author: LEVY, Justice.

text:
    FAIR et al. v. MILLER et al.
    No. 4595.
    Court of Civil Appeals of Texas. Texarkana.
    March 16, 1934.
    Rehearing Denied March 22, 1934.
    Pollard, Lawrence & Lux, of Tyler, and C. J. Brannon, of Wichita Falls, for appellants.
    Tom L. Beauchamp and Wm. Frank Be-zoni, both of Tyler, for appellees.
   LEVY, Justice.

On January 13, 1933, this suit was filed by the appellees against R. W. Fair, O. L. Thompson, and Fair & Thompson, a corporation, the Producers’ Supply & Tool Company, the Burk Royalty Company, a partnership, in the purpose to remove an apparent cloud from title to realty cast by reason of recording an instrument purporting to be a gas and oil lease of land, and for damages. As ground of remedy: “Plaintiffs allege that the instrument in writing herein pleaded. is ineffective as an instrument of conveyance; that it was nothing more thah an executory contract signed by the parties and left in the possession of the attorneys who drew it and was never delivered, but was held pending acceptance of title by defendants, and that long after they had forfeited all rights thereun,der- by declining to accept the title as it was, the defendants Fair and Thompson secured a copy of the instrument and are claiming rights thereunder, and have placed same of record and thereby cast a cloud upon plaintiffs’ title to said oil and gas lease, and have damaged plaintiffs in the reasonable sum of $100,000.00.” The petition further specially set up a state of facts in breach of the terms of agreement and of invalidity of the instrument, in the purpose of warranting the relief prayed for. The Producers’ Supply & Tool Company and the Burk Royalty Company were named defendants as claiming some character of interest in the lease or lien on the property.

The defendants Fair and Thompson, individually and corporate, answered by general denial, and specially that they were not in default of the terms of the agreement and that they acted without delay and expended money in effort to cure objections to title, and any delays therein were occasioned by requests and demands of plaintiffs to await, efforts to clear up the title to the land. Further acts and conduct in estoppel were set up. By way of cross-action damages were sought to he recovered for alleged injuries to the defendants.

The defendants Burk Royalty Company and Producers’ Supply & Tool Company answered pleading acquisition of an interest in the property as innocent purchasers.

In keeping with the answers of the jury to special issues, judgment was entered in favor of the plaintiffs and canceling the instrument in suit, and against the defendants and denying a recovery on their cross-action. The defendants have appealed from the judgment.

The instrument, which is the basis of this suit, reads:

