Philbin, Dallas (Locke, Purness, Boren, Laney & Neely, Dallas), for appel-lee.
   McCLOUD, Chief Justice.

This is a fiduciary relationship case involving the validity of a transaction between a corporation and its president.

Plaintiff, Tom I. McFarling, Liquidator-Receiver for the Liquidation Division of the State Board of Insurance and Temporary Receiver of Great Liberty Life Insurance Company, a Texas corporation, sued defendants, George L. Allen and wife, Norma F. Allen, seeking cancellation of a release executed by Great Liberty discharging a $60,000 note and deed of trust executed by defendants in favor of Great Liberty.

Based on jury findings the trial court entered judgment against defendants canceling the release and holding the note and deed of trust valid. The judgment awarded plaintiff $60,000, the principal amount of the note, plus $36,537 accrued interest, and $9,653 attorneys’ fees as well as $2500 exemplary damages. Defendants have appealed. We reverse and remand.

The record reflects that George L. Allen had served as president, a director, and a member of the executive committee of Great Liberty since 1958. In 1966 the Commissioner of Insurance advised Allen that because of capital impairment, Great Liberty could issue no new policies unless $60,000 was added to its capital. On May 4, 1966, the Board of Directors of Great Liberty resolved to -accept as a gift a note from the Allens payable to Great Liberty in the sum of $60,000 secured by a deed of trust on property owned by the Allens. The resolution provided:

“. . . that if and when the free and unassigned surplus of Great Liberty Life Insurance Company become available to such an extent and amount that the assets of the company will not be impaired or its sound operation affected, the shareholders and directors shall make a contribution from the free and unassigned surplus of the company to the President, George L. Allen and Norma F. Allen, his wife, in the sum of money equal to the gift hereinbefore referred to; provided that such gift shall not impair the capital stock, reserves, or surplus of the company . .

The note and deed of trust were executed on May 30, 1966, and delivered to Great Liberty. The Commissioner of Insurance was notified of the transaction, and the note became an “admitted asset” of Great Liberty.

Great Liberty continued to experience financial difficulty. In late 1967 Allen met Jay Dodd, a resident of Arizona, and Allen, on behalf of Great Liberty, negotiated an agreement with Dodd whereby 52 percent of the Great Liberty stock would be exchanged for stock in First Texas Holding Company, a Dodd controlled company. The agreement was finalized by a written contract which stated that First Texas was to provide “sufficient assets to be used as substitution” for the $60,000 Allen note.

The Dodd agreement involved Great Liberty with an Arizona Corporation, C & S Land & Development Company. C & S executed two notes in favor of Great Liberty. The first note was in the principal sum of $65,000. The second note, dated March 12, 1968, was in the principal sum of $60,000. Both notes were secured by a “collateral assignment of beneficial interest” on Arizona property and both notes were signed by Jay Dodd as Secretary-Treasurer of C & S Land & Development Company. There is evidence that the $60,000 C & S note was to be substituted for the $60,000 Allen note.

On March 12, 1968, the shareholders and Board of Directors of Great Liberty passed resolutions authorizing the substitution and release of the Allen note and deed of trust provided the new securities met the requirements of Article 3.39 of the Insur-anee Code of Texas, V.A.T.S. George Allen voted for the resolutions at both meetings.

Thereafter, the Insurance Commissioner received an appraisal of the Arizona property and advised Allen the appraisal was defective because it was based on “prospective” construction of recreational facilities. On April 18, 1968, Allen received a letter from an attorney who examined certain title documents affecting the Arizona property. The letter stated in part:

“The tax lien outlined in exception number 12 will be substantially reduced as indicated by Joe W. Meek in his letter of April 2, 1968, which is attached hereto and made a part hereof as Exhibit ‘3.’ Only 50% of the beneficial interest of C & S Land Development Company, Inc. is conveyed to secure your mortgage; therefore, your security is not affected by the tax lien.
The Lis Pendens filed as the result of Civil Suit No. 24635 recorded in Book 399, pages 550-552 of the official records in Yavapai County, Arizona will affect a ⅛⅛ interest in the property as evidenced by the papers in such cause of action on file with the District Clerk of said county, thereby not encumbering the 50% interest serving as collateral in this instance.
The Trust created by Trust Instrument No. 95299 places the beneficial interest in C & S Land and Development Company, Inc. and leaves said company with authority to convey all or any part thereof, therefore, giving Great Liberty Life Insurance Company a valid collateral assignment. It might be noted that a collateral assignment of beneficial interest is an instrument used in Arizona to convey an interest similar to the use of a deed of trust in Texas.”

On April 30, 1968, the release of the $60,000 Allen note and deed of trust, the subject of this suit, was executed by a vice president on behalf of Great Liberty.

On September 4, 1970, the Insurance Commissioner ordered Great Liberty placed in conservatorship. The company was placed in temporary receivership on November 9, 1971. The Insurance Liquidator employed an Arizona attorney to determine the status of the Arizona property. Suit was filed in the Superior Court of Maricopa County, Arizona, on the $65,000 and $60,000 notes executed by C & S Land & Development Company. The Arizona court held that Great Liberty Life Insurance Company had no rights under the notes or the collateral assignment of beneficial interest.

Defendants first contend the court erred in entering judgment against them since the jury found no improper conduct on the part of George L. Allen. However, in answer to Special Issue Number 1 the jury found that the release on April 30, 1968 of the Allen note and deed of trust, was not fair to Great Liberty Life Insurance Company.

Officers and directors of a corporation are fiduciaries and when an officer or director is involved in a transaction with the corporation, the officer or director has the burden of establishing the “fairness” of the transaction to the corporation. International Bankers Life Insurance Company v. Holloway, 368 S.W.2d 567 (Tex.1963); Popperman v. Rest Haven Cemetery, Inc., 162 Tex. 255, 345 S. W.2d 715 (1961); Pepper v. Litton, 308 U.S. 295, 60 S.Ct. 238, 84 L.Ed. 281 (1940); See also Stephens County Museum, Inc. v. Swenson, 517 S.W.2d 257 (Tex.1974). Defendants’ contention is overruled.

Defendants next argue the action asserted by plaintiff was barred by the two year statute of limitations. Article 5526, Vernon’s Ann.Tex.Rev.Civ.Stat. Defendants say plaintiff’s suit was a tort action for fraud. We disagree. Plaintiff’s trial pleading seeks cancellation of the release of the Allen note and deed of trust. We hold the four year statute of limitations is applicable and plaintiff’s suit is not barred. Article 5529, Tex.Rev.Civ.Stat, Evans v. Southern Methodist University, 87 S.W.2d 918 (Tex.Civ.App.—Eastland 1935, no writ); Larson v. Sterling Mutual Life Ins. Co., 134 S.W.2d 717 (Tex.Civ.App.—Galveston 1939, no writ).

Defendants next contend the trial court committed reversible error in admitting the judgment containing findings of facts and conclusions of law, entered in the Superior Court of Maricopa County, Arizona, wherein Tom I. McFarling, Conservator for Great Liberty Life Insurance Company, was plaintiff and C & S Land & Development Company along with various other parties were defendants. We agree. Neither George L. Allen nor Norma F. Allen were parties to that proceeding.

Defendants properly objected to the admission of the judgment containing the court’s “Findings of Fact”. The Arizona court found among other things that Dodd had no right or authority to act on behalf of C &■ S Land & Development Company.

The court in Davis v. Zapata Petroleum Corporation, 351 S.W.2d 916 (Tex.Civ. App.—El Paso 1961, writ ref. n. r. e.), stated the rule as follows:

“In general, a judgment in another cause finding a fact now in issue is not admissible. The fact that another jury had theretofore, in another case, determined the very questions at issue in the present trial would have had a strong tendency to induce the jury in the subsequent case to reach the same conclusion, and would therefore have been very prejudicial. Such judgment, under well settled rules, could not have been introduced in evidence to establish the facts on which it was rendered. Jones v. Teat, Tex.Civ.App., 57 S.W.2d 617, aff’d, Tex.Com.App., 89 S.W.2d 987; Wiggins v. Holmes, Tex.Civ.App., 39 S.W.2d 162 (err. ref.); McCormick & Ray, Texas Law of Evidence, Section 1279.
While we recognize the rule announced in McCamant v. Roberts, 66 Tex. 260, 1 S.W. 260, that a judgment is always admissible in evidence for the purpose of showing the fact of its own existence, it is not admissible for the purpose of showing what matters were adjudicated except where the parties and the subject matter in each suit are the same, or where the matter determined was of a public nature (in rem) and from public considerations should be considered binding upon all persons.”

Plaintiff contended the release of the Allen note and deed of trust was not fair to Great Liberty because Dodd had no authority to execute the two C & S notes and, therefore, Great Liberty received nothing of value for its substitution of the $60,000 C & S note for the $60,000 Allen note. The only evidence that Dodd had no signatory authority was the finding by the Arizona court which was inadmissible. We hold that the prejudicial effect of the inadmissible evidence probably resulted in the rendition of an improper judgment.

The judgment of the trial court is reversed and the cause remanded. In view of our holding it is not necessary to pass upon defendants’ other points.

ON APPELLEE’S MOTION FOR REHEARING

As a general rule a judgment is admissible against a stranger thereto for the purpose of proving the mere existence of the judgment and the legal consequences resulting therefrom. McCamant v. Roberts, 1 S.W. 260 (Tex.1886). As stated, however, in Davis v. Zapata Petroleum Corporation, 351 S.W.2d 916 (Tex.Civ. App.—El Paso 1961, writ ref, n. r. e.), a judgment is not admissible:

“. • . for the purpose of showing what matters were adjudicated except where the parties and the subject matter in each suit are the same, or where the matter determined was of a public nature (in rem) and from public considerations should be considered binding upon all persons.”

Great Liberty filed suit against C & S Land and Development Company and other defendants in Arizona seeking recovery on the $65,000 and $60,000 notes as well as foreclosure of its “collateral assignment of beneficial interest” covering certain Arizona property. Neither George L. Allen nor Norma F. Allen were parties to that suit.

