author: COLEMAN, Chief Justice.

text:
    Cloyce F. CHANDLER, Jr., et al., Appellants, v. Paul W. DRUMMET, Appellee.
    No. 16892.
    Court of Civil Appeals of Texas, 1st District, Houston.
    June 30, 1977.
    Rehearing Denied Oct. 6, 1977.
    Sears & Burns, David F. Beale, Sonfield & Sonfield, Houston, for appellants.
    Boswell, O’Toole, Davis & Pickering, Donald R. Hallmark, Houston, for appellee Paul W. Drummet.
    Schlanger, Cook, Cohn & Mills, Joel W. Cook, Houston, for appellee Houston Lighting & Power.
   COLEMAN, Chief Justice.

This is a suit to remove the cloud from the title to land. The two principal issues are (1) whether a certain oil and gas lease has terminated, and (2) if not, whether the defendant, Cloyce F. Chandler is the owner of an interest in said oil and gas lease.

The case was submitted to a jury on one special issue, in response to which the jury found that it was an intent of the parties to the Drummet-Bacarisse lease that it would terminate sixty days after the completion of a dry hole if additional drilling or reworking operations could not be done within said period. Judgment was entered finding that the oil and gas lease had terminated and that the interest claimed by the defendant Cloyce F. Chandler, Jr. under the Drummet-Bacarisse oil and gas lease dated April 28, 1961, recorded in Vol. 1346, P. 492 of the Contract Records of Harris County, Texas, was null and void.

On April 28, 1961, Paul W. Drummet executed an oil, gas and mineral lease on a tract of land in Harris County to Sidney L. Baearisse. Paragraph 1 of the lease reads:

“Lessor, in consideration of $10.00 in hand paid . . . and of the royalties herein provided and of the agreements of the lessee herein contained, hereby grants, leases and lets exclusively unto lessee for the purpose of investigating, exploring, prospecting, drilling, mining and operating for and producing oil, gas, and all other minerals, . . . the following described land . . . ”

Following the description of the land leased this paragraph was typed in a blank space on the printed form:

“Notwithstanding any other provisions in this Lease, if operations for the drilling of a test well for oil or gas is not commenced on this tract of land or on the George B. Meyer & Frank K. Meyer 527 acre tract of land, located on the adjoining survey in the W.C.R.R. Survey Abstract # 934 on or before 120 days from this date, this Lease shall terminate as to both parties.
“Should the test well commence on or before 120 days from this date on either tract this Lease shall become valid and in force.”

Paragraph 2:

“Subject to the other provisions herein contained, this lease shall remain in force for a term of ten (10) years from this date (called “primary term”), and as long thereafter as oil, gas, or other mineral is produced from said land.”

The third paragraph of the lease sets out the royalties to be paid to the lessor. Paragraph 4 reads:

“If operations for drilling or mining are not commenced on said land on or before 120 days from this date, this lease shall terminate as to both parties.”

The printed provisions of paragraph 4 providing for delay rentals were struck out. Paragraph 5 of the lease reads:

“If, prior to discovery of oil, gas, or other minerals on said land, lessee should drill and abandon a dry hole or holes thereon, or if, after discovery of oil, gas, or other minerals, the production thereof should cease from any cause, this lease shall not terminate if lessee commences additional drilling or reworking operations within sixty (60) days thereafter, or (if it be within the primary term) commences or resumes the payment or tender of rentals on or before the rental paying date next ensuing after the expiration of three (3) months from date of completion and abandonment of said dry hole or holes or the cessation of production. . . .”

Other provisions of the lease have no bearing on the problems presented in this case. Drummet relies on the language found in paragraph 5 as creating an obligation for additional drilling within sixty days from the completion of any dry hole during the primary term. Chandler contends that it does not create an express obligation to so drill because it is stated in the negative, i. e., “it shall not terminate if . . The lease nowhere expressly provides that the lease shall terminate unless additional drilling operations are undertaken.

In Texas Co. v. Davis, 113 Tex. 321, 254 S.W. 304 (1923), the supreme court considered an oil and gas lease containing the following provisions:

“To have and to hold the above-described premises, unto the said parties of the second part, their heirs and assigns, upon the following conditions: In case operations for either the drilling of a well for oil, gas or other minerals, is not commenced and prosecuted with due diligence within two years from this date, then this grant shall immediately become null and void as to both parties; provided that said second party may prevent such forfeiture from year to year by paying to the first party the sum of $10.00 per year, until such well is commenced or until shipments from such mine have begun, and it is agreed that the completion of a well shall operate as a full liquidation of all rental under this provision during the remainder of the term of this lease, . In case the parties of the second part should bore and discover either oil or other minerals, then in that event this grant, incumbrance or conveyance shall be in full force and effect for twenty-five years from the time of the discovery of said product, and as much longer as oil, water, gas or other minerals can be produced in paying quantities thereon. . . ”

The opinion in Texas Co. v. Davis, reflects that within the two year period specified in the lease the lessee drilled four oil wells, one of which produced for a time. The lease was dated February 23, 1901. The fourth well was completed in July, 1904 when all drilling equipment and machinery was removed from the premises. After the completion of the fourth well no exploration or production was undertaken.

After considering these facts the court said:

“The Court of Civil Appeals concluded that the wells drilled by Underwood’s assigns liquidated all rentals and kept the grant in effect for 25 years. We think the $10 per year payment clause had no relation to anything save prevention of a forfeiture from failure to drill with diligence, within two years from the date of the grant. After a well was drilled, with the required diligence, the grantee and his assigns were invested with title, freed of the express condition subsequent, to the oil, gas and other minerals, and incidental rights, for 25 years from the time of discovery of the oil, gas, or other minerals, and as much longer as same might be produced from the 76½ acres of land in paying quantities. But such title vested only for the purpose specified in the writing through which the title was derived.”
“We are convinced: First, that Underwood and his assigns took only a determinable fee under the grant from Arnold and wife, which terminated long ago; and, second, that abandonment of the purpose for which Underwood and his assigns were invested with their title and rights in and to the minerals and land was necessarily fatal to the maintenance of the suit of defendants in error. The evidence is undisputed, which conclusively shows that those under whom defendants in error claim entirely and permanently stopped and abandoned the exploration and development of the 76½ acres and the production of minerals thereon. Their estate at once terminated without the need of a conveyance.”

In the fifth installment of an often cited law review article on The Nature of the Property Interest Created by an Oil and Gas Lease in Texas, by Professor A. W. Walker, Jr., appearing in 11 Texas Law Review 399, it is stated that the law is well settled today that the lessee in any oil and gas lease assumes a number of implied obligations to the lessor with reference to the operation and development of the leasehold premises, in the absence of express provisions relieving the lessee of these obligations. One of the implied covenants is the covenant to develop the premises with reasonable diligence, (p. 401) Professor Walker also states (p. 408) that the peculiar nature of these implied covenants in Texas results from the holding of our courts that the devotion of the leased premises to the purpose of oil and gas exploration, development, and production is a special limitation upon the lessee’s estate even though not expressly stated as a special limitation in the lease. Professor Walker states that the implied covenant to develop with reasonable diligence exists in all situations where the lease is being preserved other than by the payment of delayed rentals, (p. 411) With reference to a case where the lease contains no delayed rentals clause, but provides for drilling of an initial well, Professor Walker says:

“A more interesting situation develops when the initial well provided for in the lease is completed as a dry hole before the exploratory term has expired. Under the Texas law that the lease will terminate when the premises are not devoted to the limitational purpose, except where a substitute method of preserving the lease by the payment of rentals is available, it is clear that the lease in this situation would terminate in the absence of further development. . . . ” (p. 414)

The Supreme Court of Texas in Fox v. Thoreson, 398 S.W.2d 88 (Tex.1966), has reaffirmed the existence in an ordinary oil and gas lease which does not contain provisions to the contrary, of a special limitation imposed by law which would terminate the estate upon cessation of use of the estate for its intended purpose, citing Texas Co. v. Davis, 113 Tex. 321, 254 S.W. 304, 255 S.W. 601 (1923); and Stephens County v. Mid-Kansas Oil & Gas Co., 113 Tex. 160, 254 S.W. 290, 29 A.L.R. 566 (1923).

The evidence in this case shows conclusively that a test well was commenced on the premises described in the lease within the time required by the lease. Therefore, as provided in paragraph 2 of the lease, it would remain in force for a term of ten years and as long thereafter as oil or gas is produced from said land “subject to the other provisions herein contained”. Nevertheless the special limitation imposed by law would terminate the estate upon abandonment or cessation of use of the estate for its intended purpose. As we construe the terms of the lease, paragraph 5 was inserted to remove the uncertainty which might arise upon the completion of this first well as a dry hole. It provided that the lease would not terminate if the lessee commenced additional drilling or reworking operation within sixty days after the completion of the dry hole. This provision is not a special limitation, rather it is a savings clause. It reflects the agreement of the parties as to what constitutes a reasonable period of time in which additional drilling operations must be undertaken after the completion of a dry hole in order to save the lease from termination by reason of the implied limitation imposed by law on the cessation of use of the estate for its intended purpose.

The evidence establishes that additional drilling operations were not commenced within the sixty day period. It follows, therefore, that an unreasonable length of time elapsed between the abandonment of the nonproducing well and the commencement of operations upon another exploratory well. The lease terminated by reason of the implied special limitation since there is no language in the lease which would excuse lessee from his obligation to develop the lease with reasonable diligence. W. T. Waggoner Estate v. Sigler Oil Co., 118 Tex. 509, 19 S.W.2d 27 (1929); Gulf Production Co. v. Kishi, 129 Tex. 487, 103 S.W.2d 965 (1937); Chapman v. Ellis, 254 S.W. 615 (Tex.Civ.App.—Beaumont 1923, writ dism’d).

A number of points of error have been raised by the appellants and they have been carefully considered. Since we have held that as a matter of law the lease terminated sixty days after completion of the well as a dry hole these points become immaterial.

The judgment is affirmed.


source: Caselaw Access Project

author: EVANS, Justice.

license: Public Domain

text:
    EARL HAYES RENTS CARS & TRUCKS, a corporation, et al., Appellants, v. CITY OF HOUSTON, Appellee.
    No. 16901.
    Court of Civil Appeals of Texas, Houston (1st Dist.).
    Aug. 4, 1977.
    Rehearing Denied Oct. 6, 1977.