“State of Texas, County of Smith.
“Whereas, on August 11, 1925, Mrs. Daisy M. Bradford made, executed, acknowledged, and delivered to C. M. Joiner, Trustee, a certain oil, gas and mining lease covering 100 acres of land, more or less, in the Juan Ximines Survey in Rusk County, Texas, said lease being recorded in Volume 126, page 132, Deed Records of Rusk County, Texas, reference to which is here made for all purposes ; and,
“Whereas, on November 22, 1929, O. M. Joiner, Trustee, did subdivide and plat said oil, gas and mining lease and file same for record on November 23, 1929, as recorded in Volume 140, page 626, Deed Records of Rusk County, Texas; and
■ “Whereas, on August 11, 1930, Mrs. Daisy M. Bradford did make, execute, acknowledge, and deliver to C. M. Joiner, Trustee, an extension agreement extending the time of said lease for thirty days, said extension agreement being recorded in Volume 148, page 411, Deed Records of Rusk County, Texas, reference to which is here made for all purposes ; and,
“Whereas, on August 15, 1930, Mrs. Daisy M. Bradford did execute a second extension agreement to C. M. Joiner, Trustee, extending the date of said lease for a period of thirty days from midnight of September 11, 1930, and so much longer as oil, gas, or either of them, is being produced in paying commercial quantities from said lease, said extension agreement being recorded in Volume 149, page 524, Deed Records of Rusk County, Texas; and,
“Whereas, on August 11, 1930, C. M. Joiner, Trustee, did sell, assign, transfer and convey to H. C. Miller all of that certain oil, gas and mining lease, together with all rights, title and interest of the original lessee and present- owner in and to all rights thereunder insofar as it covers all of 100-3/4 acres of land in two tracts, and being described as follows, to-wit: (Here follows description of the land.)
“Said assignment being recorded in Volume 148, page 419, Deed Records of Rusk County, Texas, reference to which is here made for .all .purposes; and,
“Whereas, the said H. C. Miller is now the owner of said oil, gas and mining lease above described insofar as it covers Block No. 5 and the .West one-half of Block No. 6 of the C. M. Joiner Subdivision of the Mrs. Daisy M. Bradford oil, gas and mining lease, as per plat recorded in Vol. 140, page 626, Deed Records of Rusk County, Texas, together with all personal property situated thereon, said land being, more particularly described as follows, to-wit: (Here. follows description.) . - •
“And, Whereas, it is the desire of the said H. C. Miller, joined by his wife, Oralie Miller, and Mrs. Daisy M. Bradford, hereinafter known as assignors, to sell, transfer, assign, set over and convey to R. W. Fair and C. L. Thompson, hereinafter known as assignees, said oil, gas and mining lease covering said above described tracts of land insofar as it covers six-eighths of all the oil, gas and other minerals in, under and that may be produced from said above described 67 acres of land.
“Now, therefore, know all men by these presents:
“That I, H. C. Miller, joined by my wife, Oralie Miller, and Mrs. Daisy M. Bradford, a feme sole, of the County of Smith and State of Texas, do hereby sell, assign, transfer-, set over and convey unto the said R. W. Fair and C. L. Thompson, of the County of Smith and State of Texas, said above described oil, gas and mining lease insofar as it covers six-eighths of all the oil, gas and other minerals in and under and that may be produced from said 67 acres of land situated in Rusk County, Texas, in consideration of the payment by assignees to assignors of the sum of Twenty Thousand One Hundred ($20,100.00) Dollars out of the first one-eighth of all the oil and/or gas produced, saved and marketed from said above described lease, subject, however, to the provision that assignees may pay to assignors, within six months from the commencement of the drilling of the first well as hereinafter provided, the sum of Six Thousand Seven Hundred ($6,700.00) Dollars; and, in the event the said sum of Six Thousand Seven Hundred ($6,700.00) Dollars is paid to assignors within said six months period of time, then and in that event, the said sum of Six Thousand Seven Hundred ($6,700.00) Dollars, less the money already received out of the payment of one-eighth of the, oil and/or gas above mentioned, shall be accepted by assignors, their heirs, successors, as full payment of the said sum of Twenty Thousand One Hundred ($20,100.-00) Dollars to be paid out of the first one-eighth of all the oil and/or gas produced, saved and marketed from said lease; and upon the payment of the said sum of Six! Thousand Seven Hundred ($6,700.00) Dollars Assignors bind and obligate themselves to release the said first one-eighth of the oil and/or gas produced, saved and marketed from said lease from which said sum of Twenty Thousand One Hundred ($20,100.00) Dollars is to be paid to assignors upon the following terms, conditions, and stipulations, to-wit:
“1. Assignors hereby agree to warrant and defend the title to said land against any persons whomsoever lawfully claiming or to claim the same, or any part thereof, and further bind and obligate themselves to deliver to assignees a good and merchantable title to said land.
“2. It is agreed and understood that the abstract of title to said above described tract of ■ land certified to this date has been delivered by assignors to assignees for examination,, and approval of title; that assignees shall have five days from this date to examine and deliver to assignors an opinion concerning the title to said land pointing out to assignors defects of title, and assignors shall have thirty days from the receipt of said opinion in which to cure the defects so pointed out and meet such requirements as assignees shall make, after which time, assignees may have a reasonable length of time within which to do such curative work as has not been completed by ássignors. In the event an examination of title by attorneys for assignees discloses that assignors’ title to the land, or any part thereof, covered by this assignment, is, at the expiration of the time so allowed, still unsatisfactory to assignees’ attorneys, or is encumbered to the prejudice of this assignment, then and in that event, assignees shall have the right, at their option, to either reject or accept the entire lease assigned, or any part thereof, and in case of rejection of all or any part of said lease, then assignees shall assign to assignors the part of said lease whose title is not accepted; provided, however, that the assignor shall receive only such proportion of' the consideration recited herein as same bears to the number of acres accepted. In the event title to said land is not accepted, then no liability shall exist as to either party against the other party hereto, and assignees shall reassign the interest herein assigned to assignors.
“3. Assignees bind and obligate themselves, to, at their own proper cost and expense, begin operations for the drilling of an oil and/or gas test well upon said above described tract of land within fifteen days after a good and merchantable title shall have been approved and accepted by assigns, a good and merchantable title to said lease, acceptable to assignees, then and in that event, assignees, their heirs, successors or assigns, bind and obligate themselves, as a part of the consideration for the execution of said oil, gas and mining lease, to, within fifteen days after the delivery of a good and merchantable title to said land, at their own proper cost and expense, erect a derrick and place a rotary drilling rig, in good condition, upon the above described lease, and begin the actual drilling of an oil and/or gas test well upon said above described tract of land, with standard rotary drilling equipment; and shall, at their own proper cost and expense, continue, without interruption or delay, in good faith, except if prevented by acts of God or other persons beyond the control of the assignees, their heirs, successors, or assigns, to drill, at their own proper cost and expense, said oil and/or gas test well on said above described tract of land until said well shall have been drilled to a depth of 3700 feet unless oil and/or gas shall have been encountered in paying commercial quantities at a lesser depth without cost to assignors. In the event oil and/or gas shall have been encountered in paying commercial quantities in said first well to be drilled upon said above described tract of land, then and in that event, assignees, their heirs, successors, or assigns, shall, within thirty days after oil and/or gas shall have been encountered in paying commercial, quantities in said first well, at their own proper cost and expense, begin the operations for the drilling of a second oil and/or gas test well upon said above described tract of land in the manner provided above, and shall continue the drilling of same in the manner provided for the drilling of the first well; and shall, within thirty days after oil and/or gas shall have been found in paying commercial quantities in said second well, begin the operations for the drilling of a third oil and/or gas test well upon said above described tract of land, and shall continue the drilling of same in the manner provided for the drilling of said first well.
“4. In the event assignees elect to perform the terms and conditions of this contract and do not assign same to assignors, as provided hereinafter, then and in that event assignees, their heirs, successors, or assigns, in the performance of said contract, bind and obligate themselves to, at their own proper cost and expense, furnish a derrick or derricks, surface casing, cement, water, gas, fuel, rig, two-inch upset tubing, separator, all labor, drill pipe easing, and other pipes, and each and every kind of equipment or necessary appliances for the drilling of said well or wells, including storage tanks or tank, run-ways and separators, together with all other and further appliances, pipes, fittings, etc., necessary to completely install and equip same, including dikes built around storage tanks. Assignees, their heirs, successors or assigns, bind and obligate themselves to, at their own proper cost and expense, drill said wells in the manner and at the times above required; that they will carry, at their own proper cost and expense, compensation insurance, public liability and property damage insurance, and any and all other forms of insurance necessary to fully protect assignors, their heirs, successors or assigns, from any and all liability which may or might arise in the full, complete and faithful performance of this contract; and assignees, their heirs, successors, or assigns further bind and obligate themselves to hold assignors herein harmless from any and all liability of any nature whatsoever which may or might arise or grow out of the full and complete performance of this contract. Assignees, their heirs, successors or assigns, further bind and obligate themselves that they will, at their own proper cost and expense, drill any and all other wells necessary to take care of producing off-set wells on said above described tract of land.
“5. That all of the above terms and conditions of this contract are made subject to the following agreement, to-wit: That time is the essence of this contract, and in the event assignees fail or refuse to complete the drilling of the first well or any other well to be drilled thereon, and desire to abandon the drilling of said well and/or the operation of said lease, then and in that event assignees shall convey to assignors the leasehold rights herein conveyed, together with any property situated thereon or used in connection with the drilling of said well, and all work, labor, and materials furnished in the drilling of said well, and/or in the operation of said' lease, which are owned by assignees, free and clear of any liens and encumbrances, save and except such assignments of interest of oil payments which have been made by assignees for costs and expense of the drilling of said well or wells, which said oil payments, if any, shall be paid only out of assignees’ portion of the oil produced, saved and marketed from the well or wells so drilled and completed, which said assignments shall release assignee from any and all liability of any nature whatsoever incurred in and under the terms of this contract.
“6. Assignees, their heirs, successors, or assigns, shall have the exclusive right to operate said property above described; according to the terms of said lease above referred to.
“It is agreed and understood and made a part of the consideration for the execution of this agreement that, in the event the first well drilled by assignors does not produce oil and/or gas in paying commercial quantities, then and in that event, assignees may assign to assignors the lease interest herein conveyed, free and clear of any liens and encumbrances, and no liability shall exist as to either party herein, in the event assignees desire so to do; however, should assignees desire to drill a second well, they may do so at their option, and may continue to perform the terms and conditions of his agreement.
“Witness Our Hands and Signatures at Tyler, Texas, this the 11th day of May, A. D. 1932.”