We think that part of the Arizona judgment, wherein the court ordered and decreed that judgment be entered against Great Liberty and in favor of C & S Land and Development Company and the other defendants, was admissible to show the existence of the judgment and its legal consequences. We do not think the finding of fact by the court, included within the judgment, that Dodd had no right or authority to act on behalf of C & S was admissible.

Great Liberty’s theory of recovery was that the release of the $60,000 Allen note and deed of trust was not fair to the corporation and was not free from fraud. The record clearly reflects that Great Liberty attempted to show the transaction was unfair and fraudulent by showing that Dodd had no authority to execute the instruments and, therefore, the C & S notes were of no value.

Great Liberty also contends that defendants failed to properly object to the introduction of the Arizona court’s findings of fact. We disagree. The objection was sufficiently specific and expressly chai-lenged the admissibility of the court’s findings of fact.

Great Liberty further argues there is no showing of reversible error even if the findings of fact were inadmissible and assuming proper objection. We cannot agree with this contention. The introduction of the finding of fact by the Arizona court that Dodd had no authority to act on behalf of C & S was highly prejudicial. There can be no doubt that such inadmissible finding induced the jury in this case to reach the same conclusion.

Great Liberty says in the instant case “the record reflects no importance” was attached to the findings of the Arizona Court in support of the judgment. We disagree.

After defendants’ objection was overruled the findings of fact were read to the jury. In his closing argument Great Liberty’s attorney stated:

“Truth of the matter is, he never had anything to begin with, there never was anything because he got out there and found Jay Dodd didn’t even have authority to execute those instruments on behalf of C & S Land Development Company, but did George Allen do anything to find out about it? Here is the maker of the note, C & S Land Development Company and Jay Dodd, but he didn’t do a thing to find out about it,”

The attorney further argued:

“What did Great Liberty Life Insurance Company get for the $60,000.00 George Allen note? They got a piece of paper there, an order by the Court in Arizona saying ‘you ain’t got nothing, not nothing.’ In fact, the fellow that signed it didn’t even have authority to execute it on behalf of the folks he purported to sign it for.”

While discussing Special Issue Number 1, Great Liberty’s attorney told the jury:

“You can answer both of those issues that it was not entirely and inherently fair, that it was not executed free from fraud and with good faith, even if you believe George Allen didn’t have anything to do with it, even if you believe Jay Dodd is the cause . . .”

We find nothing in the record to cause us to change the judgment heretofore entered. The motion for rehearing is overruled.

      . Plaintiff argues the C & S notes did not comply with the following provisions of Article 3.39: “Part II. Authorized Loans
      A life insurance company organized under the laws of this state may loan its several funds identified as follows, taking as collateral security for the payment of such loans the securities named below, and none other.
      A. Any Of Its Funds Accumulations Such company may loan any of its funds and accumulations on the following securities:
      1. First Liens Upon Heal Estate.
      First liens upon real estate, the title to which is valid and the value of which is at least one-third more than the amount loaned thereon.


source: Caselaw Access Project

author: PRESLAR, Chief Justice.

license: Public Domain

text:
    Richard E. PATTON et al., Appellants, v. James E. CALLAWAY et al., Appellees.
    No. 6409.
    Court of Civil Appeals of Texas, El Paso.
    April 2, 1975.
    Rehearing Denied April 30, 1975.

      Stubbeman, McRae, Sealy, Laughlin & Browder, W. B. Browder, Jr., Rodney W. Satterwhite, Midland, for appellants.
    Turpin, Smith & Dyer, Irby L. Dyer, Midland, Lawrence L. Fuller, Monahans, for appellees.
   OPINION

PRESLAR, Chief Justice.

Appellants, Richard E. Patton, Ted Collins, Jr. and Herbert E. Ware, Jr., sued Appellees, James E. Callaway,. William O. Callaway and Texana Oil Company, seeking to recover upon an oral agreement and to impose a constructive trust on certain property under allegations that plaintiffs and defendants were engaged in a joint venture. At the conclusion of all the evidence the Court instructed a verdict for the defendants. We affirm.

Throughout this opinion the parties will be referred to by name or as plaintiff or defendant. In summary, the facts are that plaintiffs learned that an oil and gas lease on Section 18 was held by one E. B. White and Harry Miller and that it was for sale. Plaintiffs also knew that the defendants had previously sold a lease on an adjoining section to the Miami Oil Company, so they contacted the defendants to see if they would be interested in Section 18. After some preliminary negotiations, plaintiffs and defendants orally agreed that the defendants would buy the leases from Miller and White, taking them in Texana’s name, and defendants would resell the leases and the parties would share the profits and share in any overriding royalty interests which might be retained on the resale. The defendants bought the leases, and when their expiration date came and no sale had been made, defendants made an additional payment to get an extension and renewal of the leases. The defendants were never able to negotiate a sale, to Miami or anyone else, so Texana Oil itself drilled a well on the leases after making an agreement with El Paso Natural Gas Company for a loan in the amount of the cost of drilling the well in return for a 50% overriding royalty interest. The oral agreement of the parties did not contemplate the drilling of a well on the leases by Texana itself, and that was a development which arose after they were unable t.o make a sale. As indicated, the plaintiffs’ theory of recovery is to establish that defendants are constructive trustees holding property in trust for plaintiffs, that plaintiffs and defendants were engaged in a joint venture to acquire the leases and sell them and split the profits, and that plaintiffs and defendants were partners and plaintiffs should have an accounting of partnership profits.

The defendants specially pled the Statute of Frauds, Art. 3995a, Vernon’s Tex.Rev.Civ.Stat.Ann., now Section 26.01, Tex.Bus. & Comm.Code Ann., V.T.C.A., and the Texas Trust Act, Art. 7425b-7, Tex.Rev.Civ.Stat.Ann. Plaintiffs seek to avoid these statutes and to bring themselves within the equitable considerations of the constructive trust. By their first two points of error, they say that the trial Court erred in sustaining defendants’ motion for instructed verdict because there was a confidential relationship between plaintiffs and defendants, and that such relationship existed before and apart from the agreement made the basis of their suit. For a constructive trust to arise there must be a fiduciary relationship before and apart from the agreement made the basis of the suit. Consolidated Gas & Equipment Company of America v. Thompson, 405 S.W.2d 333 (Tex.1966); Tyra v. Woodson, 495 S.W.2d 211 (Tex.1973). Plaintiffs presented evidence to show a fiduciary relationship prior to the instant suit. This being a directed verdict case, we must view the evidence in the light most favorable to the losing party, the plaintiffs in this case, and we must disregard all conflicts and indulge in every in-tendment reasonably deductible from the evidence in favor of the plaintiffs. Viewing the evidence in that light, we are of the opinion that under the standards of the above cases plaintiffs fail as a matter of law to show a prior fiduciary relationship. Plaintiffs show two prior business transactions between one or more of their number with one of the defendants. They testified that in each instance they trusted the defendant they were dealing with. But plaintiffs’ own testimony is that they were arms-length transactions in which they were the seller and the defendant was the buyer and that each party was trying to get the best deal he could for himself. The transactions were in writing so that there was no showing of trusting or the building of a confidential relationship. And the testimony that the plaintiffs “trusted the defendant” does not aid their position in view of the Supreme Court’s statement in Thigpen v. Locke, 363 S.W.2d 247 (Tex.1962):

“ * * * but mere subj ective trust alone is not enough to transform arms-length dealing into a fiduciary relationship so as to avoid the statúte of frauds. * * sjc »

In dealing with the conflict which arises as courts attempt to accommodate the legal expressions of the Statute of Frauds with the equitable considerations of the constructive trust, our Supreme Court has taken what may be termed a hard line, as compared to its earlier cases, such as Fitz-Gerald v. Hull, 150 Tex. 39, 237 S.W.2d 256 (1951); Gaines v. Hamman, 163 Tex. 618, 358 S.W.2d 557 (1962); and Omohundro v. Matthews, 161 Tex. 367, 341 S.W.2d 401 (1960). Tyra v. Woodson, supra, was before this Court and the facts were much stronger than they are in the case now before us, but the Supreme Court said that Tyra was controlled by Consolidated Gas & Equipment Company of America v. Thompson — that the fiduciary relationship must be existent before and apart from the agreement made the basis of the suit. In the recent case of Meadows v. Bierschwale, 516 S.W.2d 125 (Tex.1974), the Supreme Court quoted from its opinion in Consolidated Gas & Equipment Company of America v. Thompson, and reaffirmed the rule:

“ ‘Our holdings above cited are to the effect that for a constructive trust to arise there must be a fiduciary relationship before, and apart from, the agreement made the basis of the suit. Such is our holding here. As stated, the fact that one businessman trusts another, and relies upon his promise to carry out a contract, does not create a constructive trust. To hold otherwise would render the Statute of Frauds meaningless.’ ”

The Court then went on to say:

* * * This court has imposed stringent prerequisites to the enforcement of oral agreements like the one in Thompson to avoid abrogating the Statute of Frauds and the Texas Trust Act. * * * ’>

As authority for that statement, the Court cited Tyra v. Woodson, supra. In the case before us, plaintiffs’ evidence as to a prior fiduciary relationship is insufficient to raise a fact question.

Plaintiffs also seek to recover under allegations that their oral agreement created a partnership or joint adventure which entitles them to an accounting of profits. Four elements are necessary to constitute a joint adventure. They are: (1) a mutual right of control, (2) a community of interests, (3) the sharing of profit as principals, and (4) the sharing of losses, costs or expenses. Price v. Wrather, 443 S.W.2d 348 (Tex.Civ.App.—Dallas 1969, writ ref’d n. r. e.). These elements are not satisfied by the evidence for plaintiffs’ own testimony was that they had done all they were supposed to do when they brought the defendants and the sellers of the lease together, and that they were to bear no expenses or costs, and the resale of the leases was entirely under the control of the defendants. In Tyra v. Woodson, this Court found on facts much stronger than those presented here that the parties were engaged in a joint adventure, and as such joint adventurers they were in a confidential relationship. We held that their case was not controlled by the Consolidated Gas case, since that case recognized that joint ventures are one of the usual cases of fiduciary relationship. In that case, the trial Court had instructed a verdict, as in the case before us, and the Supreme Court reversed this Court and upheld the trial Court. Under the holding of Tyra v. Woodson, we uphold the trial Court in the case before us.