      Jamail & Gano, John Gano, Houston, for appellants.
    Otis H. King, City Atty., Joseph G. Rollins, Senior Asst. City Atty., Houston, for appellee.
   EVANS, Justice.

This is a breach of contract case.

In 1968 the City of Houston let competitive bids for the operation of certain public parking facilities at the Houston Intercontinental Airport, which was then under construction. Earl Hayes Rents Cars & Trucks, a corporation, was the successful bidder, and a formal contract was made for a five year term beginning July 1,1969 and ending June 30, 1974.

Under this contract, termed a Concession Agreement, the City granted Hayes the “right and privilege” to operate the parking facilities at the airport. The contract also designated various levels in each terminal building as parking areas and specified the number of parking spaces within each area. As compensation to the City, Hayes agreed to pay “a sum equal” to specified percentages of the annual gross revenues to be derived from the operation of the facilities or, alternatively, specified minimum annual guaranteed payments, whichever would be the greater. The contract provided that the City would furnish certain directional signs or graphics and would make office space available to Hayes in one of the terminal buildings.

The grand opening of the Houston Intercontinental Airport was held on June 9, 1969, and on that date Hayes commenced operation of the facilities under the business name “Interpark”.

Difficulties between the parties soon developed due to the City’s failure to promptly perform some of its affirmative obligations under the contract. The City was unable to make available to Hayes the specified number of parking spaces and to furnish Hayes with signs and office space as agreed. Hayes, at its own expense and with the approval of the Director of Aviation, advanced the funds necessary to construct the office and to purchase the signs. It then sought reimbursement from the City for the amount of such costs and for its claimed loss of revenue due to the City’s failure to provide sufficient parking spaces. The total sum Hayes claimed was $75,-384.70.

Despite continuing efforts on the part of Hayes to reach a settlement with the City, the controversy was never resolved. Finally Hayes decided to withhold the amount of its claim from the monies which it was due to pay the City under the terms of the contract. This resulted in further investigation by the City and in the passage of a resolution authorizing a settlement of the matters in dispute; however, no final settlement was reached. On May 13,1971 the City, contending that Hayes was in arrears of its required payments, enacted an ordinance providing that at 12:01 that same night, the Director of Aviation would take over the parking facilities and operate the facilities. Pursuant to this authority, Hayes was evicted from the premises and the City thereafter operated the parking facilities for the balance of the five year term.

Hayes subsequently filed this action against the City, alleging damages as a result of the City’s actions, and the City counterclaimed, alleging that Hayes was liable for the difference between the guaranteed minimum payments and the net revenues which the City had realized after its take-over of the parking facilities.

The trial court submitted four special issues to the jury. In response to Special Issue No. 1 the jury found that Hayes had expended $47,893.16 for construction of office space and $15,067.59 for signs. The parties had stipulated that Hayes’ loss of revenue by reason of the City’s failure to furnish the required number of parking spaces was in the sum of $12,423.95. Therefore, based on the stipulation and the jury’s finding, Hayes’ damages by reason of the City’s failure to perform its contractual obligations was established to be in the claimed amount of $75,384.70. The jury also found that Hayes suffered a loss in the amount of $150,000.00 by reason of the City taking over its properties, and that in reasonable probability, Hayes would have made a $400,000.00 profit had it been permitted to continue its operation for the balance of the contract term.

In response to Special Issue No. 2, the jury found that prior to May 13, 1971, the date of the City’s take-over of the facilities, Hayes had failed to remit to the City the total sum of $393,787.50. However, in response to Special Issue No. 3 the jury found that after deducting the City’s profits from its operation after taking over the facilities, Hayes had not failed to pay to the City any amount of the money due it under the guaranteed payment provisions of the contract.

The trial court entered judgment on the jury’s verdict, disregarding the jury’s answer to Special Issue No. 2, and awarding Hayes the sum of $150,000.00 in damages, plus interest thereon at 9% per annum from and after May 14, 1971. All other claims for affirmative relief were denied.

On this appeal, Hayes contends the trial court erred in refusing to enter a judgment in its favor for the sum of $400,000.00, plus interest, the amount which the jury found would have been its profits had it been permitted to continue operation for the balance of the five year term. In cross-points of error, the City contends that the trial court erred in refusing to award it the sum of $610,095.42 which it contends the evidence established, as a matter of law, to be the amount which Hayes failed to remit prior to the date of the City’s take-over, and, alternatively, for refusing to award it the sum of $393,787.50, which is the amount found by the jury to response to Special Issue No. 2. The City further contends that the trial court erred in awarding Hayes the sum of $150,000.00 plus prejudgment interest for loss of properties resulting from the City’s take-over, and prejudgment interest thereon, and that the court also erred in awarding prejudgment interest at the rate of 9% per annum prior to the effective date of the statute increasing the legal rate of interest.

Although each party claims that the other breached the contract, neither party requested an issue pertaining to the contract or as to its alleged breach. Nor did the trial court prepare written findings as authorized by Rule 279, Texas Rules of Civil Procedure. Therefore, in considering the parties obligations under the contract and whether or not there was a breach of such obligations by either party, all factual issues must be resolved in support of the trial court’s judgment and any theory of the law which under the pleadings and evidence would tend to support the judgment must be adopted. Transportation League, Inc. v. Morgan Express, Inc., 436 S.W.2d 378, 387 (Tex.Civ.App. — Dallas 1969, writ ref’d n. r. e.). Hayes argues that the evidence conclusively shows the City breached the contract from the date of its inception by its failure to perform its affirmative obligations, and that such breach constituted a repudiation of the contract, excusing Hayes from performance. The City contends, on the other hand, that the evidence conclusively shows that the failure of Hayes to make the required payments constituted the only material breach of the contract, and that the City was entitled to take-over the operation of the facilities, including Hayes’ property, and to recover from Hayes the amount of the arrearage.

Since the trial court denied Hayes’ claim for recovery of the sum of $400,000.00, as its lost profits resulting from the City’s take over, it may be presumed to have found no breach of the contract by the City in taking over operation of the facilities. The City’s action in taking over the operation is governed by Section 28 of the contract, which, in pertinent part, provides:

“(a) City shall have the right immediately and without notice, to suspend Concessionaire’s rights hereunder and to take over operation of all public parking facilities operated by Concessionaire under the terms hereof, including the use of Concessionaire’s installed equipment necessary to operate the facilities, upon the occurrence of any one or more of the following events that, in Director’s opinion, results in the parking facilities not being operated for the convenience and benefit of the public or in the manner required herein, and City shall have the right to terminate this Agreement in its entirety (subject to the pro-visions of Section 31 “Survival of Concessionaire’s Obligations” hereof) and all rights of Concessionaire ensuing here-from upon thirty days written notice if such event or events are not corrected or abated within said thirty day period:
1. Concessionaire shall fail duly and punctually to pay the fees, charges and rentals or to make any other payments when due to City that are required hereunder.”

Contrary to Hayes’ contention, the contract did not require that the City give written notice of termination prior to taking over operation of the facilities under Section 28 of the contract. It is clearly evident from the reading of Section 29, as well as other applicable sections of the contract, that prior written notice was not required under the suspension provisions of Section 28, and the evidence supports the court’s implied finding that the City acted in accordance with the terms of the contract in taking over operation of the facilities upon Hayes failure to make the required payments.

At the time of the City’s takeover, a dispute existed between the parties with respect to whether Hayes was in default of the guaranteed payment provisions of the contract, the City claiming that Hayes was then several hundred thousand dollars in arrears. There is evidence in the record from which the trial court could have concluded that the City’s failure to furnish the required number of parking spaces, office facilities and signs was not of such a nature, under the circumstances, as to excuse Hayes’ obligation to pay the required compensation. Not every breach of performance will excuse the other party from performance. Where the obligations imposed upon one party are independent of or subsidiary to the obligations imposed upon the other, a breach by one party may not constitute such a repudiation of the contract as will excuse the other party from continued performance. Scarborough v. Arrant, 25 Tex. 129 (1860).

“Where there are several terms in a contract, a breach committed by one of the parties may be a breach of a term which the parties have not, on a reasonable construction of the contract, regarded as vital to its existence. Such a term is said to be subsidiary, and breach thereof does not discharge the other party; he is bound to continue his performance of the contract, but may bring an action to recover such damages as he has sustained by the default.
The prevailing rule is that, where a promise is to be performed in the course of the performance of the contract, and after some of the consideration of which it forms a part has been given, it will be regarded as subsidiary, and its breach will not effect a discharge unless there are words expressing the fact that it is a condition precedent, or unless the performance of the thing promised is plainly essential to the contract.” 17A C.J.S. Contracts § 476, p. 673.

Furthermore, the refusal by one party to honor its obligations under a contract will not constitute an anticipatory breach, if made in good faith and as the result of misunderstanding or mistake. Englehart v. Volunteer State Life Ins. Co., 195 S.W.2d 798, 802 (Tex.Civ.App.—Eastland 1946, writ ref’d n. r. e.); Bell v. Máximos, 85 Tex. 140, 19 S.W. 1070 (1892).

The City’s failure to perform its obligations under the contract did not render performance by Hayes impossible, and Hayes continued to operate the facilities under the contract. The trial court was justified in concluding that Hayes had elected to continue the contract in effect and that the City’s breach did not excuse Hayes’ failure to perform. Scarborough v. Arrant, 25 Tex. 129 (1860); Jenkins v. Northwestern Pipe & Supply Co., 299 S.W. 857 (Tex.Com.App.1927).

The trial court’s judgment denying the City’s claim for arrearage was, in effect, a recognition of the validity of Hayes’ claim for the sum of $75,384.70, which Hayes had withheld from the guaranteed minimum payments it was required to make to the City. The trial court did not err in refusing to affirmatively provide in its judgment that Hayes should recover said amount from the City, because such an award would have permitted Hayes to recover judgment for monies which it already had in its possession.

The trial court did not err in awarding Hayes the sum of $150,000.00 based upon the jury’s finding that such sum represented that amount of Hayes’ loss by reason of the taking of its properties by the City. The City does not attack the eviden-tiary basis of the jury’s findings, but contends that under the contract the title to the properties became vested in it at the time of its take-over of the parking facilities. Contrary to the City’s contention, the contract provides only that the City acquired title to those improvements that could not be removed without damage to the premises or to other City property. The contract expressly provides that Hayes retained the title to all removable properties. The nature and value of the properties in question were matters factually in dispute, and the jury’s verdict on the issue must be given conclusive effect.