This instrument was duly signed and acknowledged by both the assignors and Fair and Thompson, assignees; and was filed for record November 25,1932.

Upon the execution of the above instrument, a certified abstract of title to the tract of land described was delivered by assignors • to the assignees for examination. The assignees had the abstract of title examined within the five-day period, and the written, legal opinion thereupon, which was delivered by the assignees to the assignors, recited “that the abstract reflects that H. 0. Miller has a good and merchantable title to that certain 7/8” oil, gas and mineral lease in the Daisy Bradford tract of land, subject to the following limitations, to-wit: (Here follows forty-eight specified “exceptions” or defects.) The assignors then presented a certified supplemental -abstract of title, and the written legal opinion thereupon was delivered by the assignees to the assignors. The written legal opinion recites: “We have examined the above supplemental abstract of title covering an additional 34 pages, and in addition to the forty-eight exceptions to the title as pointed out in our original opinion we find the following exceptions to the title, to-wit:” (Here follows twenty-six “exceptions” or defects.) There is evidence going to show that for greatly more than thirty days the assignors made due and continuous effort to clear the title and meet the exceptions as pointed out, but were unable to do so. There is further evidence that Mr. Miller acting for the assignors made many trips to various places in the effort to obtain needed instruments to cure the defects of title pointed out. Mr. Thompson, one of the assignees, accompanied Mr. Miller on some of the trips. There is also evidence that the assignees in individual and independent efforts tried diligently to cure some of the defects of title pointed out.

It was shown by evidence that in December, 1932, the assignees built a derrick on the land, and then began drilling an oil well and completed a flowing well, at a cost of some $11,000. Preparations were begun for the drilling of a second well and the drilling was prevented by this suit. There was evidence going to show that prior to the time of beginning the drilling of the first oil well Mr. Miller for assignors gave notice to the assignees of the intention of assignors to forfeit and to insist upon the forfeiture of the agreement of assignment of the lease. Mr. Miller testified that he notified the assignors through Mr. Pair that it was impossible to cure the title “without a lawsuit with old man Joiner” and “that he (Mr. Pair) turned it down” and “wouldn’t accept it under those terms at all.”

The evidence, which is only briefly stated and not in detail and at length, fully appears in the record and is here referred to.

The following issues were submitted to the . jury and answered:

“No. 1. Do you find from a preponderance of the evidence in this case that the defendants paid the plaintiffs any consideration at the time of the execution of the contract dated May 11, 1932?” Answer: “No.”
“No. 2. Do you find from a preponderance of the evidence in this case that it was contemplated by the parties to said contract dated May 11, 1932, that the defendants should pay the plaintiffs any consideration?” Answer: “Yes.”
“No. 3. Do you find from a preponderance of the evidence in this ease that the defendants expended any money in obtaining curative matter to perfect the title to the land in controversy in this suit?” Answer: “No.”
“No. 5. Do you find from a preponderance of the evidence in this, case that the defend-, ants incurred expanses in the drilling of the oil well on the land in controversy in this suit?” Answer: “No.”
“No. 8. Do you find from a preponderance of the evidence in this case that the plaintiffs, prior to the time defendants began drilling an oil well on the land in controversy in this suit, gave notice to the defendants of plaintiffs’ intention to cancel said contract?” Answer: “Yes.”
“No. 9. Do you find from a preponderance of the evidence in this case that the plaintiffs, either by act, word or conduct, agreed for the defendants to continue securing curative matter to perfect the title to the land in controversy in this suit up to the time they began drilling an oil well?” Answer: “No.”
“No. 10. Do you find from a preponderance of the evidence in this case the plaintiffs, either by act, word or conduct, agreed for the defendants to place machinery on the ground and drill an oil well on the property in controversy in this suit?” Answer: “No.”
“No. 11. Do you find from a preponderance of the evidence in this ease that defendants did, after the expiration of the 30-day period allowed by the contract dated May 11, 1932,- for the plaintiffs to cure the title, attempt to cure and perfect the title to the land in controversy in this suit?” Answer: “Yes.”
“No. 12. Do you find from a preponderance of the evidence in this case that the defendants pursued the matter and cured the defects in the title, if any, to the property in controversy in this suit to their own satisfaction within a reasonable time?” Answer: “No.”
“No. 13. Do you find from a preponderance of the evidence in this case that the plaintiffs used such diligence in attempting to clear the title to the land in controversy in this suit as a reasonably prudent person ' would have used under the same or similar circumstances?” Answer: “Yes.”
“No. 14. Do you find from a preponderance of the evidence in this case that the plaintiffs instituted suit 'against defendants herein without cause?” Answer: “No.”
“No. 15. Do you find from a preponderance of the evidence in this case that the defendants have been damaged by reason of filing such suit?” Answer: “No.”
“No. 17. Do you find from a preponder-anee of the evidence in this case that at the time the Burk Royalty Corporation purchased an interest in this property that it knew or could have known hy the exercise of ordinary diligence, such as a reasonably prudent person would have exercised under the same or similar circumstances, of the claim or claims of the plaintiffs herein?” Answer: “Yes.”
“No. 18. Do you find from a preponderance of the evidence in this case that at the . time the Producers Tool and Supply Company purchased an interest in this property that it knew or could have known by the exercise of ordinary diligence, such as a reasonably prudent person would have exercised under the same or similar circumstances of the claim or claims of the plaintiffs herein?” Answer: “Yes.”