We find no merit in the plaintiffs-appellants’ fourth point of error that theirs was an agreement to share the profits from the sale of real estate, and that such an agreement is enforceable and not within the Statute of Frauds. The simple fact is that the contract was for sharing of the profits of a sale and there has never been a sale. The testimony of the parties is completely in agreement that the extent of their oral contract was the sharing of proceeds of a sale, and there was no understanding as to what would happen in the event Texana drilled the lease itself. When defendants could not effect a sale and did decide to drill, they offered the plaintiffs an opportunity to share with them in the drilling of a well, and the plaintiffs declined. There is testimony by one of the plaintiffs that Jim Callaway, defendant, explained to them that since there was no profit from a sale there wasn’t going to be anything to split and that they were going to give them an override of 1.25%. This brings us to the fifth and sixth points of error asserted by plaintiffs as the exclusion from evidence by the trial Court of a letter from defendants to plaintiffs tendering the 1.25% override. Plaintiffs say that this was a written memorandum of the contract between the parties. But they concede the law to be that generally such memorandum must contain all the essential elements and that such essential elements of the contract may not be supplied by pa-rol. The letter does not meet that test, and was not admissible as the memorandum of the agreement of the parties. The trial Court could well have determined that the letter was an offer of compromise for it was dated four days after suit was commenced. We are not authorized to overrule such a finding of compromise in the absence of a showing that the trial Court abused its discretion in the matter. Southerland v. Porter, 336 S.W.2d 841 (Tex.Civ.App.—Amarillo 1960, writ ref’d n. r. e.). We find no abuse of discretion.

By a supplemental petition filed the day before submission, plaintiffs assert a seventh point of error that there was pleading and proof of actual fraud committed by defendants which justifies the imposition of a constructive trust. Over the objection of the defendants we have permitted the filing of this late point of error and over the objection of the defendants we will consider it. However, upon examination of the point of error, we find it to be without merit. The fraud alleged is that on April 12th defendants represented to the plaintiffs that Section 18 had been turned or sold to Miami Oil producers. It was further alleged that such representation was not true and was made to induce the plaintiffs to enter into the agreement with defendants to share equally in the profits. It clearly appears from the evidence that the statement was one of an opinion, but, be that as it may, at the time the statement was made it was also discussed by the parties that no terms had been agreed upon and the parties were in agreement that they should wait until the well which Miami was drilling on the adjoining section was nearly completed and they could then make a better deal with Miami. Thus the evidence is clear that the plaintiffs knew that there had not been a binding sale made with Miami. Also, if we were to assume that it was a fraudulent representation and that it was relied upon, it still was not the inducement to enter into the contract because the deal had long since been made between the parties and the only change made on April 12th was from a 40-60 division to a 50-50 division of any profits that might be made. Since we have held that the contract was unenforceable this induced change of a fraction is of no consequence.

We have considered all points of error and all are overruled. The judgment of the trial Court is affirmed.

OSBORN, J., not sitting.


author: REYNOLDS, Justice.

text:
    Howard R. STEWART and Taresa Stewart, Appellants, v. MUTUAL BENEFIT LIFE INSURANCE COMPANY, Appellee.
    No. 8539.
    Court of Civil Appeals of Texas, Amarillo.
    April 14, 1975.
    Rehearing Denied May 5, 1975.

      Smith & Baker, Inc., Edward R. Smith, Lubbock, for appellants.
    Crenshaw, Dupree & Milam, Cecil C. Kuhne, Lubbock, for appellee.
   REYNOLDS, Justice.

Confronted with oppugnant motions for summary judgment asserting, respectively, the legal right of the insured under and the owner of a life insurance policy to compel the insurance company to change and the legal right of the insurance company to decline to change, the beneficiary designation in the form proposed by the insured and owner, the trial court summarily determined that the insurance company was not required to accept the designation in the form submitted. The uncontroverted facts are that the change of beneficiary designation is permitted by and it is not prohibited under the terms of the policy. Reversed and rendered.

Mutual Benefit Life Insurance Company issued its life insurance policy No. 5,546,185 insuring the life of Taresa Stewart with the ownership of the policy vested in her husband, Howard R. Stewart, the primary beneficiary. Section 6 of the policy provides for a change of beneficiary in these words:

From time to time, upon request satisfactory to the Company received at its home office before maturity,
(a) the beneficiary may be changed;
The policy states that:
The proceeds will be payable at the death of the insured to the beneficiary set forth in the most recent beneficiary designation whether in the application or in an effective request as provided by this policy. If every beneficiary in such designation is a natural person taking in his or her own right and if no such beneficiary is alive at such death, the beneficiary will be the executors or administrators of the insured unless otherwise specifically provided in such designation.
Payment will be made by the Company at its home office immediately upon receipt of due proof of the death of the insured.

Section 16 specifying the amount of proceeds payable at the date of the death of the insured also provides that:

Interest, accruing monthly, at 2¾% yearly or at such higher rate as may be determined by the Company, from the date of the insured’s death to the date of payment, but in no event for more than 6 months, will be allowed on any portion of such proceeds paid in one sum.

Subsequently, the Stewarts signed and submitted to the insurance company a form designating a change of beneficiary in the following manner:

One-half to Howard R. Stewart, husband of the insured, if living, otherwise to his estate, and one-half to the Trustee of The Taresa Stewart Estate Trust, a Testamentary Trust created under the Last Will and Testament of the insured.
Payment of such proceeds shall be deferred, interest accumulating, until the 181st day following the date of death of the Insured or until the Company receives at its Home Office a certified copy of the probated Will of the Insured under which Will a testamentary trust has been created, whichever is the earlier date. At the end of the aforesaid period of deferment such proceeds with interest shall be paid in one sum to the trustee or trustees of said testamentary trust, if such certified copy of said probated Will creating such testamentary trust is received by the Company as hereinbefore provided, otherwise to the executors or administrators of the Insured.
Any payment made by the Company pursuant to the foregoing provisions shall fully release and discharge the Company from all liability with respect to the amount so paid.
Nothing herein shall impose on such insurance company any obligation or burden which the undersigned are not lawfully entitled to impose.

Responsive thereto, the insurance company advised that the “forms are not quite satisfactory to us since the mere receipt of a certified copy of a probated will may not be enough to qualify a testamentary trustee depending, of course, on where the insured dies. Also, this Company does pay interest on proceeds, the payment of which has been deferred, but not beyond a six month period. At any rate we prefer not to include any reference to interest in our form.” Upon receipt of correspondence from the attorney for the Stewarts demanding that the designation be recorded, the insurance company then advised that “(W)e are willing to accept that part of the form which deals with the payment of proceeds to the testamentary trustee of the testamentary trust. We must add the stipulation, however, that, before payment is made to the trustee, the Company must be satisfied that the trustee has either qualified or is not required by local law to qualify.” Quoting the policy provision for payment of interest on death proceeds, the communication then posed the query whether the provisions in the designation of beneficiary form concerning payment of interest and the disclaimer of imposition of any obligation the insured and owner were not lawfully entitled to impose “are meant to obligate the Company to something more than our contract provision requires.”

Seven days after the date of the inquiry, to which no reply is shown by the record, the Stewarts instituted this suit, seeking an order, by writ of mandamus or otherwise, requiring the insurance company to record the change of beneficiary form as submitted. After the issue was joined, the opposing parties moved for summary judgment. The trial court denied the Stewart’s motion for summary judgment, granted the motion of the insurance company, and denied the Stewarts the relief they sought.

Preliminarily, it should be noted that although the change of beneficiary form as submitted designated the husband, if living, or otherwise, his estate, to be entitled to one-half of the death proceeds and the trustee of The Taresa Stewart Estate Trust or her executors or administrators to be entitled to the other one-half, the form itself dictated that “such proceeds with interest shall be paid in one sum to the trustee or trustees . . . otherwise to the executors or administrators of the Insured.” The insurance company has not objected to the variance between those named to be entitled to the proceeds and the payee designated to receive all of the proceeds. Upon submission, it was declared on behalf of the Stewarts and without objection by the insurance company that the form should have provided, and it should be amended to provide, that payment of the death proceeds shall be made one-half to each primary beneficiary named if in being, otherwise to the respective contingent beneficiaries. Since the insurance company did not reject the submitted designation because of the erroneous authorization for one beneficiary to accept all of the death proceeds and it has not objected to the amendment, the change of beneficiary designation will be considered as amended.

It is undisputed that there is the contractual right given in the policy to change the beneficiary from time to time. Notwithstanding, the insurance company takes the position on appeal that it must give its consent to any change before it becomes effective and, in any event, it was justified in rejecting the requested designation because of the included provisions modifying the insurance policy which the company is not required to accept.

While an insurance company may insert in its policy reasonable requirements by which a change of beneficiary may be effected, Garabrant v. Burns, 130 Tex. 518, 111 S.W.2d 1100 (1938), it is only necessary that there be a substantial, rather than a strict, compliance with those policy requirements. Fidelity Union Life Insurance Company v. Methven, 162 Tex. 323, 346 S.W.2d 797 (1961). And it is the duty of the insurance company to honor the request once it is presented in substantial compliance with the terms of the policy. Salvato v. Volunteer State Life Insurance Company, 424 S.W.2d 1 (Tex.Civ.App.- — ■ Houston 1968, no writ).

The policy itself contains no specific provisions that the insurance company must consent in a certain manner to a requested change of beneficiary. The only requirement is a “request satisfactory to the Company received at its home office before maturity.” The requirement is not an express policy condition that the consent of the insurance company is required to effect a change of beneficiary; it merely means that the company may refuse to accept a change of beneficiary designation only if it is contrary to the express conditions of the policy or to the law.

The insurance company does not seriously question the designation of the beneficiaries named. This is for the reasons that the policy does not prohibit the designation of the beneficiaries the Stewarts selected, and those named are statutorily sanctioned as beneficiaries by V.A.T.S. Insurance Code, art. 3.49-1, § 2, and art. 3.49-3, § 2, as long as the designation meets the provisions of the policy and the requirements of the insurance company.