The trial court’s judgment denying the City’s claim for the alleged arrear-ages under the guaranteed minimum payment provisions of the contract must also be sustained. It is the City's contention that under the uncontroverted evidence it was entitled to a recovery for the full amount of its claimed arrearages in the sum of $610,095.42 or, alternatively, for the amount of $393,787.50 based upon the jury’s finding in response to Special Issue No. 2. The question of whether and to what extent there was an arrearage at the time of the City’s take-over was a matter in dispute, and the record does not establish as a matter of law that the amount of the ar-rearage was the sum claimed by the City. The jury’s finding in response to Special Issue No. 2 established the amount of the arrearage to be in the sum of $393,787.50. However, the jury also found, in response to Special Issue No. 3 that after deducting the City’s profits subsequent to its takeover of operations, Hayes had not failed to pay any amount due the City under the minimum payment provision of the contract. Under the terms of the contract, the City had the right to elect whether to terminate the contract in its entirety, or to resume possession and continue operations under the contract. The City did not elect to terminate the contract, but instead elected to take-over the operation of the facilities without terminating Hayes’ continuing obligation under the minimum payment provisions of the contract. Therefore, at the City’s own election, Hayes remained liable under the contract for a “sum equal” to the total amount of the minimum payments due for the entire contract term, less such profits as the City might receive from its operation of the parking facilities. The City did not object to the submission of Special Issue No. 3, and has not attacked the evidentiary basis of that issue. Since the jury found in response to Special Issue No. 3 that after deducting the City’s profits, Hayes had not failed to pay any amount due under the minimum payment provisions of the contract, the trial court was justified in disregarding Special Issue No. 2, and in denying the City’s claim for recovery based upon that finding.

The City’s cross point contending that the judgment erroneously awarded prejudgment interest at the rate of 9% per annum prior to September 1, 1975, the effective date of the amendment of Tex.Rev. Civ.Stat.Ann. art. 5069-1.05 must be sustained. Where interest is allowed as damages, it must be computed at the rate which was legal during the particular time in question. Trinity Portland Cement Division v. Coastal Industrial Water Authority, 551 S.W.2d 76 (Tex.Civ.App. — Houston [1st Dist.] 1977).

The judgment of the trial court is modified so as to provide that interest will accrue on the amount of the award at the rate of 6% per annum from May 14,1971 to September 1, 1975, and thereafter at the rate of 9% per annum until paid; in all other respects the judgment of the trial court is affirmed.


author: PEDEN, Justice.

text:
    TUESDAY MORNING, INC., Appellant, v. CITY OF HOUSTON, Appellee.
    No. 16903.
    Court of Civil Appeals of Texas, Houston (1st Dist.).
    Aug. 11, 1977.

      Crowder, Mattox & Morris, Allen R. Morris, Dallas, for appellant.
    Otis H. King, City Atty., Dale M. Tin-gleaf, Asst. City Atty., Houston, for appel-lee.
   PEDEN, Justice.

Tuesday Morning, Inc. appeals from the refusal to vacate an order temporarily enjoining it from selling any of the merchandise listed in Section 1 of Article 9001, Vernon’s Texas Civil Statutes, on both the two consecutive days of Saturday and Sunday. Appellant complains that this order fails to comply with Rule 683, Texas Rules of Civil Procedure, in that it does not state the reasons for granting it. Appellant also asserts that the trial judge abused his discretion in not finding that the alleged violations fell within the “occasional sales” exception of Article 9001, V.T.C.S. We affirm.

These facts of the case, stipulated by the parties, were set forth in the trial court’s order:

1) That the defendant, through its officers, agents, servants and employees operates in Harris County, Texas in the City of Houston and sells goods, wares and merchandise prohibited by Art. 9001, Vernon’s Annotated Civil Statutes, on eleven weekends out of the year, said weekends including Saturday and the following Sunday.

2) That said articles being sold by defendant on said weekends are prohibited by Section 1 of Article 9001 of Vernon’s Annotated Civil Statutes.

3) That defendant maintains that he is not in violation of said Art. 9001 because such sales fall within Section 5 of said statute and fall within the category of being “occasional sales.”

4) That the periods of operation by the defendant in the City of Houston comprise four 20 day periods in each calendar year and each said 20 days includes two Saturdays and the following Sundays as prohibited by Art. 9001 of Vernon’s Annotated Civil Statutes.

5) That defendant during the 20 day periods when he is selling prohibited articles has one representative from his main store in Dallas and employs six employees in the City of Houston parttime for the purpose of operating his outlet here in the City of Houston on the first day of each such 20 day period and three temporary employees thereafter.

6) That the goods, wares and merchandise sold by defendant during the periods of operation in the City of Houston do not fall within any exemptions allowed under said Art. 9001 and specifically Section 2 thereof.

Appellant argues under its first point of error that the order does not meet the mandates of Rule 683 because it 1) fails to state the reason for its issuance, 2) does not give a reason why an injury will be suffered if relief is not granted, and 3) fails to make any finding on the status of appellant’s operation under the occasional sales exception.

Under Rule 683 the reason for the granting of a temporary injunction must be stated in the order. The trial court need not explain its reasons for believing that the applicant has shown a probable right to final relief, but it is necessary to give the reasons why injury will be suffered if the interlocutory relief is not ordered. Transport Co. of Texas v. Robertson Transports, 152 Tex. 551, 261 S.W.2d 549 (1953).

Article 9001, V.T.C.S., was transferred from Article 286a, Vernon’s Penal Code, by authority of § 5 of Acts 1973, 63rd Legislature, p. 995, ch. 399.

“Section 4 of Art. 286a [now Art. 9001 V.T.C.S.] declares the violation of that Act be a public nuisance, and it authorizes an injunction restraining the violation. By reason of this statutory provision, a violation of Art. 286a [now Art. 9001] during the pendency of the suit for permanent injunction becomes an injury to the public which may be enjoined. It is a sufficient reason for the interlocutory order that a party is violating this statute and will otherwise violate it in the interim pending final disposition of the case.
“Without Section 4 of the statute, it would be necessary for the court to state in the order why it decided that the applicant would suffer harm, or be endangered by probable injury, if not granted the preliminary injunction. However, this statute itself declares the injury. The order need not restate the words of the statute making these Saturday and Sunday sales a public nuisance. The finding of the violation is itself a finding of injury and reason for the order to cease.” State v. Cook United, 464 S.W.2d 105 (Tex.1971).

The trial court’s recital in the order of the facts stipulated in our case amounts to a finding of those facts and shows that the appellant is violating Art. 9001 and would continue to do so, unless restrained, during the pendency of the City’s suit for permanent injunction.

Nor do we find any merit in appellant’s last argument under its first point. We presume in support of the trial court’s order that it found the “occasional sales” exception inapplicable; indeed, such a presumed finding is inescapable under the stipulated facts of this case. Appellant relies on Section 5 of Article 9001, which provides:

Occasional sales of any item named herein by a person not engaged in the business of selling such item shall be exempt from this Act. (emphasis added).

Since the appellant is engaged in the business of selling such items in Houston 80 days each year, Section 5 cannot be applied. It was not necessary for the order to specifically state a finding concerning this defense.

Appellant’s second point of error is based on the argument that the trial court abused its discretion in granting injunctive relief over the appellant’s contention that its sales fell within the “occasional sale” exception provided by Section 5 of Art. 9001. We overrule it for the reasons already stated.

Affirmed.


text:
    Jeanette RASH, Appellant, v. CITY COUNCIL OF the CITY OF HOUSTON, Texas, et al., Appellees.
    No. 16916.
    Court of Civil Appeals of Texas, Houston (1st Dist.).
    Aug. 11, 1977.
    Rehearing Denied Oct. 6, 1977.

      Parrish & Parrish, Angelo Parrish, Houston, for appellant.
    Otis H. King, City Atty., Alan F. Levin, Senior Asst. City Atty., Ann L. Carleton, Asst. City Atty., Houston, for appellees.
   EVANS, Justice.

This mandamus action was brought by the appellant to compel the Houston City Council to issue two emergency wrecker permits on the basis of the record made at a hearing held before City Council to determine public convenience and necessity. The trial court dismissed the appellant’s action, determining that it lacked jurisdiction because the appellant failed to allege a vested property right or a constitutional violation.

It is the appellant’s contention that the allegations of her application show her right to a hearing before the trial court to determine whether a writ of mandamus should be issued. In her application she alleges that the testimony and evidence presented at the hearing before City Council establish that there are no facts or conditions which justify the action taken and that the City Council’s ruling constitutes a clear abuse of discretion.

It is the City’s position that the trial court properly dismissed the action for lack of jurisdiction. In support of this position the City argues that the appellant had no inherent right to a judicial review of the City Council’s ruling and that the appellant failed to establish either that she had a vested property right or that there had been some constitutional violation which would entitle her to judicial review.

The remedy of mandamus is available, under appropriate circumstances, to compel an official to act where a clear legal duty is shown. 6 Texas Practice, § 302, pp. 292-303. The writ will not issue to control matters of a discretionary character, but in a proper case the writ is available to correct a clear abuse of discretion. Womack v. Berry, 156 Tex. 44, 291 S.W.2d 677, 682 (1956). Where the issuance of a license or permit required by law is arbitrarily refused, mandamus is an appropriate remedy.

“Boards and officers charged with the duty or power of issuing licenses and permits usually exercise a discretionary function in the matter. Their determination involves a judgment as to the right and fitness of the applicant, and generally calls for examining evidence and passing upon questions of fact. Where such is the case, courts may compel them to exercise their judgment or discretion, but will not attempt to control their discretion or compel them by mandamus to decide in a particular way. If in the proper exercise of their power they refuse a license or permit, the writ will not issue to revise or review their decision . But the rule denying mandamus in such cases presupposes that the board or officer, in withholding the license or permit, acted in good faith and with legal discretion. If there is an arbitrary abuse of the power vested in the respondent, amounting to a virtual refusal to perform the duty involved or to act at all in contemplation of law, mandamus will be granted.” 52 Am.Jur.2d, § 208, pp. 537-538.