There is evidence going to support the verdict of the jury, and the answers are adopted except as to issue No. 5.

In view of the findings of the jury, the trial court correctly concluded, it is believed, that there was a failure of performance by the assignees of a condition vital to the main object of the agreement of the parties, and that the contract of sale or assignment of the lease was ended. The jury made the finding of fact that (1) the assignees “within a reasonable time” had not “pursued the matter and cured the defects in the title, ' if any, to the property in controversy in this suit to their own satisfaction.” The parties by their contract expressly agreed that “assignees may have a reasonable length of time within which to do such curative work as has not been completed by assignors.” This by the finding of the jury was not done. That in point of fact the assignees did not within the time provided to their satisfaction cure or obviate the defects of title pointed out by the written opinion of the attorneys. The timely performance by the assignees of the stipulated condition was vital to the main object of the agreement of the parties. Time was of importance, as known and contemplated by the parties, in the acceptance or rejection of the assignment of the oil lease of land situated in a producing oil field. The contract of the parties expressly stipulated as a “condition” to the assignment or sale of the lease that .the assignors must “deliver to assignees a good and merchantable title to said land.” The abstract of title, timely delivered by the assignors, was examined by the assignees’ attorneys, a firm of competent lawyers. In a written opinion by them, evidencing carefulness of work and exceptional legal knowledge, objections are made to the title, which appear upon their face to be substantial. The assignors were unable, as proven, to remove all the objections to the title pointed out. The title tendered assignees suggested litigation. They Were unable to convey a merchantable title as agreed. The assignees were not required to accept a title which they had been advised, was defective or suggested litigation. By the terms of the contract they were given a final, refusal or not to obviate the objections point-, ed put. They had stipulated that they should be given “a reasonable length of time,” after the thirty-day period of time allowed the assignors to cure or obviate the objections pointed out, “within which to do such curative work as has not been completed by assignors.” That such a stipulation is valid and will be enforced is hot open to serious question. The assignees had no contractual right to demand an extension of time. And the findings of the jury further establish there was not,waiver of delay or an extension of time to take steps in effort to cure or 1 obviate defects in title pointed out. The jury made the findings of fact that (1) the assignors did not “either by act, word or conduct agree for the defendants to continue securing curative matter to perfect the title to the land in controversy in this suit up to the time that they began drilling an oil well,” and (2) “the plaintiffs prior to the time the defendants began drilling an oil well on. the land in controversy in this suit gave notice to the defendants of the plaintiffs’ intention to cancel said contract.” The principal contention is that of whether the provisions of the conSract concerning the title were waived.In the facts the assignors were unable to show a good ’marketable title and the as-, signees had not acted within the time provided and cured or removed to their satisfaction the objections to the title pointed out. The breach or default of agreement to furl nish a good marketable title in effect rendered the object sought to be effected not possible of accomplishment at least within the period of time stipulated, and the breach of both parties would operate as a discharge of the whole agreement, unless it is waived. The assignees were obligated either to take or not accept the title within the stipulated time. The right may not be predicated in the facts established by the jury to not terminate and to elect to enforce the agreement of sale of the lease and to drill an oil well on the land. The facts so established show that the stipulated time was not waived “either by acts, words or conduct,” and “notice” was given of the intention of assignors to cancel or refuse to be bound by the agreement. The default or failure of terms of agreement of-title as respects both the assignors and assignees took place while the contract was still executory, and before performance could be legally demanded.

There appear other assignments of error, which we have duly considered and have concluded should each be overruled as not warranting reversal. The evidence complained of was not improperly admitted. The issues submitted were pertinent and substantially presented the controversy to the jury for decision.

There is just complaint of the form of the judgment, and the judgment is here directed to be corrected in the respect of the elimination of the words complained of “as in their amended petition and supplemental petitions prayed for.” Those terms might include recovery of a money judgment which was not in fact decreed by the court.

The judgment is affirmed.


source: Caselaw Access Project

author: BOND, Justice.

license: Public Domain

text:
    BELLE SPRINGS CREAMERY CO. et al. v. SCHULTZ et al.
    No. 11440.
    Court of Civil Appeals of Texas. Dallas.
    March 10, 1934.

      Ben F. Napheys, Jr., of Abilene, Kan., and Butts & Wright, of Cisco, for appellants.
    McCormick, Bromberg, Leftwieh & Carring-ton, of Dallas, for appellees.
   BOND, Justice.

H. M. Schultz instituted this suit against the Belle Springs Creamery Company, a corporation of Abilene, Kan., to recover damages arising out of a purchase of eggs, and to effect collection sued out a writ of garnishment, directed to the First National Bank of Dallas, to impound funds in its possession. By its answer to the writ, the garnishee vouched in the suit the Citizens’ Bank of Abilene, Kan., as claimant to the funds. The Kansas Bank answered, claiming the funds impounded. For convenience, H. M. Schultz will be referred to as plaintiff, the Belle Springs Creamery Company as defendant, the First National Bank of Dallas as Dallas Bank, and the Citizens’ Bank of Abilene, Kan., as Kansas Bank.

The record reveals that, on March 26, 1931, defendant sold to plaintiff 400 cases of eggs, for which plaintiff agreed to pay $2,400. The introduction of the contracting parties was brought about through W. W. Butler, an independent broker. Their contractual relationship, however, is based on written instruments ; defendant mailing to plaintiff an invoice of the eggs it had for sale, an inspection certificate describing the eggs and a warehouse warrant, or certificate, embodying the terms and conditions of storage, and, in turn, plaintiff mailing to defendant a check for $400, with a note for $2,000, in payment thereof. There is no further evidence of the contract between the parties.