But the insurance company does seriously question whether the designation meets the provisions of the policy. In this connection, the company proposes that its required acceptance of the designation would modify or add to the policy provisions without the mutuality of its assent thereto. By way of argument, the company advocates that the provision contained in the designation for withholding payment to the trustee or personal representatives of the estate for 181 days or until receipt of a certified copy of the probated will allows the beneficiary, rather than the company, to control when payment is made and requires the company to pay interest that it otherwise would not have to pay. The concern about a unilateral modification of the policy and the uncertainty over the provisions in the designation are understandable but, realistically, the argument is not persuasive.

Although the policy obligates the company to pay the policy proceeds “immediately upon receipt of due proof of the death of the insured,” this obligation is necessarily predicated on the preceding provision which contemplates that the company must be certain that the named beneficiary is capable of receiving the proceeds before payment is made. As a practical matter, all of this information is furnished to, instead of being secured upon initiation of action by, the insurance company, and the company neither can nor will pay the death proceeds until it has been furnished with due proof of death and satisfactory evidence that the named beneficiary or beneficiaries are capable of receiving the proceeds. Moreover, the company further obligated itself to pay interest on any portion of the death proceeds paid in one sum from the date of death to the date it is able to make payment, but not to exceed six months. The designation provides for no departure from that obligation.

In view of the foregoing, the designation, as amended, is no more than a change from Howard R. Stewart as the primary beneficiary to:

1. Howard R. Stewart, husband of the insured, if living, otherwise to his estate, as beneficiary of one-half of the policy proceeds; and
2. The trustee or trustees of The Taresa Stewart Estate Trust, if such trust is created under the last will and testament of the insured, otherwise to the executors and administrators of the insured, as beneficiary of one-half of the policy proceeds;

and a paraphrasing of the policy provisions for payment of one-half of the proceeds to the trustee or the personal representatives upon the death of the insured:

a. When proof of the beneficiaries entitled to payment is furnished, •
b. With interest paid from the date of death until payment of the proceeds, but in no event for more than six months.

In this light, the amended designation does not modify, alter or add to the provisions of the insurance policy. It does designate beneficiaries permitted to be designated and merely reiterates some of the procedures provided in the policy for payment of the death proceeds. And it comports with the understanding the record reveals the parties sought to, and almost did, reach.

Accordingly, the Stewarts are, and the insurance company is not, entitled to summary judgment. We, therefore, reverse the judgment of the trial court, and, pursuant to Rule 434, Texas Rules of Civil Procedure, and Tobin v. Garica, 159 Tex. 58, 316 S.W.2d 396 (1958), we render the following judgment, to wit:

It is ordered, adjudged and decreed that the motion for summary judgment filed by plaintiffs Howard R. Stewart and Taresa Stewart be, and it hereby is, granted, and the summary judgment motion filed by defendant Mutual Benefit Life Insurance Company be, and it hereby is, denied; and Mutual Benefit Life Insurance Company is ordered to record the change of beneficiary designation executed on May 2, 1973, by Howard R. Stewart and Taresa Stewart, as that designation is a'mended and construed herein.


author: MASSEY, Chief Justice.

text:
    William C. PROCTOR, Appellant, v. SOUTHLAND LIFE INSURANCE COMPANY, Appellee.
    No. 17598.
    Court of Civil Appeals of Texas, Fort Worth.
    April 11, 1975.
    Rehearing Denied May 9, 1975.

      Joe E. Shaddock, Wichita Falls, for appellant.
    Fillmore, Parish, Martin, Kramer & Fillmore, and Elmer H. Parish, Wichita Falls, for appellee.
   OPINION

MASSEY, Chief Justice.

Suit was by William C. Proctor, plaintiff, against Southland Life Insurance Company, defendant, for insurance policy benefits in the form of an amount representing the accrued sum owing because of amounts per week prescribed by the policy to be payable in the event of total disability.

The defendant company moved for summary judgment, which was granted. The plaintiff appealed.

Reversed and remanded for trial.

In a summary judgment we resolve all doubts against the company, as the moving party. This includes instances where there is conflict in the evidence. We do this in our statement of the case.

Since 1960 the plaintiff had, among several other policies of insurance with Southland Life Insurance Company, that upon which he relies in this case, to-wit: No. AC 37831, dated September 1, 1960, containing in the Schedule of Coverages “Weekly Indemnity for Total Disability . . . $100.00.”

The Benefit Provision immediately following reads, “Section 1. Weekly Indemnity — Total Disability: If such injuries shall, within twenty days after the date of accident, result directly and independently of all other causes in total disability which shall continuously prevent the insured from performing each and every duty pertaining to his occupation, the Company will pay weekly indemnity at the rate hereinbefore specified in the Schedule of Coverages for the period of such continuous total disability, but for not exceeding fifty-two consecutive weeks. After the payment of weekly indemnity for fifty-two weeks as aforesaid, the Company will continue the payment of weekly indemnity at the same rate thereafter so long as the insured shall be totally disabled and continuously prevented by such injuries from engaging in any occupation or employment for wage or profit.”

By the rules applicable in construction and interpretation of insurance contracts we view the foregoing in a liberal construction in favor of the insured plaintiff and by strict construction against the company insurer.

The plaintiff sustained on July 28, 1969 injuries which from that moment occasioned the “total disability” specified by the policy language, both as applied to the initial fifty-two weeks period, and also as applied to the entire period subsequent thereto up until date of the judgment on April 18, 1974.

Unless, under the policy of insurance, there is some provision which prevents it, or frees the company of obligation to make payment of the calculable amount of $100.-00 times the number of weeks elapsed between July 28, 1969 and April 18, 1974, such amount is owed to plaintiff.

Substantially tracking the requirements provided by Texas’ Insurance Code, V.A. T.S., Subchapter G, “Accident and Sickness Insurance”, Art. 3.70-3, “Accident and Sickness Policy Provisions”, there was policy provision as follows: “Notice of Claim: Written notice of claim must be given to the Company within twenty days after the occurrence or commencement of any loss covered by the policy, or as soon thereafter as is reasonably possible. Notice given by or on behalf of the Insured or the beneficiary to the Company at Dallas, Texas, or to any authorized agent of the Company, with information sufficient to identify the Insured, shall be deemed notice to the Company.”

Under rules applicable to summary judgments, motion for which is made by a defendant, the record in this case shows a failure on the part of the movant company to exhibit that neither plaintiff, nor someone in his behalf, gave the required notice. For our purposes notice is proved. Questions of fact exist which might be material upon a trial of the merits, but such are of no importance to these summary judgment proceedings. ■

Further substantially tracking the requirements of Art. 3.70-3 of the Insurance Code, the following paragraphs were likewise inserted in the policy:

“Claim Forms: The Company, upon receipt of a notice of claim, will furnish to the claimant such forms as are usually furnished by it for filing proofs of loss. If such forms are not furnished within fifteen days after the giving of such notice, the claimant shall be deemed to have complied with the requirements of this policy as to proof of loss upon submitting, within the time fixed in the policy for filing proofs of loss, written proof covering the occurrence, the character and the extent of the loss for which claim is made.”

“Proofs of Loss: Written proof of loss must be furnished to the Company at its said office in case of claim for loss for which this policy provides any periodic payment contingent upon continuing loss within ninety days after the termination of the period for which the Company is liable and in case of claim for any other loss within ninety days after the date of such loss. Failure to furnish such proof within the time required shall not invalidate nor reduce any claim if it was not reasonably possible to give proof within such time, provided such proof is furnished as soon as reasonably possible and in no event, except in the absence of legal capacity, later than one year from the time proof is otherwise required.” (Emphasis supplied.)

“Legal Actions: No action at law or in equity shall be brought to recover on this policy prior to the expiration of sixty days after written proof of loss has been furnished in accordance with the requirements of this policy. No such action shall be brought after the expiration of three years after the time written proof of loss is required to be furnished.”

By what we have written, herein-above, there was satisfaction of the requirement for notice. The company did not furnish any of its forms for preparation of proof of loss. Therefore plaintiff was free to use any form of proof of loss. This he did not do, but much later and on or about June 20, 1973 he obtained the forms customarily used by the company and by their use filed his proof of loss. Of course, by policy provisions which we have copied, plaintiff’s right to file suit was prohibited until December 20, 1973, except upon the company’s waiver of the provisions by its denial of all liability under the policy. There was such waiver, for the company did deny, liability thereunder before July 19, 1973, date suit was filed.

The question is raised on the appeal : “Since the date suit was filed was some eleven and one-half months beyond a period of three years subsequent to the date of the injury (and the first week of disability for which the policy provided liability for payment of benefits) was all or any portion of plaintiff’s cause of action foreclosed by the policy limitation of three years?” Our answer to the question is in the negative, or “No”. The period of disability should, by liberal policy construction in favor of the insured and by strict policy construction against the insurance company, be treated as a single unit in time covering the period from date of injury on July 28, 1969, until suit was filed on July 19, 1973. That would be correct because the summary judgment proof showed a single continuous period of total disability as defined in the policy contract.

It is in instances where there is a “termination of some period for which the insurer is allegedly liable where the provision for proof of loss within ninety days thereafter might become consequential. Examples are to be observed in the cases where there is a termination of hospitalization and where the policy involved provides for the payments of benefits due to hospitalization. In these the requirement has been held to be that the proof of loss must be filed within ninety days from discharge of the hospital under analogous policy language. By hypothesis, if hospitalization never ceased there would be no “termination” date by which there would be requirement for proof of loss to be filed.

The same would apply to plaintiff’s disability; he would be free after the first week of disability to set a “termination” date by filing proof of loss pursuant to a claim for policy benefits for such first week, or first few weeks, but the “termination” date would never be set until he acted in filing proof of loss. Proof fixes only the time for payment, but disability arising pursuant to policy provision creates the obligation to pay. The latter is a continuing obligation activated by the filing of proof so as to set a measurable period determinative of the obligation pursuant to the demand.