In her application for writ of mandamus the appellant alleges that the City Council acted arbitrarily and unreasonably in refusing the application for the two wrecker permits, and that she is entitled to a hearing to determine whether mandamus should issue to compel the City Council to perform its clear legal duty in the matter. These allegations show that the appellant has a justiciable interest in the subject matter, and in the absence of special exceptions, reflect the trial court’s jurisdiction over the mandamus proceeding. Where a municipal board has a clear legal duty to issue a license or permit and refuses to do so, mandamus is an appropriate remedy.

“In the government of affairs of a municipality many powers must necessarily be confided to the jurisdiction of its officers, and it can be productive only of mischief in the treatment of such questions to substitute the discretion of strangers in place of that of the officers best acquainted with the circumstances, conditions, and necessities of the case. That the law furnishes ample remedies for the abuse of such discretion, when the action taken is but an arbitrary exercise of power, can hardly be questioned. It is a discretion confided that must be exercised in the interest of the public welfare, in the interest of the public health, and the public peace, and if the facts should show that in the refusal of the permit or license no such incentives of purposes were behind the action of the council, then, in application for a writ of mandamus made to the proper tribunal, the council would be compelled to issue the license or permit.” Ex parte Broussard, 74 Tex.Cr. 333, 169 S.W. 660, 662 (1913).

The authorities relied upon by the City do not support its contention that mandamus is unavailable to compel issuance of a license or a permit where there is no right of appeal or constitutional violation alleged. Appellant does not allege that a vested property right is involved or that some constitutional right has been violated which would entitle her to a judicial review by means of appeal or by way of injunctive relief. She alleges only that the City Council acted in an arbitrary and unreasonable manner in refusing to issue the two emergency wrecker permits to her, and that its ruling constituted a clear abuse of its discretion. Although these allegations are general in nature, they are adequate to show the trial court’s jurisdiction over the mandamus proceeding, especially since the appellant has no adequate remedy at law. Cash v. City of Houston, 426 S.W.2d 624 (Tex.Civ.App.—Houston [14th Dist.] 1968, writ ref’d n.r.e.).

In a mandamus proceeding of this nature, the applicant bears a heavy burden, both in pleading and in proof. In order to prevail, the applicant must allege and prove a clear legal right to the performance of the particular duty sought to be enforced and a corresponding duty on the part of the official board to whom the writ is directed. Pedroso v. DeWalt, 340 S.W.2d 566 (Tex. Civ.App.—Waco 1960, no writ); Wortham v. Walker, 133 Tex. 255, 128 S.W.2d 1138, 1151 (1939). Whether the appellant in the instant case is able to meet this burden against special exceptions or upon the merits is a question which we are not called upon to resolve.

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


text:
    James JACKSON et ux., Appellants, v. J. R. NEATHERLIN CORPORATION, Appellee.
    No. 16920.
    Court of Civil Appeals of Texas, Houston (1st Dist.).
    Aug. 18, 1977.
    Rehearing Denied Oct. 6, 1977.
    John E. Sherman, Houston, for appellants.
   COLEMAN, Chief Justice.

This is an appeal from a judgment entered after a nonjury trial dismissing the case on a finding that the cause of action was barred by the four year statute of limitations.

On January 30, 1971, the Jacksons executed a contract with J. R. Neatherlin Corporation under which the Jacksons purchased a house from the corporation and the corporation agreed to move the house onto a lot owned by the Jacksons. On March 1, 1973, the plaintiffs filed a suit naming J. R. Neatherlin as defendant alleging various breaches of the contract, which was attached to and made a part of the petition.

The citation was served on J. R. Neather-lin, who filed an answer setting forth a general denial and certain affirmative defenses. On July 15, 1974, Neatherlin filed an amended answer in which he alleged that he was not liable in the capacity sued because the contract forming the basis of the suit was between plaintiffs and the J. R. Neatherlin Corporation. On August 5, 1974, plaintiffs filed an amended petition naming the J. R. Neatherlin Corporation as defendant. On March 29, 1976, the J. R. Neatherlin Corporation filed an answer which included a plea that the plaintiffs’ cause of action was barred by the four year statute of limitations. (The trial court recited for the record that citation was issued for service on the corporation five years and one month after the date of the contract. The plaintiffs’ attorney testified that he mailed his amended petition naming J. R. Neatherlin Corporation'as defendant to the clerk and enclosed in the same letter the necessary additional deposit for court costs and requested the issuance of citation. He also testified that on August 5, 1974, he mailed to the attorney for J. R. Neatherlin a copy of the amended petition which was receipted for on August 9, 1974. This was the same attorney that subsequently filed an answer on behalf of the J. R. Neatherlin Corporation.) There was testimony that the citation on the amended petition was served on the J. R. Neatherlin Corporation on March 23, 1976.

Appellant contends that the trial court erred in finding that plaintiff failed to exercise due diligence in procuring the issuance of a citation on its amended petition naming the J. R. Neatherlin Corporation as a defendant. This point cannot be sustained. The attorney for appellant testified that he mailed the amended petition to Ray Hardy and included a letter requesting the issuance of citation together with a check for the necessary filing fee. This court judicially knows that Ray Hardy is the Clerk of the District Court of Harris County, Texas, and that R. E. Turrentine, Jr. is the Clerk of the County Civil Court at Law No. 1 of Harris County, Texas, the court in which the case was pending. While it appears that the amended petition reached the office of the County Clerk, there is no evidence that the letter and the check also reached that office.

It has been held that a party has the right to assume that officers will do their duty and that citation will be issued and served promptly. Allen v. Masterson, 49 S.W.2d 855 (Tex.Civ.App.—Galveston 1932, writ ref’d). In the absence of proof it will not be presumed that the plaintiff did anything to delay the issuance of citation. Curtis v. Speck, 130 S.W.2d 348 (Tex.Civ. App.—Galveston 1939, writ ref’d). In the absence of proof that the necessary fees were paid, these presumptions could not apply. Landers v. Jordan, 126 S.W.2d 677 (Tex.Civ.App.—Amarillo 1939, no writ history); Klemm v. Schroeder, 204 S.W.2d 675 (Tex.Civ.App.—San Antonio 1947, no writ history).

Appellants also contend that the trial court erred in sustaining appellee’s plea in bar based on the statute of limitations for the reason that appellants’ amended petition naming J. R. Neatherlin Corporation as the defendant related back to the original petition filed on March 1,1973, and was not barred by the statutes of limitations. The appellee failed to file a brief in this court, and we may rely on the statement of facts found in the appellants’ brief. The contract between James Jackson and J. R. Neather-lin Corporation was executed by J. R. Neatherlin. Neatherlin answered with a general denial and then plead specially that the plaintiff was not entitled to damages for the reason that the contract involved in the lawsuit was merged into final closing documents. He further plead accord and satisfaction, waiver, estoppel, and laches.

In February, 1974, well within the period of limitations, appellant propounded interrogatories to the J. R. Neatherlin Corporation addressed to J. R. Neatherlin. The interrogatories were answered by J. R. Neatherlin. He answered “yes” to the first interrogatory reading:

“State whether or not you entered into an agreement with JAMES JACKSON on or about January 30, 1971 for the sale of a three (3) bedroom house on a slab to be moved to Lot 64, Block 3, Lincoln City Section 5, in Harris County, Texas.”

A copy of the contract was attached to the answers made to the interrogatories.

J. R. Neatherlin is the President of J. R. Neatherlin Corporation, and is its agent for service. By his original petition the plaintiff alleged that he entered into a contract with J. R. Neatherlin, although the contract which was incorporated by reference into the petition showed that the contract was between James Jackson and the J. R. Neatherlin Corporation, and that J. R. Neatherlin executed it as agent for the Corporation.

This action was for damages for breach of the written contract which required the defendant to move a house on the plaintiffs’ property and to “fix all doors and windows in the house and replace all rotten boards.” The statute of limitations applicable to such an action is Art. 5527, V.A.T.S. providing that the cause of action must be commenced and prosecuted within four years “after the cause of action shall have accrued.” Certain-Teed Products Corporation v. Bell, 422 S.W.2d 719 (Tex.1968). Action on the contract does not accrue until the contract has been breached. No evidence was introduced to establish the date on which such breach occurred. Since there are no points specifically asserting that there is no evidence or insufficient evidence to support a finding that this action is barred by the statute of limitations, the point has been waived and we will consider that the action is barred by the statute of limitations unless the trial court erred in failing to consider that the amended petition naming the corporation as a defendant related back to the date of the filing of the original petition.

In Continental Southern Lines, Inc. v. Hilland, 528 S.W.2d 828 (Tex.1975), the court had before it a case in which Ruth Hilland, a passenger, was injured when she was getting off a bus marked Continental Trailways. The bus from which the plaintiff stepped was owned and operated by Continental Southern Lines, Inc. Suit was brought within two years by Ruth Hilland against Continental Trailways, Inc., a Texas corporation. This corporation is a different corporation with different officers and directors from Continental Southern Lines, Inc., a Louisiana corporation, which has its headquarters in Jackson, Mississippi. More than two years after the accident the plaintiff’s petition was amended to make Continental Southern a party defendant. It interposed as a defense the two year statute of limitations. The plaintiff recovered a judgment in the trial court which was affirmed by the court of civil appeals. The Supreme Court stated that the general rule was that the institution of a suit against one corporation will not interrupt the running of a limitation period as to a different corporation or entity. The court, however, remanded the case for a new trial in the interest of justice.