The invoice recites the sale of 400 cases slack-packed eggs, the terms and conditions for - payment, and stipulates that the seller should pay the storage and insurance; the inspection certificate describes the eggs sold, as being of “good quality, medium to large size, mixed color, sweet odor and graded slack storage,” and states that some of the eggs were “dirty, stained, small, seconds and checks”; and the warehouse warrant, o;- certificate, specified that the eggs were received in the seller’s cold-storage building in Abilene, Kan., for storage to December 31, 1931, subject to the buyer's order, on payment of $2,000, the seller to carry insurance in the sum of $2,250, and that the conditions of such storage are that: (1) “All loss or damage to property occasioned by fire, water, leakage or rottage is at owner’s risk and this company is not responsible for -shrinkage in weight.” (2) “All property is stored at owner’s risk, condition and quality unknown.” And (3) “no delivery of goods specified upon the reverse side of this warrant will be made unless order is accompanied by this warehouse receipt.” On these proposals and conditions rests defendant’s covenants, and in accordance therewith plaintiff paid the $100 cash and delivered to defendant his promissory note for $2,000, payable “on demand,” and bearing interest from -date of the purchase until paid.

On September 26, 1931, on demand, plaintiff paid on'said note $200 with interest, as a margin for the decline in the egg market, and delivered to defendant an $1,800 renewal note for the balance due; this note was made payable “on demand,” to bear interest from date thereof, and to further provide that the eggs were pledged and delivered to defendant as collateral security for the payment of said note, and to contain' accelerated clauses, effecting the* maturity of the 1 note in case of insecurity or loss of the eggs pledged, authorizing a sale by the pledgee, in the event of a decline in value, or failure of the pledgor to pay margin on such decline, and to evidence ownership of the eggs to be in plaintiff, subject to defendant’s lien.

On December 10, 1931, plaintiff ordered the eggs shipped, and defendant delivered them to the railroad company at Abilene, Kan., for transportation to Dallas,' Tex., receiving therefor a bill of lading. Defendant attached the bill of lading to a draft drawn on plaintiff, for the sum of $2,052.85, which amount included the principal of the $1,800 note, $24.37 interest, $220.48 freight, and $S for two tons of ice, used in the freight car containing the eggs. On arrival of the eggs at Dallas, December 12, 1931, plaintiff paid the draft, inspected the eggs, and found a -material deterioration in quality, affecting their value; that they were mouldy, “whiskered,” spoiled; that water had accumulated in the cases about the eggs; and that they were neither sweet-odored nor sweet-tasting, and some testimony is to the effect that such condition, was due to “improper storage.”

The eggs were candled, sorted, graded, and sold by plaintiff on the Dallas market, considering only plaintiff’s proof, at a considerable reduction from a reasonable market value of the eggs; had they arrived in Dallas in first-class condition, such market value would have been from $8 to $8.50 per case, where the maximum salvage value of the eggs, upon their arrival at Dallas, was $4.57 per case, plaintiff realizing only $1,700 from the entire shipment.

Subsequent to the arrival of plaintiff’s shipment, the A. Rubenstein Produce Company also purchased 'from the Belle Springs Creamery Company a similar shipment, subject to inspection at Dallas. The 'bill of lading attached to draft on the Rubenstein Company for $2,055.18, payable to the Citizens’ Bank of Abilene, Kan.; the draft was deposited by the Kansas Bank to the credit of the drawer, the Belle Springs Creamery Company, subject to the depositor’s check, and in turn the Kansas Bank forwarded the draft and bill of lading through the' usual banking channels, to the First National Bank of Dallas, for collection. On an inspection of the shipment, the purchaser declined to accept, until the seller reduced the amount of the draft, and, in accordance therewith, the Kansas Bank authorized the Dallas Bank to reduce the draft by $300. The modified draft was paid and, before a remittitur of the proceeds could be made by the Dallas iBank to the Kansas Bank, the writ of garnishment was served on the collecting bank.

On trial before the court, without the intervention of a jury, judgment for $1,100 was rendered for plaintiff (Schultz) against defendant (Creamery Company), and for plaintiff against intervener (Kansas Bank), and the garnishee (Dallas Bank), for the amount of the judgment thus rendered against defendant, allowing the garnishee $150 as attorney’s fee for making its answer in the garnishment suit, payable out of the impounded funds.

In disposing of this appeal, we will consider first the garnishment phase of the suit, and in this we are led by the authorities of this 'and other jurisdictions to follow the rule of law that the rights, obligations, and interpretation of contracts are determinable by the law of the state where the cgoiract_ was^aadfij unless a different forum is shown to hayg, to be the. place of performance. The draft was deposited by defendant (Creamery Company) with the Kansas Bank,ll subject to defendant’s check; thus,, in our opinion, the rights of defendant and the Kansas Bank are settled by the laws of that state. In the case of Burdg v. Scott, 111 Kan. 610, 203 P. 668, the question there centered around the ownership of property, represented by bills of lading attached to drafts, deposited in a bank, for which the depositor received credit on the bank’s books, subject to check. In passing on the ownership of the property, the court stated, in effect that, after the drafts were taken by the bank as a deposit and placed to the credit of Scott (the depositor), the wheat became its property, citing as thoroughly settling the question the decisions in Scott v. W. H. McIntyre Co., 93 Kan. 508, 144 P. 1002, L. R. A. 1915D, 139; Farmers’ & Merchants’ Nat. Bank v. Sprout, 104 Kan. 348, 179 P. 301; Ranney-Davis Mercantile Co. v., Home Nat. Bank, 105 Kan. 474, 185 P. 287 Lampl v. Hawkins, 106 Kan. 423, 188 P. 233; Fourth Nat. Bank v. Bragg, 127 Va. 47, 102 S. E. 649, 11 A. L. R. 1034, and 11 A. D. R. 1061, note. Thus, it will be seen that the facts in this case follow closely the Kansas rule and manifestly the cited decisions settle the rights of the intervening Kansas Bank,, as to-the title to the draft and the proceeds thereof, as passing incidentally with the deposit.