In view of that hereinabove considered it would not be essential that we consider the question of plaintiff’s “excuse” for delay in filing proof of loss, for by our view there was no delay. If there was, however, plaintiff’s evidence—in the nature of that presented under a plea of confession and avoidance—would nevertheless have found support by evidence foreclosing right of the company to summary judgment. The proof was by the establishment of plaintiff’s mental infirmity. The brain damage shown to have occurred on July 28, 1969, was supported by medical evidence by way of deposition of a physician. Supporting the plea of “excuse”, based upon plaintiff’s condition was affidavit of attorney Joe E. Shaddock. Therein Shad-dock stated that by reason of the plaintiff’s mental disorder due to brain damage there was inability of the plaintiff to file a proof of loss any sooner than was actually done.

There exists a question relative to the efficacy of the Shaddock affidavit for it is not therein shown that it was made on personal knowledge or that affiant was competent to testify. Nevertheless the deficiency constitutes what has been termed “purely formal” defects. These an opposite party must be considered to have waived when he does not object in the trial court. Youngstown Sheet & Tube Co. v. Penn, 363 S.W.2d 230, 234 (Tex.Sup., 1962); Swilley v. Hughes, 488 S.W.2d 64, 68 (Tex.Sup., 1972). For summary judgment purposes Mr. Shaddock’s affidavit supports existence of a fact issue on “excuse”.

We take occasion to comment upon certain contentions made by plaintiff as result of his having left the policy, among others, with the insurance agent who sold them to him. Under our view the plaintiff, having declared upon the policy contract, may not support any contention of excuse by reason thereof. The law commits him as one who with the other contractual party had that meeting of the minds essential to the formation of the very contract upon which he declares. Of such terms and provisions he cannot claim ignorance. This would not affect his ability to rely upon the mental lapse or incompetence due to the brain condition whereby he failed to remember that to which he had agreed at the time he entered into the contract relation.

The company showed testimony and admissions by plaintiff contradicted by further testimony by plaintiff. There were both averments, or admissions, and denials relative to the same issuable facts, some in the single instrument of plaintiff’s deposition. This circumstance is of no aid to the company on summary judgment. Even on a trial of the merits where testimony of the same witness raises and supports a determinative issue of fact but further testimony denies the existence thereof or removes support earlier supplied by him, none of it may be disregarded as legally improper or insufficient. Thereby is presented matter for the trier of fact which cannot be resolved by any other.

Judgment is reversed with the cause remanded for trial.


author:
STEPHENSON, Justice.
      KEITH, Justice

text:
    Gerald E. PEDDICORD, Appellant, v. Jean PEDDICORD, Appellee.
    No. 7684.
    Court of Civil Appeals of Texas, Beaumont.
    March 27, 1975.
    Rehearing Denied April 17, 1975.
    Brown & Hill, Sherman, for appellant.
    Robert C. Bush & Associates, Sherman, for appellee.
   STEPHENSON, Justice.

This is an appeal from a summary judgment granted to plaintiff. The parties will be referred to here as they were in the trial court.

Plaintiff, Jean Peddicord, brought this suit against her former husband, Gerald Peddicord. The record shows they executed a property settlement agreement December 2, 1970, and a divorce was granted December 7, 1970. In the divorce decree the recitation is made that the agreement is approved by the court, incorporated into the judgment by reference, and was found to be contractual in nature. The agreement provided that defendant should pay plaintiff $350 on the first and fifteenth of each month, beginning immediately after the granting of this divorce, until January 1, 1981, at which time the' payment would be reducd to $250. The payments would also be reduced to $250 each if defendant was unemployed. The payments were to be continued as long as plaintiff should live or until she remarried. Defendant made the payment as provided until November 1973, since which time no payments have been made.

Defendant’s sole point of error is that the trial court erred in granting plaintiff’s motion for summary judgment in that the trial court failed to allow defendant to assert contractual defenses to the property settlement agreement. Defendant pleadings, in essence were: lack of consideration; failure of consideration; duress in executing the agreement; lack of mental capacity to contract.

Plaintiff’s motion for summary judgment was based upon admission made by defendant in response to plaintiff’s request for admissions. Defendant made these admissions : He was the manager of the Tangle-wood Hills Country Club, on Lake Texo-ma, at the time of execution of the settlement agreement, divorce, and at present. That he had made no payments since November 1973. That he had complied with the terms of such agreement from the date of the divorce until November 1973, with one exception. That he was represented by an attorney at the time of making the agreement and at the time the divorce decree was entered.

The trial court properly refused to allow defendant to interpose contractual defenses to the property settlement agreement which was incorporated into the divorce judgment. The settlement agreement became a part of the judgment of the trial court, and to allow defendant to raise contractual defenses would be to allow a collateral attack upon that judgment.

As far as we have been able to ascertain, this is the first case passing directly upon that point. In Lampkin v. Lampkin, 480 S.W.2d 35 (Tex.Civ.App.—El Paso 1972, no writ), the former wife brought suit to collect delinquent payments under a property settlement agreement incident to a divorce. Defendant plead lack of consideration and coercion. The trial court granted the wife’s motion for summary judgment which was affirmed by the Court of Civil Appeals. However, the appellate court found against the husband as a matter of law as to the defenses plead.

In Akin v. Akin, 417 S.W.2d 882 (Tex. Civ.App.—Austin 1967, no writ), the wife brought suit to collect delinquent child support paymants under an agreement made by the parties and which was incorporated into the divorce decree. The husband plead failure of consideration. The trial court granted the wife’s motion for summary judgment and the Court of Civil Appeals affirmed with this statement: “If appellant has any remedy in the premises it is by direct attack on the divorce judgment in the court which rendered it.”

In Miller v. Miller, 463 S.W.2d 477 (Tex.Civ.App.—Tyler 1971, writ ref’d n. r. e.), the former wife brought suit to collect unpaid payments due under a written property settlement which was approved by the court. The husband plead no consideration, inadequate consideration, and unjust enrichment. The order granting the wife’s motion for summary judgment was affirmed by the Court of Civil Appeals by a finding that there were no material issues of fact. See also Chandler v. Chandler, 323 S.W.2d 377 (Tex.Civ.App. — San Antonio 1959, writ dism’d).

In Ex Parte Jones, 163 Tex. 513, 358 S. W.2d 370, 375-376 (1962), we find some support for the action we are taking in the case before us. There a trial court held the husband in contempt of court for failure to build the wife a house as agreed in a property settlement incorporated into the divorce decree. The Supreme Court granted the husband’s petition for a habeas corpus with this statement: “The contractual provisions in the settlement decree or agreed judgment are neither subject to modification nor can they be enforced by contempt proceedings.”

We do not decide this case by passing upon the contractual defenses raised by defendant, and holding they have no merit. We hold that the judgment of the trial court entered December 7, 1970, became a final judgment when there was no appeal. Upon a suit to enforce the terms of the settlement agreement approved in such judgment, the sanctity and finality of that judgment cannot be collaterally attacked. Therefore, no issues of fact were raised by the defendant through his pleadings, and the trial court properly granted plaintiff’s motion for summary judgment.

Affirmed.

KEITH, Justice

(concurring).

I express my complete concurrence in the well-reasoned opinion of Justice Stephenson. The result reached is sound and compatible with the authorities considered. However, I am perturbed by the unanswered questions which still exist in this area of procedural law notwithstanding our holding.

I have experienced difficulty in drawing a definite distinction between two seemingly conflicting rules which emerge from the myriad of decisions on the subject. There are many decisions which support the rule announced in Pollard v. Steffens, 161 Tex. 594, 343 S.W.2d 234, 239 (1961), where the Court said: “[A] consent judgment has the same degree of finality and binding force as does one rendered by the court at the conclusion of an adversary proceeding.” Indeed, quoting from a text quoted earlier in Wagner v. Warnasch, 156 Tex. 334, 295 S.W.2d 890, 893 (1956), the Court held that such a consent judgment has neither less nor greater force or effect than one rendered after protracted litigation, “ ‘except to the extent that the consent excuses error and operates to end all controversy between the parties.’ ” See also, Schwartz v. Jefferson, 18 Tex.Sup.Ct.J. 261, 264 (March 19, 1975).

These cases fit readily into the general concept of finality of judgments. Judge Smedley in Harrison v. Manvel Oil Co., 142 Tex. 669, 180 S.W.2d 909, 914 (1944), expressed the rule in these words:

“Final judgment is intended to be the end of controversy and trial. * * *
Otherwise, a final adjudication would become the starting point for new litigation, for reexamination and for second decision of the question decided in the former suit.”

See also, Carter v. Nichols, 349 S.W.2d 264, 265 (Tex.Civ.App.—San Antonio 1961, writ ref’d n. r. e.).

But, in consent judgment cases, and particularly those relating to child support orders resting upon contracts incorporated into the decree, we find confusing language which seemingly limits or restricts the generality of the foregoing line of cases. This language apparently first entered our jurisprudence in Peterman v. Peterman, 55 S.W.2d 1108, 1110 (Tex.Civ.App.—Eastland 1933, no writ), in quoting from 34 C.J., Judgments § 337 at 133 (1924) [the substance of which now appears in 49 C.J.S. Judgments § 178 at 316 (1947)]: “It [the consent judgment] has the same force and effect as any other judgment, and in the absence of fraud or mistake is valid and binding, as such, as between the parties thereto and their privies, * * (emphasis supplied)

The first phrase in the quotation from Corpus Juris is now firmly embedded in the jurisprudence of Texas. See, e. g., Pollard v. Steffens, supra (343 S.W.2d at 239); Wagner v. Warnasch, supra (295 S.W.2d at 893).

However, when we come to consider the italicized words, we encounter confusion because of another rule epitomized by this quotation from Hutchings v. Bates, 406 S. W.2d 419, 420 (Tex. 1966), which also has solid support in the Texas cases:

“In a case like the present, however, where the duty to make support payments arises from an agreement of the parties [which has been incorporated in the divorce decree], their rights and obligations in that respect are governed largely by the rules relating to contracts.”

Thus, our courts'are required: (a) to determine the rights of the parties under the rules “relating to contracts”; and (b) to hold that consent judgments are just like other judgments “in the absence of fraud or mistake.” The application of these two rules suggests the questions which I now state: (1) When, where, and in what kind of a proceeding may a party assert fraud, mistake, or other contractual defense? and (2) When does the court use the “contract interpretation” rule ?