The Supreme Court pointed out that the two corporations made a conscious effort to make it appear to the public and to their customer that they are “Continental Trailways”. The two companies had the same agent for service and the same attorneys in Houston. Circumstances indicated that the citation may have been forwarded to Continental Southern Lines, Inc. The driver of the bus reported the accident to Continental Southern Lines, Inc. After citing these facts, the Supreme Court said:

“From the above it might be inferred that its people became alerted and that its investigative people had prompt notice of the accident. Upon a retrial, the plaintiff will also have the opportunity to prove, if she can, that with knowledge of the facts of the accident, Continental Southern Lines, Inc., caused an answer to be filed by Continental Trailways, Inc., or acquiesced in such action. The record, however, was not fully developed; and there are only inferences, but no finding, that Continental Southern Lines, Inc., was actually notified and had a fair opportunity to defend itself before the period of limitations had run.
The primary purpose of a statute of limitations is to compel the exercise of a right within a reasonable time so that the opposite party has a fair opportunity to defend while witnesses are available and the evidence is fresh in their minds. While the plaintiff made a mistake in her original petition as to the defendant that should have been sued, it is our opinion that she should be given, under the circumstances here present, an opportunity to prove that the Continental Southern Lines, Inc., was cognizant of the facts, was not misled, or placed at a disadvantage in obtaining relevant evidence to defend the suit. * * *
If the substance of the facts set out above are found upon a new trial, it would be a misapplication of the statute of limitations to hold that the plaintiff’s action was barred. Continental Southern would then have known or should have known that it would be the target if plaintiffs ever learned the new facts, and it had as much opportunity to prepare a defense as if it had been named a defendant in the original petition.”

The rationale of this case is applicable to the case now before this court. The president of the corporation with whom plaintiff made a contract which he alleged the corporation breached was named as the defendant in the original petition. While he was the only named defendant he answered interrogatories in a manner which might be taken to mean that he had admitted that he had entered into a contract with the plaintiff in his personal capacity even though he attached a copy of the contract to his answers. The amended petition naming the corporation as the plaintiff was filed within four years from the date of contract. There is evidence that a copy of the amended petition was mailed to the lawyer representing the president of the corporation and he subsequently filed an answer for the corporation more than four years after the cause of action accrued. These facts were undisputed and established that the corporation was cognizant of the facts, and was not misled or placed at a disadvantage in obtaining relevant evidence to defend the suit. It also established that the corporation acquiesced in the action of its president in filing an answer on the merits and in answering interrogatories in such a manner as to leave the impression that the action was properly brought by the plaintiff.

The trial court has misapplied the statute of limitations by holding that the plaintiffs’ action is barred. The amended petition naming the corporation as a defendant relates back to the date of the filing of the original petition. Under these facts the date on which the citation on the amended petition was served becomes immaterial. Continental Southern Lines, Inc. v. Hilland, supra.

The judgment is reversed and the cause is remanded.


text:
    The PEOPLES NATIONAL BANK OF TYLER, Texas, et al., Appellants, v. Louis V. CRANEK, Sr., et al., Appellees.
    No. 16919.
    Court of Civil Appeals of Texas, Houston (1st Dist.).
    Aug. 25, 1977.
    Rehearing Denied Oct. 6, 1977.

      Schleider & Ewing, Ben H. Schleider, Jr., Houston, for appellant Truxton Shaw.

      Carter, Jones, Magee, Rudberg, Moss & Mayes, Joe Hill Jones, Dallas, for appellant Helen K. Phillips.
    Johnson & Cravens, Hubert D. Johnson, H. Dee Johnson, Jr., Dallas, for appellants The Peoples National Bank of Tyler, Texas and certain others.
    Scott & Douglass, Ivan D. Hafley, Austin, for appellees.
   EVANS, Justice.

This is an appeal from an order of the trial court overruling the defendants’ plea of privilege.

The plaintiffs, owners of an oil, gas and mineral lease in Colorado County, Texas, known as the Cranek lease, brought this suit against the owners of the Frederickson lease, which is adjacent to the Cranek lease, alleging that the defendants had illegally drained gas from the Cranek leasehold. In amended pleadings, the plaintiffs named additional party defendants and alleged that there was further controversy as to the parties’ rights in the oil, gas and minerals underlying an adjacent tract of land known as the Drlik tract. The plaintiffs sought recovery for the alleged damage from the Cranek tract and a declaratory judgment upholding the validity of the plaintiffs’ lease in the Drlik tract. All defendants save one, William J. Amis, filed pleas of privilege and have perfected this appeal from the court’s order overruling such pleas.

The plaintiffs contend that the trial court properly maintained venue in Colorado County under Subdivision 14, Tex.Rev. Civ.Stat.Ann. art. 1995. Venue under this Subdivision depends upon the principal right asserted and the relief sought by the plaintiffs, a matter which may be determined by reference to the plaintiffs’ petition. 1 McDonald, Texas Civil Practice § 4.22.2, p. 488. Where the allegations of the plaintiffs’ petition show the suit to be one for the recovery of land or for damages thereto, and that the land is in the county of suit, Subdivision 14 is applicable. Piazza v. Phillips, 153 Tex. 115, 264 S.W.2d 428 (1954).

In the case at bar the plaintiffs alleged that the defendants’ well on the adjacent Frederickson lease was illegally draining gas and condensate from the Cranek lease, and that by reason of such illegal drainage, the defendants were liable for the fair market value of the gas illegally produced and, alternatively, for the diminution of the fair market value of the Cranek lease. These allegations set forth a cause of action for damages to land, notwithstanding that the plaintiffs’ sought, in the alternative, a measure of damages based upon the value of the gas produced. 1 McDonald, Texas Civil Practice § 4.55, p. 612.

The additional count in the plaintiffs’ petition, seeking a declaratory judgment with respect to the parties’ mineral rights in the Drlik tract, also alleged a cause of action to quiet title to land within the meaning of Subdivision 14. Ren war Oil Corporation v. Lancaster, 154 Tex. 311, 276 S.W.2d 774 (1955). The defendants contend, however, that the undisputed evidence shows, as a matter of law, that the title dispute was fraudulently alleged by the plaintiffs for the purpose of maintaining venue in Colorado County. The defendants argue that the plaintiffs knew or should have known that their lease on the Drlik tract was only effective upon termination of the defendants’ lease and that the evidence shows, as a matter of law, that the defendants’ lease had not terminated. In order to establish that the plaintiffs’ allegations were fraudulently cast the defendants were required to prove that the plaintiffs did not have a valid lease on the Drlik tract, and that the plaintiffs knew or in the exercise of reasonable diligence should have known, at the time such allegations were presented, that the defendants’ lease was valid and in force and effect. Hagan v. Anderson, 513 S.W.2d 818 (Tex.1974). The defendants failed to meet their burden before the trier of fact, and the evidence does not support their contention as a matter of law.

It is the further contention of the defendant The Peoples National Bank of Tyler,. Texas that it was entitled to have venue transferred to Smith County under the provisions of the federal venue statute applicable to national banks. This statute, 12 U.S.C. § 94, provides:

“Actions and proceedings against any association under this chapter may be had in any district or Territorial court of the United States held within the district in which such association may be established, or in any State, county, or municipal court in the county or city in which said association is located having jurisdiction in similar cases. R.S. § 5198; Feb. 18, 1875, c. 80, § 1, 18 Stat. 320; Mar. 3, 1911, c. 231, § 291, 36 Stat. 1167.”

The plaintiffs contend that venue was properly maintained in Colorado County under a recognized exception to the federal statute since their cause of action was local in nature, as distinguished from transitory. This exception was initially stated in Casey v. Adams, 102 U.S. 66, 26 L.Ed. 52 (1880). In Texas, the exception has been held applicable to actions for the recovery of land or for damages to land within the meaning of Subdivision 14, Article 1995. Houston National Bank v. Farris, 549 S.W.2d 420 (Tex.Civ.App. — Waco 1977, writ dism’d, w. o. j.); Lone Star Producing Co. v. Bird, 406 S.W.2d 344 (Tex.Civ.App. — Tyler 1966, writ dism’d); Fort Worth National Bank v. Ballanfonte, 469 S.W.2d 9 (Tex.Civ. App. — Houston [14th] 1971, no writ).

The Peoples National Bank of Tyler, Texas argues that the three Texas cases which applied the Casey v. Adams exception were erroneously decided, and that the exception should be limited to those instances where no court other than the court in which the action is pending has the jurisdictional authority to determine the controversy. It contends that all district courts in Texas have the jurisdictional power to hear and determine title matters pertaining to lands in any county within the state, and that an action for recovery of land is, therefore, not a “local” proceeding within the meaning of the exception to the federal statute. In support of its position, The Peoples National Bank of Tyler, Texas cites, among other cases, Mercantile National Bank v. Lang-deau, 371 U.S. 555, 83 S.Ct. 520, 9 L.Ed.2d 523 (1963) and Michigan National Bank v. Robertson, 372 U.S. 591, 83 S.Ct. 914, 9 L.Ed.2d 961 (1963).

The distinction between transitory actions and actions which are local in their character is explained by the United States Supreme Court’s opinion in Casey v. Adams:

“The distinction between local and transitory actions is as old as actions themselves, and no one has ever supposed that laws which prescribed generally where one should be sued, included such suits as were local in their character, either by statute or the common law, unless it was expressly so declared. Local actions are in the nature of suits in rem, and are to be prosecuted where the thing on which they are founded is situated.” 102 U.S. 67.

In order to determine whether an action is local or transitory in nature, it is appropriate to look to the law of the forum state. Chateau Lafayette Apartments, Inc. v. Meadow Brook Nat’l Bank, 416 F.2d 301, 304 (5th Cir. 1969). The action is considered to be local where the state’s venue statute requires that the action be brought in the particular county where the subject matter is located. Moreland v. Rucker Pharmacal Co., Inc., 59 F.R.D. 537 (W.D.La. 1973). In Texas, traditional common law concepts pertaining to local and transitory actions have been supplanted by statutory provisions insofar as pertain to intrastate venue. 1 McDonald, Texas Civil Practice § 1.07.1, p. 34. A suit for determination of title to land or to recover damages to land within the meaning of Subdivision 14 is considered “local”, and not transitory. South Padre Development Co., Inc. v. Texas Commerce Bank Nat’l Ass’n, 538 S.W.2d 475, 480 (Tex.Civ.App.—Corpus Christi 1976, no writ). The actions discussed in the authorities referred to by The Peoples National Bank of Tyler, Texas would not under the Texas statutes be considered local in character. The trial court correctly applied the exception of Casey v. Adams, and determined that the federal venue statute did not apply to the plaintiffs’ action for damages to land and to quiet title to land.

The defendants, W. C. Pickens, R. H. Pickens, Truxton Shaw, and Helen K. Phillips further contend that no evidence was produced at the venue hearing to show that they owned or claimed any interest in the Frederickson and Drlik tracts. It is also claimed that the uncontroverted evidence shows that the Pickens and Shaw defendants parted with all title prior to the institution of suit.