Aside from the above rule, and considering the Texas decisions, in the. case of Heid Bros. v. Commercial National Bank, 240 S. W. 908, 912, 24 A. L. R. 904, a decision of the-Commission of Appeals, approved by our Supreme Court, held in a situation as here that if “the 'bank was owner of the drafts by virtue of having credited, finally and in good faith,- the .account of Pierson-La-t-hrop Grain Company with the amount of the drafts, of course plaintiff could not take the proceeds under garnishment.” To the same effect is the holding in Provident National Bank of Waco v. Cairo Flour Co. (Tex. Civ. App.) 226 S. W. 499, 503, citing, with approval, the text in' 7 C. J. 635, to wit: “Where checks or drafts are indorsed [and deposited] and are-accepted as,cask they become the property of the bank, and the bank becomes-the debt- or of the depositor in the amount of such check, even though it is understood that the bank has the right to charge back the, amount-if the paper deposited proves uncol-lectable. So where a bank accepts for deposit a check drawn on itself and credits the payee with the amount, this creates the relation of debtor and creditor between the bank and the payee and is equivalent to a payment of the amount of the check to the-drawer; and it is held that, under such circumstances, the bank has no right to charge back the amount credited to the payee, even though the drawer fails to pay the amount.”' The quoted text is also supported by Blaisdell, Jr., Co. v. Citizens’ National Bank, 96 Tex. 626, 75 S. W. 292, 295, 62 L. R. A. 968, 97 Am. St. Rep. 944; Chrisman v. Lumberman’s Nat. Bank (Tex. Civ. App.) 163 S. W. 651; Howe Grain & Mercantile Co. v. A. B. Crouch Grain Co. (Tex. Civ. App.) 211 S. W. 946; Kadane & Co. v. Security National Bank (Tex. Civ. App.) 219 S. W. 506.

The record reveals that there is no conflicting testimony disclosing that the intervening Kansas Bank was not the debtor of the depositor; manifestly, the draft belongs to the intervener, and the proceeds are not subject to the garnishment writ; therefore, we hold (hat the court erred in its finding that the funds belonged to the defendant, and 'in decreeing judgments against the funds.

In the main sujt, the issues center around the question whether the agreement of the parties, at the time of delivery of the eggs to the warehouse and common carrier, was an executed or executory contract, i. e., whether the fee in the eggs placed in storage was complete in plaintiff at the time of the passing of the consideration and the storage of the eggs, and thereafter the delivery to the railroad company. An executed contract consists in the performance of everything necessary to be done, according to the terms of the contract, by the parties contracting, so as to fully invest the parties contracting with dominion over the thing parted with. The defendant, at different stages in the transaction, was both a seller and warehouseman. As seller, defendant (Creamery Company) lost dominion over the eggs, parted with the title, and occupied the position of a creditor, with the property pledged as security ; as warehouseman, it was a bailee under specific storage covenants, holding the property subject to the order of the bail- or, on payment of his obligations; on the other hand, plaintiff performed the covenants of sale, pledged the eggs as security, and bailed them subject to the conditions of the warehouseman’s receipt. We are of the opinion that plaintiff’s title vested at the time he accepted the conditions of bailment, and effected the consideration in the payment of the $400 and the execution and delivery of the $2,000 note. He became a debtor and pledgor of defendant as the seller, and bail- or of defendant as a warehouseman; his dominion over the shipment was complete, subject only to the payment of his note and the lifting of the pledgee’s lien. We feel that there was no obligation incumbent upon the seller to deliver the eggs to plaintiff at any particular time, but defendant was obligated to deliver only on plaintiff’s order. Plaintiff was the directing agent of defendant; thus, the delivery to the railroad company was, in effect, a delivery to plaintiff, the railroad company becoming his agent in the transportation.

This conclusion is accentuated by plaintiff paying the freight charges and for the icing of the refrigerator car in transit; manifestly, plaintiff would have sustained the loss, if the eggs had been destroyed while in the warehouse or in transit. And, further, plaintiff’s obligation to pay the note on demand was not contingent' upon proper storage or safe delivery, and the accelerated clause of the note refuted the idea of an executory contract. The fact ■ that defendant adopted the method of collection of the note through draft with bill of lading attached, does not, in our opinion, change the relative position of the contracting parties. Such method, evidently, was subsequent to, outside, and independent of the contractual relationship and cannot be construed as affecting the contract so as to require defendant to deliver the eggs in Dallas. Therefore, jve hold that title to and legal possession of the eggs passed in the state of Kansas; that theextentjjf^detei'i-oration and the measure of damage is castjat the piace of delivery to the common carrier.

It is evident from the record that the judgment of the lower court is based upon the condition of the eggs on their arrival at Dallas, and the measure of damage determined by the Dallas market. The record is silent as to the condition of the'eggs and the difference in market value, as contracted for and as delivered at Abilene, Kan. If the eggs had been damaged by reason of any negligence of defendant, then, in our opinion, the difference between the market value of the eggs, in the condition that they should have been in and the condition they were actually in at the time and place of delivery, would have been the measure of damages ; or, if there was no market for the eggs, then the difference in the actual value of the eggs, in the condition that they would have been in and the condition that they were actually in would have controlled. Thus, the judgment finds no support in the testimony.

Furthermore, it is seen that the storage certificate excludes all loss or damage to the property, occasioned by fire, water, leakage, or rottage, and that the storage, at the time specified, was at the owner’s risk. These contentions exclude the idea of responsibility for damage arising by reason of causes specified, in the absence' of proof of actual negligence. There is no evidence that defendant had negligently permitted the eggs to become water-soaked, or had kept them at an improper temperature, or that it had in any manner failed to perform its duties as a warehouseman. The only testimony hearing upon the issue of negligence is a related conclusion of witnesses that the damaged condition of the eggs was due to improper storage. It is well known that some goods deteriorate or decay through operation of inherent or natural causes, and it cannot be reasonably supposed that eggs, normally sweet-odored and sweet-tasting when fresh, even under the most favorable circumstances, would retain their qualities entirely' in cold storage for a period of nine months. Contrary to the general rule that a presumption of negligence arises when property is delivered in good condition and returned in an injured condition, is in chattels which deteriorate or decay through natural and inherent causes. The record reflects a sale of fresh eggs and a delivery of cold-storage variety, accompanied with their natural and inherent deterioration; to what extent the natural and inherent condition bears to the whole of the damaged condition the record does not disclose. The burden was upon plaintiff- to show the extent of such natural and inherent deterioration. Manifestly, the full extent of injury to the eggs was not and could not have been caused by the failure of the bailee in the exercise of ordinary care, incumbent upon warehousemen. Thus, defendant, as a warehouseman, under the facts stated, was duty bound to deliver to plaintiff’s agent, the common carrier, eggs as good as shown by its warehouse certificate, less their “natural and inherent” deterioration. The presumption of negligence will not be imputed where the deterioration shown is due to the natural and inherent deterioration of the product. In the case of Southern Ice & Utilities Co. v. Stewart, 15 S.W.(2d) 132, 136, Justice Levy, for the Texarkana Court of Civil Appeals, held: “It is true that although the eggs were delivered in fresh condition to appellant, the mere fact, standing alone, that they were redelivered to appellee in inferior condition, would not justify the presumption of negligence on the part of appellant. That rules does not apply to chattels which deteriorate or decay through operation of inherent or natural causes. Patterson v. Wenatchee Canning Co., 53 Wash. 155, 101 P. 721. Eggs are, as admittedly appears, inherently of a delicate and perishable nature. They are liable to decay and do not long stand up under ordinary circumstances. The yolks normally turn dark and the whites become thin and watery.”