Since the so-called consent judgments are final judgments in the true sense of the word, such a judgment is not subject to a collateral attack but may be attacked only in a direct proceeding. Professor Gus Hodges has stated the thesis in this manner: “A direct attack on a judgment is an attempt to change it in a proceeding brought for that specific purpose, such as an appeal or bill of review. A collateral attack is an attempt to avoid the effect of a judgment in a proceeding brought for some other purpose.” G. Hodges, “Collateral Attacks on Judgments,” 41 Tex.L.Rev. 163 (1962).

Each of the defenses which defendant sought to interpose in the case at bar was in the nature of a collateral attack upon a final judgment. Such defenses could be urged, if at all, only in a direct attack upon such judgment, i. e., by direct appeal [and the time had long since expired within which to appeal] or by a bill of review. We need not determine the effectiveness of such defenses because of the almost impossible burdens attendant upon the availability of the bill of review procedure.

Thus, the “fraud or mistake” limitation upon the finality of such consent judgments [see cases cited in footnote 1] is confined to situations wherein a direct attack is made upon such judgments. Subject to all other limitations upon the bill of review procedure [see cases cited in footnote 2], the defenses sought to be interposed in this case may be urged only in such an action. Hodges, supra (41 Tex.L. Rev. at 180 et seq.). Until set aside in a direct proceeding, such final judgment is conclusive as to all issues therein determined under the doctrine of res judicataKolb v. Kolb, 479 S.W.2d 81, 83 (Tex.Civ. App.—Dallas 1972, no writ).

Two instances wherein Courts of Civil Appeals have met and considered the defenses which amounted, in law, to collateral attacks upon final judgments are: Lampkin v. Lampkin, 480 S.W.2d 35 (Tex.Civ.App.—El Paso 1972, no writ), and Lee v. Lee, 509 S.W.2d 922 (Tex.Civ. App.—Beaumont 1974, writ ref’d n. r. e.), wherein I spoke for this court. The defenses interposed in each of the cited cases were no more than collateral attacks upon final judgments and should not have been considered by the court. However, in each instance, the court reached the correct result.

Having placed the two rules in proper perspective, I find no conflict in the application of each to the proper type action. The “fraud and mistake” and contractual defense line of cases refer to direct attacks; the “contract interpretation” doctrine applies in subsequent proceedings between the parties and their privies, not to alter the judgment but to determine and enforce the order entered.

With these remarks, I now reaffirm my concurrence in this case.

      . The substance of the “fraud or mistake” quotation from Corpus Juris has found its way into many decisions of our courts, either directly or by paraphrasing. I cite only a few instances. Beam v. Southwestern Bell Tel. Co., 164 S.W.2d 412, 415 (Tex.Civ.App.—Waco 1942, writ ref’d w. o. m.) [quoting from Peterman, but not from Corpus Juris]; Plumly v. Plumly, 210 S.W.2d 177, 179 (Tex.Civ. App.—San Antonio 1948, writ dism.) [cited with approval in Ex parte Jones, 163 Tex. 513, 358 S.W.2d 370, 375 (1962), upon another point]; Brady v. Hyman, 230 S.W.2d 342, 344 (Tex.Civ.App.—San Antonio 1950, no writ); Routon v. Phillips, 246 S.W.2d 223, 225 (Tex.Civ.App.—Port Worth 1952, writ ref’d n. r. e.); Akin v. Akin, 417 S.W.2d 882, 885 (Tex.Civ.App.—Austin 1967, no writ).
      Several cases have used the words “fraud, accident, or mistake.” See Morris v. Morris, 406 S.W.2d 550, 551 (Tex.Civ.App.—Amarillo 1966, no writ); Plumly, supra, and Brady, supra.

      . See, e. g., Alexander v. Hagedorn, 148 Tex. 565, 226 S.W.2d 996 (1950); Hanks v. Rosser, 378 S.W.2d 31 (Tex.1964); Gracey v. West, 422 S.W.2d 913 (Tex.1968); Texas Mach. & Equip. Co. v. Gordon Knox Oil & Exp. Co., 442 S.W.2d 315 (Tex.1969). This series presents the usual attempt to set aside a default judgment. But, the general rules are also applicable to other situations. See Petro-Chemical Transport, Inc. v. Carroll, 514 S.W.2d 240, 243 (Tex.1974).


author:
KEITH, Justice.
      DIES, Chief Justice

text:
    Robert A. BOWLING et ux., Appellants, v. CITY OF PORT ARTHUR, Appellee.
    No. 7671.
    Court of Civil Appeals of Texas, Beaumont.
    March 13, 1975.

      Jon Burmeister, Port Arthur, for appellants.
    Charles S. Pipkin, Beaumont; for appel-lee.
   KEITH, Justice.

We withdraw our prior opinion filed February 20, 1975 and substitute this opinion in lieu thereof.

Plaintiffs below appeal from a summary judgment entered in favor of the defendant, City of Port Arthur, and we will designate the parties as they appeared in the trial court. Plaintiffs sued for damages proximately caused by city’s negligence in the operation of its sanitary sewer system. Plaintiffs alleged that they gave written notice of the happening within the time required by the charter of the city, that the city manager duly acknowledged receipt of the notice, that city officials inspected the sewer system, but did not compensate them for their damages. The prayer for relief set out in detail the damage to plaintiffs’ home when the sewer pipes therein ruptured through the city’s negligent operation and maintenance of the sewer lines thereto. In a very general manner, plaintiffs also sought a recovery for “physical impairment due to inhalation of hydrogen sulfide gas.”

Defendant’s pleadings put in issue the validity of the notice of claim for damages as required by its charter, pointing to the fact that the notice given was deficient in several respects, inter alia: (a) it was not verified; and (b) it was directed to and served upon the city manager, not the city commission of the defendant. It is conceded by the parties that the charter provision required verification of the notice and service upon the commission, not the manager.

The date of the rupture was fixed as December 10, 1971. Chief Justice Chadick, speaking for the court in City of Texarkana v. Taylor, 490 S.W.2d 191, 192 (Tex.Civ.App.—Texarkana 1972, writ ref’d n. r. e.), has collected an imposing array of cases holding: (a) the city is immune from liability for negligence in the performance of governmental functions, except as modified by the Texas Tort Claims Act [Vernon’s Tex.Rev.Civ.Stat.Ann. art. 6252-19 (1970)], and (b) the maintenance and operation of a sanitary sewer system by a city is a governmental function.

Defendant, citing Malooly Brothers, Inc. v. Napier, 461 S.W.2d 119, 121 (Tex.1970), asserts that while the motion for summary judgment contained several grounds and the trial court’s judgment granted the motion generally, plaintiffs’ sole point is directed to the notice question. Thus, it is argued, an affirmation is required since, in the language of Malaoly: “The judgment must stand, since it may have been based on a ground not specifically challenged by the plaintiff and since there was no general assignment that the trial court erred in granting summary judgment.” See also, Watson v. Glens Falls Insurance Company, 505 S.W.2d 793, 797 (Tex.1974).

Plaintiffs urge upon us a line of cases holding that there need not be letter-proof compliance with the charter provision with reference to notice, saying that a “substantial” compliance will suffice. We have given careful consideration to each of the cited cases and none involved the defects noted earlier: lack of verification and service upon an unauthorized person.

In Carrales v. City of Kingsville, 393 S.W.2d 952, 954 (Tex.Civ.App.—Waco 1965, no writ), the court noted that the requirement of the written notice and claim is mandatory and a condition precedent to the maintenance of a suit against the city, and continued:

“Where verification is required by the City Ordinance, as here, the notice must be verified to be effective, and such requirement is held to be a matter of substance and not of mere form.”

Since the notice was not verified in Car-rales, the summary judgment in favor of the city was affirmed. A similar result was reached in Cooper v. City of Abilene, 416 S.W.2d 562, 564 (Tex.Civ.App.—Eastland 1967, no writ).

City, citing only City of Ft. Worth v. Shero, 16 Tex.Civ.App. 487, 41 S.W. 704 (Ft. Worth 1897, writ ref’d), also contends that service of the notice upon the city manager, rather than upon the city commission as required in the charter, rendered it completely ineffective. The holding of Shero was weakened seriously by the decision of our Supreme Court in McLendon v. City of Houston, 153 Tex. 318, 267 S.W.2d 805, 808 (1954). We are not prepared to hold, under this record, that the service upon the city manager was ineffective. McLendon, supra; Penny v. City of Texarkana, supra, fn. 2.

Plaintiffs contend that, by its conduct after the receipt of the notice, city waived strict compliance with the charter provision with reference to notice and that it was estopped to rely upon a failure to comply with the notice provision. We disagree.

The very charter provision requiring the giving of the notice contained this language :

“No act of any officer or employee of the City shall waive compliance, or estop the City from requiring compliance, with the provisions of this Section as to notice.”

Plaintiffs were charged with notice of the limitation upon the authority of city’s officers and agents and are deemed, in law, to have known the extent of authority (or lack thereof) of such officers. City of Beaumont v. Moore, 146 Tex. 46, 202 S.W.2d 448, 452 (1947); City of San Antonio v. Guido Bros. Construction Co., 460 S.W.2d 155, 164 (Tex.Civ.App.—Beaumont 1970, writ ref’d n. r. e.).

Moreover, plaintiffs did not plead specially either waiver or estoppel; and, in the clearest language, Texas Rules of Civil Procedure, rule 94, requires each to be pleaded before either doctrine is available. As to estoppel, see Bickler v. Bickler, 391 S.W.2d 106, 109 (Tex.Civ.App.—Austin 1965), judgment affirmed in part and reversed on other grounds in part, 403 S.W.2d 354 (Tex.1966); Forbes v. Forbes, 430 S.W.2d 947, 949 (Tex.Civ.App.—Amarillo 1968, no writ). As to waiver, see International Insurance Company v. Jataine, 495 S.W.2d 309, 318 (Tex.Civ.App.—Corpus Christi 1973, writ ref’d n. r. e.), and cases therein cited.

In their motion for rehearing, for the first time, plaintiffs contend: “That the actual notice received by the officials for the City of Port Arthur who investigated the incident in question was sufficient to comply with the notice requirements of the City of Port Arthur.” Reliance is placed upon Section 16 of Tex.Rev.Civ.Stat.Ann. art. 6252-19 (1970), quoted in the margin. This belated contention requires us to consider what actual notice city had.