An action against former owners of land who have parted with title prior to the filing of suit is not a suit for recovery of land within the meaning of Subdivision 14, Article 1995, James v. Drye, 159 Tex. 321, 320 S.W.2d 319 (1959). However, the plaintiffs petition sufficiently alleges a claim against all named defendants for damages due to the drainage from the Cranek tract. Although the defendants could have disclaimed any interest in the Drlik tract, and thus have avoided a title controversy with the plaintiffs as to that land, they could not disclaim their liability for the alleged physical damage to the plaintiffs’ Cranek tract. Cowden v. Cowden, 143 Tex. 446, 186 S.W.2d 69 (1945). In an action for damages to land, it is immaterial whether the defendants own or have ever owned any interest in the land which they have allegedly damaged. Cox v. Martin, 485 S.W.2d 589, 591 (Tex.Civ.App.—Eastland 1972, no writ).

The trial court’s order is affirmed.


text:
    Joseph KAUFHOLD, Jr., Appellant, v. CURTIS & EWING, Realtors, Appellee.
    No. 16873.
    Court of Civil Appeals of Texas, Houston (1st Dist.).
    Aug. 25, 1977.

      McAninch, Coppock & Teltschik, T. D. Sullivan, Houston, for appellant.
    Milton J. Flick, Houston, for appellee.
   PEDEN, Justice.

The partnership of Curtis & Ewing brought this action to recover a real estate commission from the seller of two tracts of land, Dr. Joseph Kaufhold, Jr. A jury trial resulted in a verdict and judgment for the realtors. Dr. Kaufhold complains that the trial court erred in overruling his motion for judgment notwithstanding the verdict because 1) Curtis & Ewing “failed to plead and prove that it was a licensed real estate broker”, 2) the alleged agreements had expired of their own terms long prior to any sale, and 3) the alleged 1966 agreement was superseded by the alleged 1967 agreement, which was superseded by the 1971 agreement, all of which expired by their own terms and each of which was a new agreement that discharged the prior one. We affirm the judgment of the trial court.

Dr. Kaufhold entered into a listing agreement with Curtis & Ewing in 1966, granting the firm the “exclusive agency and sales rights” on two tracts of real estate “for a period of 6 months from date of this letter and thereafter until sold. . . .” A public surveyor was employed in connection with an attempt to sell the property, and appellee paid his $440 fee on Kaufhold’s promise to reimburse it out of any sale of the property. Kaufhold agreed to this in a letter dated January 4, 1967, and the plaintiff-appellee relies on this promise for recovery of the commission.

Kaufhold listed the property with another broker in December 1970, and it was sold in 1971 for $223,208.50.

Kaufhold’s first complaint is that the firm of Curtis & Ewing, Realtors, failed to plead and prove that it was a licensed broker. His only argument under this point is that the firm pleaded it was licensed but failed to prove it. In his motion for judgment n. o. v., Kaufhold stated that the “State Realtor License Board” shows that both partners hold licenses, a fact also supported by the testimony of both Mr. Ewing and Mr. Curtis.

We overrule the appellant’s first point on authority of Bohls v. Brazelton, 336 S.W.2d 208 (Tex.Civ.App.1960, writ ref., n. r. e.). The appellant in that ease alleged error “because the plaintiffs failed to show that they were duly licensed as a real estate partnership.” Each of the partners in that case proved that he was a duly licensed real estate agent and the court held that this was sufficient under Article 6573a Vernon’s Texas Civil Statutes, the Texas Real Estate License Act. That statute provides:

“Sec. 19. No person or company may bring or maintain any action for the collection of compensation for the performance in this State of any of the acts set out in subdivision (1) of Section 4 hereof without alleging and proving that the person or company performing the brokerage services was a duly licensed real estate broker or salesman at the time the alleged services were commenced; or was a duly licensed attorney-at-law as exempt from the provisions of this Act by Section 6.”

This statute was amended effective May 19, 1975, and Sec. 6 no longer provides for licensing of partnerships.

As to Kaufhold’s second point, his January 4,1967, letter agreement (relied on by the appellee) makes only one reference to an expiration date:

“I hereby grant to you the irrevocable and exclusive agency and right to sell for a period of two (2) years from date hereof and thereafter until sold or terminated by me in writing addressed to you and accompanied by a cashier’s check in the amount of $440, said amount being the same as advanced by you. . . . ”

In Reinke v. West, 303 S.W.2d 419 (Tex. Civ.App.1957, no writ) the agency contract provided that after expiration of 90 days the listing could be terminated by the seller’s giving written notice of termination, but he failed to do so. The contract was held to still be binding on him.

In our case, Kaufhold claims to have terminated his exclusive agency by his letters of April 14, 1971, but these letters are not signed by the appellee, are in reference to a specific proposal made by appellee, they contain his instructions to increase the price he would accept, and suggest a change in the brokerage commission for this proposed transaction. Kaufhold had previously set forth the specific method for terminating the contract, and his letters of April 14, 1971 do not show that the appellees accepted any change in the termination aspect of the agreement. He was still required to give written notice of termination and pay the $440 debt. Kaufhold did neither.

His third point asserts that the trial court erred in overruling his motion for judgment n. o. v. in that the two letters dated April 14, 1971 superseded and discharged the prior agreements. Dr. Kaufhold relies on the rule from 17A C.J.S. Contracts § 395 which was cited in Ed Hoffman Motors v. G. F. G. Corp., 304 S.W.2d 216 (Tex.Civ.App.1957, writ ref., n. r. e.):

“A contract complete in itself will be conclusively presumed to supersede and discharge another one made prior thereto between the same parties concerning the same subject matter, where the terms of the later are inconsistent with those of the former so that they cannot subsist together.”

§ 395 of C.J.S. on Contracts goes on to say that “. . . where it is claimed that by reason of inconsistency between the terms of a new agreement and those of the old one the old one is discharged, the fact that such was the intention of the parties must clearly appear.” 17A C.J.S. 476 Contracts § 395. The agreements must be so inconsistent that the two cannot subsist together. Willeke v. Bailey, 144 Tex. 157, 189 S.W.2d 477 (1945).

Even if the letters (which were not signed by the appellee) be considered as agreements, they could subsist together. The 1971 letters only concerned a portion of the real estate, made available for a specific proposal among specific brokers. These letters did not constitute a contract complete in themselves, did not discharge the original obligation, and cannot be said to supersede the prior agreement as a matter of law, so the court was not required to grant a judgment notwithstanding the verdict on this issue.

Appellant also alleges error in the trial court’s failure to submit to the jury an instruction on the doctrine of novation. This point must be overruled since appellant did not file a motion for new trial under Rule 324, Texas Rules of Civil Procedure, and did not raise the issue in his motion for judgment n. o. v. Wagner v. Foster, 161 Tex. 333, 341 S.W.2d 887 (1960); Goldring v. Goldring, 523 S.W.2d 749, 753 (Tex.Civ.App.1975, writ ref., n. r. e.).

Affirmed.


author: O’QUINN, Justice.

text:
    Bob BULLOCK, Comptroller of Public Accounts, et al., Appellants, v. ABC INTERSTATE THEATRES, INC., et al., Appellees. Bob BULLOCK, Comptroller of Public Accounts, et al., Appellants, v. MARTIN THEATRES OF TEXAS, INC., Appellees.
    Nos. 12601, 12621.
    Court of Civil Appeals of Texas, Austin.
    Oct. 5, 1977.
    Rehearing Denied Nov. 2, 1977.

      John L. Hill, Atty. Gen., Martha E. Smiley, Asst. Atty. Gen., Austin, for appellants.
    James H. Keahey, Austin, for ABC Interstate Theatres, Inc.
    Larry E. Temple, Austin, for Allied Artists Pictures Corp., et al.
    George Garrison Potts, Claude R. Wilson, Jr., H. David Herndon, Golden, Potts, Boeckman & Wilson, Dallas, for Martin Theatres of Texas, Inc.
   O’QUINN, Justice.

Appeals in two causes involving the same basic tax controversy have been consolidated in this Court for purposes of decision and disposition of the issues.

ABC Interstate Theatres, Inc., engaged in exhibiting motion picture films, brought the first lawsuit (No. 12,601) in July of 1976 to recover taxes on leases of motion picture films, paid under protest to the Comptroller of Public Accounts, for tax periods in 1975 and 1976. In compliance with statute, Interstate sued as defendants the Comptroller, the State Treasurer, and the Attorney General of Texas. (V.A.T.S. Tax.-Gen. art. 1.05(2)).

Subsequently eight motion picture distributor companies intervened, intervenors being Allied Artists Pictures Corp., Avco Embassy Pictures Corp., Columbia Pictures Industries, Inc., Paramount Pictures Corporation, Twentieth Century-Fox Film Corporation, United Artists Corporation, Universal Film Exchanges, Inc., and Warner Bros. Distributing Corporation.

The second appeal (No. 12,621) is from judgment in a suit filed in March of 1976 by more than 100 theater owners and operators, from which Martin Theatres of Texas, Inc. was severed and proceeded to judgment. Martin Theatres sought recovery of taxes paid under protest in tax periods of 1976 and 1977.

Each of the causes was tried before the district court without a jury, and the court entered judgments in both cases in January of 1977. In both cases the trial court found that the “sales and use tax as applied to the leasing or licensing of motion picture films to motion picture theatres in Texas is unconstitutional and inapplicable.” The court awarded Interstate recovery of taxes in the sum of $463,748.53, and awarded Martin Theatres recovery of $53,637.54. From each of these judgments the State has appealed and brings the single point of error that the trial court erred as a matter of law in holding the tax unconstitutional and inapplicable.

To bring the facts of this litigation into proper perspective, we review the statutory changes, the court decisions, and the rulings of the Comptroller which bear directly upon the tax levied by the State on the leasing of motion picture film to be exhibited. The Texas Limited Sales, Excise and Use Tax (Title 122A, Taxation-General, Chapter 20) includes as a taxable transaction the leasing of motion picture film, a “tangible personal property.” (Arts. 20.01(J)(1)(c) and 20.03).