In our opinion, the rule announced finds application only to the condition of the eggs attributable to ttyeir natural and inherent nature and not to abnormal conditions. Their abnormality brings into play the general rule of presumptive negligence; yet the fact that the eggs were delivered by the common carrier to plaintiff at Dallas in an abnormal condition does not carry with it the presumption that they were delivered to the carrier in the same condition, but if any presumption is indulged in, then the presumption of negligence may just as reasonably be applied to the railroad company, in that they were delivered in normal condition and damaged in transit, as to presume the negligence was due to causal acts of defendant.

We are of opinion that the evidence does not warrant a finding that the eggs were in an abnormal condition when delivered to the carrier, or that the defendant was guilty of negligence which proximately caused or contributed to cause the injury to the eggs, and, further, the measure of damage is not shown at the time and place of delivery. We therefore conclude that the judgment of the lower court. should be reversed, that the judgment in favor of the plaintiff against defendant should be remanded, and as against the intervener, Kansas Bank, and the garnishee, Dallas Bank; should .be here rendered in favor of the Kansas Bank for the funds impounded by the writ of garnishment, and in favor of the garnishee against plaintiff for the attorney’s fee of $150, for making answer in the garnishment proceedings, and it is so ordered.


author: PEI PHREY, Chief Justice.

text:
    TEXAS EMPLOYERS’ INS. ASS’N v. EATON et al.
    No. 2961.
    Court of Civil Appeals of Texas. El Paso.
    March 22, 1934.
    Rehearing Denied March 29, 1934.
    Shelby S. Cox and Lawther, Cox & Cramer, all of Dallas, for appellant.
    Paul Moss, of Odessa, for appellees.
   PEI PHREY, Chief Justice.

Prior to the month of August, 1931, the Wink Gravel & Clay Company was engaged in mining rotary clay near Eindlay, Tex. During August the financial condition of the company was such that it was unable to finalice the mining and handling of its product Among its other creditors was the Citizens’ National Bank of Odessa. The Dunnigan Tool & Supply Company, who were engaged in selling oil field machinery, in order to supply certain orders it had for rotary clay, agreed with Henry Pegues, president of the Citizens’ National Bank and with the owner of the Wink Gravel & Clay Company, to advance the money necessary to pay the cost of the labor required to produce the day to fill said orders. 'The money was advanced to Mr. Pegues, who was to act as paymaster of the labor.

Mr. Pegues acted in this capacity from August 1 until November 5, 1931.

About December 1, 1931, Perry Howard, store manager for the Dunnigan Tool & Supply Company at-McCamey, Tex., asked Mr. Pegues to get some one to load a car of clay for the Dunnigan Tool & Supply Company at Findlay, Tex. Mr. Pegues, on being unable to get in touch with a truck'er at Findlay, went to Wink and arranged with O. M. Hodges, who had previously worked for the Wink Gravel & Clay Company, to go to Findlay and load the clay. Hodges employed Nathan Kirby and appellee to assist him in loading the car.

While they were returning from Findlay to Wink at a point between Pecos and Barstow, the truck they were riding in collided with a house car, and appellee was injured.

Appellee presented his claim to the Industrial Accident Board, who denied his claim.

In due time he filed this suit in the district court for the 109th judicial district to set aside such award.

Appellee alleged that he was an employee of the Dunnigan Tool & Supply Company, subscribers under the Workmen’s Compensation Act (Yemen’s Ann. Civ. St. art. 8308 et seq.), and that he received personal injuries on December 5, 1931, while in the course of his employment.

Appellant in answer denied that appellee was an employee of the Dunnigan Tool & Supply Company, and, in the alternative, alleged that, if he was such employee, such employment was not in the usual course of the trade, profession, or occupation of the Dunnigan Tool & Supply Company.

In response to special issues, the jury found: (1) That appellee sustained an accidental injury on or about December 6, 1931; (2) that at such time he was an employee of the Dunnigan Tod & Supply Company; (3) that he sustained such injuries while in the course of his employment; (4) that such injury resulted in the total incapacity of appel-lee ; (5) that such total incapacity is permanent; (6) that the Dunnigan Tool & Supply Company had actual notice of appellee’s injuries within thirty days from December 5, 1931; (7) that the extent of his injuries was unknown to appellee prior to September 8, 1932; (8) that up to that date he believed them to be temporary and trivial; (9) that hardship and. injustice would result unless the compensation is paid in a lump sum; (10) that the loading of the car of clay on December 5, 1931, was within the usual course of the trade, business, profession, or occupation of the Dunnigan Tool & Supply Company; (11) that O. M. Hodges was employed by the Dunnigan Tool & Supply Company on or about November 5, 1931; and (12) that the Dunnigan Tool & Supply Company had a right to direct the manner and method in which Hodges loaded the ear of clay.

It having been admitted by appellant that the average daily wage applicable to the case was $3.50 per day, the court rendered judgment in favor of .appellee for the sum of $4,320.50.

This appeal has been prosecuted from that judgment.

Opinion.

Appellant’s fourth and fifth assignments of error assail the submission of special issues Nos. 7 and 8. They read:

“Special Issue No. 7: Do you find from a preponderance of the evidence that the extent of the injuries, if any, of C. V. Eaton, was Unknown to him prior to September 8, 1932?”
“Special Issue No. 8: Do you find from a preponderance of the evidence that O. V. Eaton believed his said injuries, if any, tempo>-rary and trivial until September 8, 1932?”