Mrs. Bowling’s notice to city was in the form of a typewritten letter three pages in length, a copy of which was attached to plaintiffs’ trial pleading. We quote the first and concluding paragraphs of this letter in the margin. The remainder of the letter did not include any reference whatsoever to personal injuries. Plaintiffs did not allege that city had actual knowledge of any “personal injuries,” nor do they now argue that Mrs. Bowling’s letter complied with the charter provision requiring the notice to state specifically “when, where, and how the death, injury, damage or destruction occurred, and the apparent extent of any such injury, the amount of damages sustained . . . .” (emphasis supplied)

City has shown, as a matter of law, that it did not have actual notice “that the claimant [had] received some injury,” although we concede that it did have actual notice “that property of the claimant [had] been damaged.”

Since city did not have actual notice of the personal injuries, if any, plaintiffs were required to comply with the charter provision. And, the notice of the claim, lacking verification as required by Carrales and Cooper, supra, was fatally defective; thus, plaintiffs failed to establish a condition precedent to the maintenance of their suit for personal injuries. The summary judgment was proper.

The judgment of the trial court is Affirmed.

DIES, Chief Justice

(concurring).

I concur in the opinion because the authorities cited therein are binding on this court. However, this writer believes the time has arrived when the Supreme Court and/or the Legislature should modify the requirements of notice of claims such as involved here.

If the purpose of such notice — as claimed — is to give a city opportunity to investigate a claim promptly while the facts are fresh, such purpose was fully accomplished here.

A letter dated January, 1972, by Mrs. Bowling to the city manager of Port Arthur, sufficiently set forth the claimed problem. On January 11, 1972, the city manager answered the letter, saying:

“I have your recent letter regarding the damage to your home at 5045 Griffin Court.
“This matter has been referred to the City’s insurance carrier and City Attorney for handling.
“I am sure you will be contacted in the near future regarding your damage.
“Sincerely yours,
/s/ George Dibrell George Dibrell City Manager”

The City of Port Arthur made the following admissions which are part of our record:

“2. That within 60 days from the date of the occurrence in question, which forms the basis of this suit, a representative of the City of Port Arthur, Mr. Leon Holtzclaw, personally inspected the damages resulting to the Plaintiffs’ residence from the sewer pipe having been eaten out.
“5. That between the years 1966 and 1970, 5 to 7 cave-ins occurred in the portion of sewer line that defendant, City of Port Arthur, maintains from the intersection of 32nd Street and Twin City Drive to the point where said sewer line intersects 25th Street.
“6. That defendant, City of Port Arthur, was aware since 1968 of sewer odor problems in the area where plaintiffs reside.”

In spite of full knowledge and presumably an investigation by city’s insurance carrier of the facts surrounding and the basis of appellants’ claim, we are saying in this opinion they cannot have their day in court because the notice was unverified and not sent to the city council. In my judgment this is not right and ought to be changed.

      . Upon the date of the incident made the basis of this suit, Section 3 of Tex.Rev.Civ.Stat.Ann. art. 6252-19 (1970), provided for a limited waiver of governmental immunty only as to personal injuries or death. Waiver of immunity as to property damages was not added until after the incident involved in this case. See, Acts 1973, 63rd Leg., p. 77, ch. 50, § 1, effective August 27, 1973.

      . E. g., City of Waco v. Landingham, 158 S. W.2d 79 (Tex.Civ.App.—Waco 1940, writ ref’d); City of Austin v. Setter, 415 S.W.2d 489 (Tex.Civ.App.—Austin 1967, writ ref’d n. r. e.); City of Temple v. Wilson, 365 S.W. 2d 393 (Tex.Civ.App.—Austin 1963, writ ref’d n. r. e.); City of Houston v. Watson, 376 S.W.2d 23 (Tex.Civ.App.—Houston 1964, writ ref’d n. r. e.); Ostrewich v. City of Houston, 419 S.W.2d 247 (Tex.Civ.App.—Houston [14 th Dist.], 1967, no writ); Penny v. City of Texarkana, 400 S.W.2d 797 (Tex.Civ.App.—Texarkana 1966, writ ref’d n. r. e.).

      . Carrales and Cooper were cited with approval in McCrary v. City of Odessa, 482 S.W.2d 151, 153 (Tex.1972), for the statement: “Several Texas decisions have sustained the validity of similar charter provisions against a number of attacks.”

      . “Except where there is actual notice on the part of the governmental unit that death has occurred or that the claimant has received some injury, any person making a claim hereunder shall give notice of the same to the governmental unit against which such claim is made, reasonably describing the injury claimed and the time, manner and place of the incident from which it arose, within six months from the date of the incident. Provided, however, except where there is such actual notice, charter and ordinance provisions of cities requiring notice within a charter period permitted by law are hereby expressly ratified and approved.”

      . “Enclosed please find a plumbing bill which we are presenting to the City of Port Arthur for payment. We have suffered great damage and tremendous aggravation and mental anguish due to a deterioated [sic] copper drain pipe from our upstairs bathroom which was corroded by strong and excessive sewer gas.
      “Because we have reported the strong sewer gas in this area for several years and the problem has not been remedied, we feel that the City of Port Arthur should at least pay our plumbing bill. Our household insurance may cover some damage, but the $100 deductible, the amount of depreciation on carpet which we would not have otherwise replaced for several years, and the mental anguish and inconvenience we have been subjected to has been at our expense. We feel that we are being more than fair to take this much on our own and hope that you see fit to compensate us for our recent loss.”

      . Tex.Rev.Civ.Stat.Ann. art. 6252-19, § 16 (1970), in effect at the time of the occurrence.

      . Tex.Rev.Civ.Stat.Ann. art. 6252-19, § 16 (Supp.1974-1975), following the 1973 amendment.


author: NYE, Chief Justice.

text:
    Frances QUINTANILLA, Appellant, v. SEAGRAVES FORD, INC., Appellee.
    No. 960.
    Court of Civil Appeals of Texas, Corpus Christi.
    April 17, 1975.

      George P. Powell, Edinburg, for appellant.
    Joe Smith, Seminole, for appellee.
   OPINION

NYE, Chief Justice.

Frances Quintanilla plaintiff instituted suit against Seagraves Ford, Inc. defendant. The defendant filed its plea of privilege to be sued in the county of its residence, Gaines County, Texas. Plaintiff filed her controverting affidavit, after which the trial court on October 4, 1974, entered its Order sustaining defendant’s plea of privilege and ordering that such cause be transferred to the 106th Judicial District Court of Gaines County, Texas. Plaintiff attempts to appeal from that judgment.

The defendant Seagraves Ford, Inc. filed a motion to dismiss the appeal for want of jurisdiction. The question we must determine is whether the appellant took the proper procedural steps to perfect the appeal. The transcript was received by the Clerk of this Court on February 13, 1975, after this Court had granted appellant’s motion for extension of time for filing of the record. The Transcript contains several Orders. It shows that an Order sustaining defendant’s plea of privilege was entered by the trial judge on October 4, 1974. The transcript also contains two subsequent Orders which were entered by the trial court. On December 2, 1974, (59 days after the original Order was entered), the trial judge entered a second Order sustaining the defendant’s plea of privilege. On January 29, 1975, (117 days after the first Order was entered), the trial court entered still another Order that stated that the Order dated October 4, 1974, was to be vacated and that the Order dated December 2, 1974 was deemed to be and was the proper .and final Order in the cause.

The appellee in its motion to dismiss contends that the October 4, 1974 Order is the final judgment. The appellant’s “Affidavit of Inability to Give Appellate Cost Bond” was filed in the lower court on December 12, 1974. It is evident to us that the appellant was computing her time periods with respect to her various appellate steps from the December 2, 1974 Order rather than the October 4, 1974 Order.

Rule 301, Texas Rules of Civil Procedure, provides that only one final judgment shall be rendered in any cause. The trial court has plenary power over its judgments during the thirty day period after the judgment has been rendered or before a timely filed motion for new trial has been overruled. Rule 329b(5), Tex.R. Civ.P.; First State Bank and Trust Company of Port Lavaca v. Vector Corporation, 427 S.W.2d 958 (Tex.Civ.App.—Waco 1968, writ ref’d n. r. e.); Dubert v. Adkins, 475 S.W.2d 383 (Tex.Civ.App.—Corpus Christi 1971, no writ). During this period, the trial court may on its own motion or on motion of any party vacate, modify, correct and reform such judgment or grant a new trial. Universal Underwriters Insurance Co. v. Ferguson, 471 S. W.2d 28 (Tex.Sup.1971); Harang v. Aetna Life Insurance Company, 400 S.W.2d 810 (Tex.Civ.App.—Houston 1966, writ ref’d n. r. e.); First State Bank and Trust Company of Port Lavaca v. Vector Corporation, supra; 33 Tex.Jur.2d, Judgments §§ 135-136.

The judgment entered by the trial court on October 4, 1974 was final on November 4, 1974 (after expiration of 30 days). On that date, the trial court lost control over the cause and was without jurisdiction to act further in the matter. The only exception to the above rule is that the court retains the power to enter a nunc pro tunc order correcting any “clerical error” which may appear in its judgments. Approximately 28 days after the court lost jurisdiction, it attempted to enter the second Order granting the defendant’s plea of privilege. There is nothing in the record before us indicating why the trial judge entered the December 2, 1974 Order. The October 4, 1974 and December 2, 1974 Orders were the same. The appellant in her January 29, 1975 “Motion” admits that the October 4, 1974 and December 2, 1974 Orders are “substantially the same”.