Article 20.01(J)(l)(c) as enacted in 1961 provided that a “Retailer” included:

“Every person who leases or rents to another tangible personal property for storage, use or other consumption, except that persons engaged in the leasing or licensing of motion picture films of any kind or character to motion picture thea-tres, television stations and others shall be liable for the tax levied under the provisions of this law, and they shall not pass said tax along to the person or persons to whom they lease or license said motion picture films.” (Acts 1961, 57th Leg., 1st C.S., Ch. 24, p. 71, 74). (Emphasis added).

Thus it is clear that in the renting, leasing, or licensing of motion picture films the distributor as lessor became responsible for the tax and was prohibited from passing on to, or collecting from, the exhibitor as lessee the amount of the tax. In interpreting application of the tax in such lease transactions the Comptroller issued Rule No. 11:

“Persons leasing or renting motion pictures of any kind or character to motion picture theaters, television stations, etc., shall be considered the ultimate consumer of such motion pictures. They are thus liable for the tax based upon the purchase or lease price to them, and shall not pass such tax on to persons to whom they lease or rent the motion pictures.”

Subsequently, in 1969, the Legislature amended Article 20.01(J)(l)(c) to provide only that “Retailer” include:

“Every person who leases or rents to another tangible personal property for storage, use or other consumption.” (Acts 1969, 61st Leg., 2nd C.S., Ch. 1, p. 61, 64).

All prior reference to rental of motion picture films was deleted by this amendato-ry Act, and exemption from the tax was provided for “motion picture theatres which are subject to admission taxes” by adding Article 20.04(Z):

“There are exempted from the taxes imposed by this Chapter the receipts from the leasing or licensing of motion picture films of any kind to or by motion picture theatres which are subject to admission taxes as imposed by Chapter 21, Title 122A, Revised Civil Statutes of Texas, 1925, as amended.” (Acts 1969, 61st Leg., 2nd C.S., Ch. 1, p. 61, 79). (Emphasis added).

The following year, in 1970, American International Television, Inc., engaged in leasing to television stations motion picture films, brought suit for refund of taxes paid under protest challenging validity of the statute as discriminatory because of the exemption afforded motion picture theaters under Article 20.04(Z). The cause reached this Court for decision announced early in 1973. (Calvert v. American International Television, Inc., 491 S.W.2d 455, no writ). This Court held that the classification by the Legislature and imposition of different burdens on theaters and television stations was not discriminatory and unequal since there existed a real difference which justified separate treatment. (491 S.W.2d 458-9).

Prior to decision on the issues raised in that lawsuit, the Legislature in 1971 amended Article 20.04(Z) to include “licensed television stations” in an unqualified exemption from the tax, but without changing the condition that motion picture theaters be exempt “which are subject to admission taxes.” The article as revised is quoted:

“There are exempted from the taxes imposed by this Chapter the receipts from the leasing or licensing of motion picture films of any kind to or by motion picture theatres which are subject to admission taxes as imposed by Chapter 21, Title 122A, Revised Civil Statutes of Texas, 1925, as amended, and to or by licensed television stations.” (Acts 1971, 62nd Leg., Ch. 1, p. 1). (Emphasis added).

In a suit brought by ABC Interstate The-atres, Inc., against the Comptroller and other state officers, a district court in Travis County in a judgment entered October 4, 1975, held unconstitutional the admission tax imposed on motion picture theaters under Article 21.02(2), as amended effective September 1, 1975. (Acts 1975, 64th Leg., Ch. 719, p. 2304, 2307-8). No appeal was perfected, and judgment of the district court became final.

Thereafter, effective October 27, 1975, the Comptroller issued a ruling directive of administration of the sales and use tax on rental or lease of motion picture films to or by theaters. The ruling provided:

“The admissions tax as applied to motion picture theaters has been declared unconstitutional; therefore, the Sales and Use Tax applies to the rental, lease and licensing of motion picture films of any kind to or by theaters, measured by the total amount charged for the use of the films. This provision is retroactive.
“The leasing or licensing of motion picture films of any kind to or by licensed television stations is exempt from the Sales and Use Tax.”

This ruling of the Comptroller resulted in collection of the tax from motion picture theaters. The motion picture theater exhibitors in this lawsuit urge that the tax is discriminatory and therefore unconstitutional because the tax on film rentals is imposed on one industry but not upon another, both of which industries rent and use motion picture films. The same contention was made by American International Television in the cause before this Court in 1973. (491 S.W.2d 455, 458).

Since the commencement of the present litigation, and after the causes were submitted and orally argued before this Court, the Legislature amended Article 20.04(Z) to accord unqualified exemption to both “motion picture theatres” and “licensed television stations.” The article, as it became effective June 10, 1977, now provides:

“There are exempted from the taxes imposed by this Chapter the receipts from the leasing or licensing of motion picture films of any kind to or by motion picture theatres and to or by licensed television stations.” (Acts 1977, 65th Leg., Ch. 380, p. 1035).

Because the bill by which the amendment was effected passed both houses of the Legislature by “overwhelming vote,” counsel for appellees suggest that passage by such vote “. . . evidences our position that the Sales Tax on film rentals was never intended by the Legislature in the first instance.”

Nothing in the amendatory Act suggests that the last Legislature, by passing the bill with strong majorities, proposed thereby to evidence a want of prior intention not to tax film rentals. Legislative intent in the original enactment of a statute is not drawn from the size of the majority by which a subsequent Legislature amends or repeals the statute. What the Legislature intended originally is to be found in the language of the statute itself. Simmons v. Arnim, 110 Tex. 309, 220 S.W. 66 (1920); McGuire v. City of Dallas, 141 Tex. 170, 170 S.W.2d 722 (1943).

As enacted in 1971, Article 20.04(Z) “exempted from the taxes imposed . motion picture theatres which are subject to admission taxes . . ." and extended to “licensed television stations” an unqualified exemption. After October 4, 1975, when a court held that the admission tax on theaters was unconstitutional, no theater “was subject to admission taxes,” and with the statutory qualification rendered void, all theaters of this state thereafter became subject to the tax on film rentals.

Article 20.04(Z), as added to the tax statutes in 1969 and as amended in 1971, plainly provided that motion picture theaters “subject to admission taxes” would be exempted from tax on film rentals, the clear meaning being that theaters which are not subject to admission taxes would be required to pay the tax on film rentals.

After the district court in 1975 declared theaters no longer were required to pay admissions taxes, the condition for their exemption under Article 20.04(Z) from payment of the tax on film rentals was removed and their exemption became inoperative. Only licensed television stations remained exempt under terms of the statute. The motion picture exhibitors now contend, as already noted, that no reasonable difference between television stations and theaters exists, and theaters should not be required, for the tax periods involved in this suit, to pay film rental taxes, and that theaters having paid the tax under protest are entitled to refunds.

We have examined with care the decision of this Court in Calvert v. American International Television, Inc., supra, in which we found substantial and significant differences between television stations and motion picture theaters in deciding whether a reasonable basis existed for classification of the two industries in separate categories for tax purposes. The only changes we note since that decision in 1973 are that theaters no longer pay admissions taxes, and this time the theaters are claiming discrimination, whereas in the earlier case discrimination was claimed by the television industry.

In Calvert v. American International we pointed out, “The two occupations are not the same, even though both the theater and the television station show motion picture films, the former as its sole occupation, the latter incidental to its principal business of news medium and exhibitor of commercial and other kinds of advertising.” (491 S.W .2d 459).

The rule is firmly established that the Legislature, in determining classifications for purposes of taxation, has broad powers, and courts will interfere only when there is a clear showing that there is no reasonable basis for an attempted classification. Hurt v. Cooper, 130 Tex. 433, 110 S.W.2d 896 (1937); American Transfer and Storage Company v. Bullock, 525 S.W.2d 918, 924 (Tex.Civ.App. Austin 1975, writ ref’d).

In determining whether a classification is constitutional, the test to be applied by the court is whether the classification made by the Legislature is essentially arbitrary, unreasonable, and not based upon reality. Dallas Gas Co. v. State, 261 S.W. 1063 (Tex.Civ.App. Austin 1924, writ ref’d); American Transfer and Storage Company v. Bullock, supra. The courts will not strike down the tax statute where there is a real difference to justify the separate treatment adopted by the Legislature. Texas Co. v. Stephens, 100 Tex. 628,103 S.W. 481 (1907); Dancetown, U. S. A., Inc. v. State, 439 S.W.2d 333 (Tex.Sup.1969); Calvert v. American International Television, Inc., supra.

Contentions by appellees that the tax violates requirements of due process, or of equality and uniformity, guaranteed under the Constitutions of the United States and of Texas, are overruled as contrary to the principles relied on, discussed, and cited in American Transfer and Storage Company v. Bullock, 525 S.W.2d 918, 925-6.

Under its single point of error the State contends on appeal (1) that it is not unconstitutional for the Legislature to exempt television stations and not exempt theaters from the tax on motion picture film rentals; (2) that it is not unconstitutional for the exhibitor to be liable for payment of the tax and the distributor to be liable for collection of the tax; (3) that the sales tax is applicable to film rentals as a tax on rental of tangible personal property; (4) that the correct tax base is cost of rental to the lessee; and (5) that receipts from rental of motion picture films to theaters have not been totally exempted from sales tax.

We have sustained the State’s first contention in holding that the classification arrived at by the Legislature will not be declared void in the absence of showing that the classification is essentially arbitrary, unreasonable, and not based upon reality.

The remaining contentions by the State are in reply to the position taken by appel-lees on matters not controlling of the main issue of constitutionality. On the basis that such contentions by appellees may be regarded in the nature of counterpoints we should dispose of, we now consider them briefly and will overrule all such contentions.

The argument that it is fatal to validity of the tax statute for exhibitors to be liable for payment of the tax and distributors to be liable for its collection of the tax is without merit. Under the statute in 1961 distributors were prohibited from passing the tax to the exhibitors under provisions of Article 20.01(J)(l)(c). Film distributors were the only class of vendors or lessors required to absorb the tax. In 1969 this provision, which in 1961 placed the incidence of the tax on the distributor as lessor instead of the exhibitor as lessee, was deleted from the tax Act. With this change the tax was imposed on the lessee who occupies the place of the purchaser under Article 20.021 applicable to all vendors and lessors.