Appellant objected to the submission of the said issues on the ground that they were merely evidentiary and not of ultimate facts upon which judgment could be based. With this contention we must agree. The ultimate fact which gave the court jurisdiction and appellee a right to now maintain his suit (it being admitted that he had failed to file his claim within six months from the date of his injury) was whether he had shown good cause for his failure to file his claim prior to the date he did file it.

The existence of the facts inquired about in the issues complained of would, at most, be only evidentiary as to the existence of good cause. From such facts the jury might have concluded that appellee had good cause for the delay in filing his claim, but, certainly, the mere existence of those facts would not show good cause as a matter of law.

There is no finding that appellee had good cause for not filing his claim prior to September 8, 1932, and therefore a want of sufficient findings to support the judgment rendered. Ocean Accident & Guarantee Corporation v. Pruitt (Tex. Com. App.) 58 S.W.(2d) 41; Holloway v. Texas Indemnity Ins. Co. (Tex. Com. App.) 40 S.W.(2d) 75.

The issue as to the existence of good cause being an ultimate one and one necessary to appellee’s cause of action, there will be no presumption that (lie court found the facts to be sufficient to show such good cause. Speer on Special Issues, §§ 301 and 302, pp. 417, 418; Ormsby v. Ratcliffe, 117 Tex. 242, 1 S.W.(2d) 1084.

Appellant also complains of the trial court’s refusal to instruct a verdict in its favor on the ground that it was uncontroverted that appellee was not an employee of the Dun-nigan Tool & Supply Company; .that, if he was an employee of the Dunnigan Company, it was uncontroverted that his employment was not within the usual course of the trade, business, occupation, or profession of the Dunni-gan Company; and that, it being uneontro1-verted that appellee failed to file his claim within six months after his injury, and having failed to plead or prove a good cause for such failure, the court was without jurisdiction of the cause.

In view of the fact that the judgment must be reversed because the findings are insufficient to support the judgment, we shall not here discuss the evidence on these phases of the case. The facts, however, in our opinion, are sufficient to warrant the submission of the issue of whether appellee was an employee of the Dunnigan Company to the jury.

The question presented as to the reading of an interrogatory, and its answer to the jury after it began its deliberations, calls for no discussion, as it will probably not occur on another trial.

Neither shall we discuss the questions as to whether certain findings of the jury are contrary to the great weight of the evidence.

For the reason heretofore stated, the judgment will be reversed, and the cause remanded.


author: HIGGINS, Justice.

text:
    WARD COUNTY v. WENTZ.
    No. 2960.
    Court of Civil Appeals of Texas. El Paso.
    March 1, 1934.
    Rehearing Denied March 29, 1934.
    T. H. Neel, Co. Atty., of Barstow, and Hudson & Hudson, of Pecos, for appéllant.
    J. Lee Bilberry, of Barstow, for appellee.
   HIGGINS, Justice.

The facts out of which this litigation arises may be briefly stated as follows:

Wentz is the owner of certain mineral royalty interests in land situate in Ward county. He rendered such interests for taxation in 19-31 at a valuation of $5,405. Later he was notified to appear before the commissioner’s court, sitting as a board of equalization, on July 18, 1931, and show cause why his valuation should not be raised. On the date stated he, by an agent, and other interested royalties owners and holders of mineral leases, appeared before the board and testimony as to values was heard. Thereupon a valuation of the leasehold interests was agreed upon by the board and the lessees. It was further agreed with the royalty owners that the royalty interests should be valued at a Certain ratio of the value of the leaseholds. Upon the basis indicated the value of Wentz’s property was $23,010, according to a calculation made by the board’s tax expert in attendance upon the meeting and assisting the board. No question is raised as to the correctness of such calculation. After reaching the agreement stated, Wentz’s representative and the other interested taxpayers departed. The next day, the board, without notice to Wentz, raised the valuation of his royalties to $37,-230. Wentz, at the proper time, paid under protest the taxes upon such increased valuation.

Later he brought this suit against Ward county attacking the validity of the order increasing the valuation to $37,280, and seeking to recover the taxes paid upon the increased valuation from $23,010 to $37,230.

Upon trial without a jury judgment was rendered in Wentz’s favor for $176.-68, being Ward county’s share of the excess tax.

Appellant questions the sufficiency of the evidence to support the court’s finding that an agreement was reached as to the value of Wentz’s property.

The evidence shows that an agreement was reached as to the basis of valuations, and upon such basis plaintiff’s property should have been valued at $23,010. The tax expert made the calculation, and so advised plaintiff’s representative at the time. An agreement having been reached as to the basis of valuation, it was a mere matter of calculation to determine the correct amount. The evidence supports the court finding.

Our statutes require that before raising valuations placed by a taxpayer upon his property the board of equalization shall give notice to the taxpayer, afford him an opportunity to be heard, and present evidence in support of the eorrectnes's of his own valuation. Article 7206, subdiv. 5, and article 7212, R. S.

The board, in this case, followed the prescribed procedure and agreed with the taxpayer as to the proper valuation. But after he had departed the agreed valuation was raised without further notice. Plaintiff’s representative testified he would have offered more testimony before the board if he had known of the proposed final valuation. We regard the action of the hoard in raising the valuation above the previously agreed amount without further notice to plaintiff and opportunity to he heard as a fraud upon him, and as in effect depriving him of the benefits of the statutory provisions mentioned which were intended for the protection of taxpayers. All assignments questioning the sufficiency of the evidence to support the court’s findings and conclusions are overruled.

We regard this action as a direct attack upon a fraudulent order of the board in raising plaintiff’s valuation, and the district court has jurisdiction of the suit regardless of the amount sought to be recovered. Article 5, § 8, Constitution; Kirby v. Transcontinental Oil Co. (Tex. Civ. App.) 83 S.W.(2d) 472.

Appellee by cross-assignment complains of the refusal of the Court to award recovery of the state’s share of the excessive tax. This matter presents no error. Plaintiff’s claim in this respect is against the state of Texas and not Ward county.

Affirmed.