The only conceivable theory upon which plaintiff could rely to overcome the obstacles above noted is that she proceeded under Rules 316 and 317, Tex.R.Civ.P., relating to judgments nunc pro tunc. Unquestionably, a court has the inherent power to correct a clerical error appearing in a judgment as distinguished from a judicial error. This is by entry of a judgment nunc pro tunc. Rules 316, 317, Tex.R.Civ. P.; Universal Underwriters Insurance Co. v. Ferguson, supra; Finlay v. Jones, 435 S.W.2d 136 (Tex.Sup.1969); 33 Tex.Jur.2d Judgments, §§ 28-29, pp. 516-521, and §§ 135-136, pp. 655-659. When a judgment is entered nunc pro tunc, the right of appeal dates from the rendition of the nunc pro tunc judgment. The time periods within which the various steps in such an appeal are to be taken shall be computed from that date. Rule 306b, Tex.R.Civ.P. However, a purported nunc pro tunc entry of judgment is erroneous and of no value where it fails to disclose the ground on which the court acts or what the entry intends to correct. It must show some reason for its entry, and unless it shows that it had been entered “this for that” or in lieu of a former judgment it does not qualify as a nunc pro tunc judgment. Otherwise there would be two judgments entered in the same case. Lung v. Varga, 400 S.W.2d 1 (Tex.Civ.App.—Austin 1966, no writ); Ellison v. Panhandle & Santa Fe Railway Company, 306 S.W.2d 909 (Tex. Civ.App.—Amarillo 1957, no writ); 33 Tex.Jur.2d, Judgments § 32 (1962).

We hold that the Order that was signed and rendered on December 2, 1974 was not a nunc pro tunc Order or judgment. It did not purport to correct any clerical error that had been made in the October 4, 1974 Order, nor did it designate what entry, if any, was intended to be corrected. See National Bank of Commerce of Brownsville v. Southmost Dodge City, Inc., 498 S.W.2d 410 (Tex.Civ.App.—Corpus Christi 1973, no writ). The December 2, 1974 Order left unchanged the judgment that was rendered on October 4, 1974. In the instant case, the only appealable judgment that was rendered was the judgment of October 4, 1974. The time for filing the appeal bond or affidavit in lieu thereof and the transcript commenced with the rendition of that judgment and not with the rendition of the Order of December 2, 1974.

Under Rule 385(a), Tex.R.Civ.P., plaintiff was required to file her appeal bond or affidavit in lieu of costs within twenty (20) days after rendition of the October 4, 1974 judgment, said period ending October 24, 1974. Plaintiff filed her affidavit on December 12, 1974. Plaintiff was required by Rule 385(b) to file her transcript within twenty (20) days after rendition of the order appealed from or upon motion being filed within five (5) days thereafter for an extension of time in which to file such record. Plaintiff was thus required to file either her transcript or a motion for extension of time by October 29, 1974. She failed to do so, by filing her first motion for extension of time on December 23, 1974.

The defendant’s motion to dismiss for want of jurisdiction should be granted. The appeal is, therefore, dismissed.

Appeal dismissed.


author: BREWSTER, Justice.

text:
    Roy E. YOUNGBLOOD, Appellant, v. CENTRAL SOYA COMPANY, INC., Appellee.
    No. 17599.
    Court of Civil Appeals of Texas, Fort Worth.
    April 4, 1975.
    Rehearing Denied May 9, 1975.

      Zbranek, Friend & Hight, and C. T. Hight, Liberty, for appellant.
    Shannon, Gracey, Ratliff & Miller, and Eugene J. Dozier, Fort Worth, for appel-lee.
   OPINION

BREWSTER, Justice.

This is an appeal by the defendant, Roy E. Youngblood, from a summary judgment that was rendered against him.

Central Soya Company, Inc., plaintiff, sued Youngblood to recover the balance due on a promissory note, to foreclose a lien that secured payment of that note, to recover the balance that was allegedly due plaintiff by defendant on an open account, and to foreclose a lien on certain property, which lien was given to secure the sums due on the open account.

Plaintiff’s suit on the open account was brought in the form of a suit on a sworn account as provided for by Rule 185, Texas Rules of Civil Procedure. The open account grew out of a series of purchases of chicken feed that Youngblood bought from the plaintiff.

Youngblood alleged in his answer that plaintiff began to charge him, starting in April, 1971, for the chicken feed, prices in excess of the market value of that type chicken feed, and that this practice continued until plaintiff had charged him over $10,000.00 in excess of the market value of the feed that defendant had purchased. Defendant alleged that when plaintiff first started charging him excessive prices for the feed he objected and that plaintiff’s agents then told him that if he did not keep on buying feed from plaintiff that they would follow him on his egg route and advise his customers that they had a lien on the proceeds from his egg sales and thus interfere with his business and break him financially. He alleged that he believed these threats and because of them kept on buying feed from defendant until they had unlawfully charged him over $10,000.00 in excess of the market value of the feed he purchased from plaintiff. Youngblood asked that this $10,000.00 in excess charges be offset against the sums that he still owed plaintiff on the account.

In paragraph S of defendant Young-blood’s answer he further alleged that plaintiff’s conduct in forcing him to buy feed from it was unlawful and willful, and that he was therefore entitled to recover $5,000.00 in punitive damages from plaintiff and to have that sum set off against the amount that he owed to plaintiff. His answer stated that he made the allegations in this paragraph 5 by way of cross-action.

The trial court entered an order severing from plaintiff’s suit on the sworn account plaintiff’s suit against defendant on the note and the defendant’s cross-action. He placed the last two mentioned matters in a separate case and gave that severed case a new docket number. The court then rendered for plaintiff and against defendant a summary judgment on the open account for $13,535.74, plus interest, and also ordered foreclosed the lien plaintiff had on defendant’s property securing the open account.

This is the summary judgment that defendant, Youngblood, is appealing from.

Defendant’s appeal is based on two points of error.

In his first point of error he contends that the court erred in granting the summary judgment on the open account because an issue of fact was raised by the pleadings, affidavit and testimony before the court.

His argument under this general point of error is that his answer alleging that plaintiff had overcharged him for the feed, together with his affidavit wherein he swore to those facts, established a fact issue which made it legally improper to render a summary judgment against him on the open account.

We overrule this point of error.

Plaintiff’s action was founded upon an open account supported by affidavit as provided for in Rule 185, T.R.C.P. That rule provides: “. . . the same shall be taken as prima facie evidence thereof, unless the party resisting such claim shall, . file a written denial, under oath, stating that each and every item is not just or true, or that some specified item or items are not just and true; . . . .”

The part of Youngblood’s answer by which he undertook to deny the account that plaintiff sued on was Paragraph 6 thereof which contained the following allegation : “. . . the account made the basis of Plaintiff’s suit is not just and true in that the Plaintiff has charged the Defendants a price in excess of the reasonable market value of the feed that it furnished . . . .” Youngblood then made oath at the end of his answer and cross-action stating, “. . . the above Defendants’ First Amended Original Answer is true and correct.”

Youngblood’s pleading, which is next above set out, did not deny under oath “that each and every item is not just or true, or that some specified item or items are not just and true” as is required by Rule 185, T.R.C.P.

Because Youngblood’s sworn denial was not in compliance with Rules 185 and 93(k), T.R.C.P., he could not at the summary judgment hearing deny the plaintiff’s claim or any item thereof. He was in the same position, as to the sworn account, that he would have been in if he had filed no denial at all.

In order for the sworn denial required by Rule 185 to have any effect it must comply with the language of that rule. Duncan v. Butterowe, Inc., 474 S. W.2d 619 (Houston Civ.App., 14th Dist., 1971, no writ hist.); Solar v. Petersson, 481 S.W.2d 212 (Houston Civ.App., 14th Dist., 1972, no writ hist.); Goodman v. Art Reproductions Corporation, 502 S.W.2d 592 (Dallas Civ.App., 1973, writ ref., n. r. e.).

Since defendant did not plead a sworn denial of the account in the form required by Rules 185 and 93 (k), there was no issue of fact involved in the case as to whether defendant did not owe all or a part of the account, or as to whether he was entitled to the alleged offset. Summary judgment was therefore properly rendered in favor of plaintiff on the sworn account action. Collins v. Kent-Coffey Manufacturing Company, 380 S.W.2d 59 (Eastland Civ. App., 1964, writ ref.); Space City Construction Co. v. Gifford-Hill & Co., 468 S.W.2d 897 (Houston Civ.App., 1st Dist., 1971, no writ hist.); J. Hofert Company v. Inman, 416 S.W.2d 461 (Austin Civ.App., 1967, no writ hist.); and Solar v. Petersson, supra.

Defendant’s second point of error is that the court erred in granting the summary judgment on the open account at a time when defendant had on file in the case a cross-action on matters that arose from the same transaction and which were an offset and counterclaim to the open account suit.

His contention in arguing the point is simply that a trial court cannot legally grant a summary judgment in favor of a plaintiff in a case wherein the defendant has on file therein a cross-action against the plaintiff and that he had a cross-action on file in the case at the time the summary judgment was granted.

We overrule the point and defendant’s argument in support of it.

Rule 166-A, T.R.C.P., gives to trial courts the right to render summary judgment in favor of the moving party upon all or any part of the case.

So under the express provisions of that rule it is apparent that the mere filing of a cross-action will not in and of itself in all cases prevent the trial court from granting a summary judgment on all or a part of the case.

The action of a trial court in rendering a summary judgment on a plaintiff’s case and in severing out of that action the cross-actions and third party actions that were also involved has been upheld in the following Texas cases: Pure Oil Company v. Fowler, 302 S.W.2d 461 (Dallas Civ. App., 1957, writ ref., n. r. e.), and Hayes v. Norman, 383 S.W.2d 477 (Corpus Christi Civ.App., 1964, writ ref., n. r. e.).

Trial courts are vested with large discretion as to whether or not to sever and have separate trials of causes of action. See Rule 41, T.R.C.P., and Pure Oil Company v. Fowler, supra.

In this case if the defendant had any complaint at all it was to the trial court’s ruling ordering the severance. But defendant has never objected to that ruling and has no points on this appeal complaining of the severance.

The record here shows that on the same day that the trial court rendered the summary judgment against defendant on the sworn account action he also rendered a separate order severing plaintiff’s cause of action on the note and defendant’s cross-action claiming an offset against plaintiff from the cause of action on which the summary judgment was granted. The order gave each of those two matters separate docket numbers.

When the court severed the cross-action out of the case this left the matter before the court the same, in so far as the sworn account action is concerned, as if no cross-action was ever filed.

This being true, the plaintiff’s second point of error is without merit, because the premise upon which that point is based is that the summary judgment was granted at a time when defendant had on file in the case a cross-action.

The judgment is affirmed.