It is contended that the caption of the 1969 legislation was not sufficient, and in violation of Article 3, section 35, of the Constitution of Texas, because notice was not given of intent to transfer liability for payment of the tax or to increase the base for the tax. It is settled that the caption of an amendatory Act is not required by the Constitution to set out exactly what changes are made in the amending legislation if the subject of the Act is not remote from the subject of the original Act. Smith v. Davis, 426 S.W.2d 827, 833 (Tex. Sup.1968). See also Majestic Industries, Inc. v. St. Clair, 537 S.W.2d 297, 301 (Tex. Civ.App. Austin 1976, writ ref’d n. r. e.). The caption of an amendatory bill need not apprise the reader of the precise effects of the body of the proposed Act if the caption discloses the general subject. Smith v. Davis, supra.

Contention is made also that the rental price of films includes two separate charges, those being (1) the price to rent the tangible film and (2) a charge for the intangible right to exhibit the film. Appel-lees argue that the sales tax should apply only to the price to rent the film as based on its replacement cost.

Under the Texas statute no attempt is made to tax an intangible. The Texas sales tax imposed on leases constitutes a transaction tax. Young & Company v. Calvert, 405 S.W.2d 174, 176 (Tex.Civ. App. Austin 1966, writ ref’d), cert. denied 386 U.S. 914, 87 S.Ct. 866, 17 L.Ed.2d 786. The motion picture film is the tangible property which is transferred by the distributor to the exhibitor with the right to use or exhibit the film for an agreed length of time. For the transaction to have value, the transaction necessarily consists of both the right to use and the actual transfer of tangible property, and the entire transaction is the subject of taxation.

We have carefully examined the contentions of appellees, and whether expressly described and disposed of or not, we overrule each and all of the contentions made which may be contrary to the disposition we make of the issues in this appeal.

We reverse the judgment of the trial court, which declared unconstitutional and inapplicable the sales and use tax as applied to the leasing and licensing of motion picture films to motion picture theaters in Texas. We hold that the tax as applied to such transaction is valid and not in contravention of the Constitution.

We render judgment that plaintiffs below in both causes take nothing by their suit.


author: SHANNON, Justice.

text:
    James L. PERKINS, Appellant, v. William H. SPRINGSTUN, Appellee.
    No. 12604.
    Court of Civil Appeals of Texas, Austin.
    Oct. 5, 1977.
    Rehearing Denied Nov. 9, 1977.
    Barry K. Bishop, Clark, Thomas, Winters & Shapiro, Austin, for appellant.
    Ralph A. Rash, Kuhn, Collins & Rash, Austin, for appellee.
   SHANNON, Justice.

Appellee, William H. Springstun, sued appellant, James L. Perkins, in the district court of Williamson County seeking to establish a partnership interest in a business known as “James L. Perkins Explosives.” After two separate trials, one involving a hearing before a jury and the other involving a hearing before the court, a judgment, which we regard as final, was entered on October 8, 1976. We will reverse the judgment and remand the entire cause to district court for trial.

After the proceeding tried to a jury, judgment was entered on November 14, 1975, decreeing that Springstun owned a one-half partnership interest in the explosives business. The judgment further provided that Perkins file a formal accounting “. . . within 60 days after the entry of this judgment, of all partnership assets, including those sold, conveyed or disposed of by said James L. Perkins.”

Later, Springstun, under a different cause number, filed suit in the same court complaining that Perkins had refused to file the accounting. By way of relief, Springs-tun prayed that Perkins be enjoined from disposing of property of the explosives business and that a temporary receiver, and finally, a permanent receiver be appointed to take over the property and records of the explosives business.

Perkins filed a plea in abatement to the second suit alleging that the parties and causes of action were the same as in the first suit.

After hearing before the court, judgment was entered on October 8, 1976. By the entry of the judgment, the court implicitly overruled Perkins’ plea in abatement. In the judgment the district court found that Springstun was entitled to a money judgment in the sum of $150,348.50 and for judgment of “one-half of the remaining assets of said partnership.” The court further found that Perkins had acquired property with partnership funds, including twenty-six acres of land claimed by Perkins as his homestead. The judgment thereafter ordered that the partnership be dissolved; that Springstun recover against Perkins $150,343.50; that a “constructive trust and equitable lien” be impressed on all partnership assets and that Springstun have foreclosure of the lien; that the temporary receiver, theretofore appointed, be continued to liquidate the partnership assets and to pay Perkins one-half of the amounts realized after $150,343.50 had been paid to Springstun. The judgment provided further that should sale of the partnership assets realize less than $150,343.50, the receiver was directed to foreclose the lien and to sell the twenty-six acres to satisfy the said money judgment.

Springstun has filed a motion to dismiss the appeal for want of jurisdiction. He argues in the motion that the judgment of November 14, 1975, was not interlocutory and that because Perkins did not perfect an appeal from that judgment, he may not now have that judgment reviewed. To the contrary, Perkins urges that the judgment of November 14, 1975, was interlocutory and nonappealable until the same was, in effect, merged in the judgment of October 8, 1976.

To be final, a judgment must determine the rights of the parties and dispose of all issues involved so that no future action by the court will be necessary in order to settle and determine the entire controversy. Wagner v. Warnasch, 156 Tex. 334, 295 S.W.2d 890 (1956). A judgment is interlocutory when it determines less than all issues as to all parties thereby leaving “something further to be determined and adjudicated by the court in disposing of the parties and their rights.” The ultimate determination of whether a judgment is interlocutory depends upon whether the judgment leaves any issues remaining which require judicial examination or re-examination. Campbell v. Campbell, 550 S.W.2d 164 (Tex.Civ.App.1977, no writ).

The November 14, 1975 judgment established the existence of the partnership and ordered an accounting to be filed in the future. A division of the precise profits and assets necessarily had to occur in the future. Because the November 14, 1975 judgment only decided principles upon which the rights of the parties might be judicially determined in some future proceeding, the judgment was not final. Leyhe v. McNamara, 243 S.W. 1074 (Tex. 1922); Bailey v. Shaw, 26 S.W.2d 669 (Tex. Civ.App.1930, writ ref’d); Culicchia v. Taormina, 332 S.W.2d 803 (Tex.Civ.App.1960, writ ref’d n. r. e.); see 3 A.L.R.2d 342 (1949).

With respect to the merits of the appeal, we are of the opinion that the judgment against Perkins for the sum of $150,343.50 was supported by no evidence. Stated another way, the court is barred by the rules of evidence from giving weight to the only evidence offered to prove up that sum. The only basis for the computation of $150,-343.50 was the accounting report and the opinion grounded upon that report by William M. Dumond, a certified public accountant, who did not participate in its preparation. Springstun did not offer the accounting report for the truth of the matters stated therein, but instead for a limited purpose. The offer of the accounting report and its admission into evidence is set out below:

“MR. KUHN: Your Honor, at this time, we would like to offer into evidence Plaintiff’s Exhibit Number One, entitled Special Report and Accounting, Unaudited, of Assets and Liabilities of James L. Perkins, that has previously been filed in Cause No. 14,453. We would like to offer it into evidence in this cause number for the limited purpose of showing what James L. Perkins, through his accountant and with his affidavit has filed as being, as being his assets at this time. Well, as of the, whatever date it appears that is. April 9th, 1976.
“MR. BISHOP: I have no objection.
“THE COURT: Let the record reflect it is admitted for that purpose.”

Springstun did not call the person who prepared the accounting report, and did not make any other character of effort to authenticate the report or to prove the accuracy of its contents. Under these circumstances, the accounting report was hearsay. It is settled in Texas that hearsay evidence, although admitted without objection, is without probative force. Henry v. Phillips, 105 Tex. 459, 151 S.W. 533 (1912); Aetna Insurance Company v. Klein, 160 Tex. 61, 325 S.W.2d 376 (1959); Knapik v. Edison Bros., Inc., 313 S.W.2d 335 (Tex.Civ. App.1958, writ ref’d).

Springstun thereafter called Dumond, the accountant. Dumond was permitted to testify, without objection, as to his conclusions grounded upon the accounting report. His testimony, in part, was as follows:

“Q All right, sir. Let me show you what has been marked as Plaintiff’s Exhibit Number One and ask you whether or not you recognize that instrument.
“A I recognize it, Mr. Kuhn.
“Q All right, sir, and have you had occasion to familiarize yourself with that instrument?
“A Yes, sir, I have and I have discussed certain matters of it with Mr. Steve Pena, who I believe was very involved with the preparation of it.
“Q Can you tell me from this instrument what amounts of money that James Perkins took from the explosives business during the years covered by this accounting, which I believe is ’68 through April of ’76.
“A Yes, sir.
“Q What is that figure?
“A The answer to your question involves two items, really. The total numbers, according to my computation, is $332,187.70.
“Q Now, that is your conclusion based upon your examination of this report filed by Mr. Pena and introduced herein in Court as Plaintiff’s Exhibit Number One, is that correct?
“A Yes, sir. It is.
“Q And that is the moneys that that report shows actually came into James Perkins’ possession from the James Perkins Explosives Company?
“A Yes, sir.”

One expert cannot base his opinion upon the hearsay opinions of other experts. Muro v. Houston Fire & Casualty Insurance Co., 329 S.W.2d 326 (Tex.Civ.App. 1959, writ ref’d n. r. e.); cf. Cornell v. American Indemnity Co., 275 S.W.2d 702 (Tex.Civ.App.1955, writ ref’d n. r. e.). Because Dumond’s conclusions were grounded upon hearsay evidence, those conclusions likewise, lacked probative value. See Reed v. Barlow, 157 S.W.2d 933 (Tex.Civ.App. 1941, writ ref’d); Calhoun v. United States Fire Insurance Co., 489 S.W.2d 359 (Tex. Civ.App.1973, writ réf’d n. r. e.). The fact that these conclusions were admitted without objection added nothing to their probative value. Casualty Underwriters v. Rhone, 134 Tex. 50, 132 S.W.2d 97 (1939); Sampson v. Apeo Oil Corp., 476 S.W.2d 430 (Tex.Civ.App.1972, no writ).

In view of our disposition of the no evidence point, it is unnecessary to discuss Perkins’ other points of error.

As there is error in the judgment, we will reverse the judgment, and in the interest of justice, remand the cause for new trial. Tex.R.Civ.P. 434.

      . This sum represented one-half of the profits earned by the partnership ($332,187.00) less that amount of profits drawn out by Springstun ($31,500.00).