Eastland County v. Davisson , 290 S.W. 196 ( 1926 )

The writer concurred in the original opinion filed in this court on the __ day of _____, 1926, being then of the opinion that the testimony of Davisson and Starnes was admissible.

Appellant has filed a very able motion for rehearing, raising the question as to the sufficiency of the testimony upon which the verdict was based, and the writer regrets that he cannot agree with the majority of the court holding that the evidence was sufficient and thereby overruling appellant's motion for rehearing.

The writer regrets very much to file a dissenting opinion at this time, but, being so thoroughly convinced that the evidence is not sufficient to support the findings of the jury, I most respectfully dissent to the opinion of the majority.

Portions of the argument of the appellant, on motion for rehearing, correctly state the facts and the principles of law to be applied thereto, and are adopted, and are as follows:

We submit that the burden was upon appellee Davisson to prove that he had a final settlement with Eastland county at the time order No. 8 was entered, then we believe the record conclusively shows that he had no such settlement, and that no competent evidence to sustain that contention was interposed. The court's opinion treats order No. 3 as the judgment of a court of record, and holds that the evidence of Starnes and Davisson supports the finding that, at the time said order was passed and as a part thereof, the commissioners' court allowed credit to Davisson on claims the latter was making for enough to offset the items of $56,160 and $8,000 sued for, and that the burden was on appellant to prove the negative of this defense asserted by him.

In legal effect, the decision in this case puts such a plea on the same footing with a plea of non est factum. That this is incorrect is manifest and so declared by all the authorities. It is elementary that the burden of proof is always on the party asserting a matter; on the plaintiff as to his cause of action, and on the defendant as to his matters of defense. The plea of the bar of a judgment is a defensive matter. In order to avail himself of such a defense, the defendant must plead it. City of Houston v. Walsh (Tex.Civ.App.) 66 S.W. 106, and authorities cited; Texas Southwestern Digest, vol. 15, Title, "Judgment," 948. Appellant did not plead order No. 3, and in order to be available to the appellee, he must plead it. Mullinax v. Barrett (Tex.Civ.App.)173 S.W. 1181. In all cases where a party interposes such a plea as that his adversary is concluded by a former judgment, the burden is on the party making such a plea to prove that his adversary is so concluded. This is the universal rule.

The rule is thus stated in Freeman on Judgments (5th Ed.) § 768:

"As a general rule, the onus of establishing an estoppel or bar is by law cast on him who evokes it. He has the burden of showing that the judgment relied upon by him adjudicates the matter in question." Bandy v. Cates, 44 Tex. Civ. App. 38, 97 S.W. 710; Tompkins v. Hooker (Tex.Civ.App.)200 S.W. 194; Hamman v. Presswood (Tex.Civ.App.) 120 S.W. 1053, on rehearing.

In Cook v. Burnley, 45 Tex. 97, cited by this court to sustain its conclusion that the evidence of Starnes and Davisson was admissible, it is said:

"If, from the record alone, no intimation is given whether a particular matter has been determined or not, it is incumbent upon the party alleging that a question has been settled by a former adjudication to support his allegation by proof aliunde."

What could be plainer than this?

In Bandy v. Cates, supra, Cates sued Brown on a debt and to foreclose a deed of trust. Brown pleaded a general denial, limitation, and innocent purchaser. A verdict was instructed for Brown. Then Cates had the trustee sell the property, and became the purchaser at the sale, and brought suit in trespass to try title. Brown pleaded the judgment as a bar to Cates' suit, but introduced no evidence showing that the validity of the debt was adjudicated. The court held the burden was on the defendant, and that his plea did not avail him. These authorities cannot, we submit, be distinguished nor their applicability denied. The court evidently did not place its holding as to the burden of proof on the ground that the plea of res adjudicata proved itself, inasmuch as the cases cited in the opinion, and evidently carefully considered, hold directly to the contrary, as shown above, but cites Barkley v. Tarrant County, 53 Tex. 251 . This case does not hold that, where a settlement is alleged by the defendant, the burden of proof is on the plaintiff to show that there was no settlement, or, in other words, that a plea of settlement proves itself, but that where a settlement is shown all prior items are presumed to have been included. This rule is stated in 12th C.J. Title, "Compromise and Settlement," p. 364, § 76:

"Where a party alleges the existence of an agreement of compromise of the matter in controversy, the burden of proof devolves on him to establish the same; and this burden remains on him throughout the trial, notwithstanding the presumption that a settlement covers all past transactions." Bergman Produce Co. v. Brown (Tex.Civ.App.) 156 S.W. 1102; Meyers v. Grantham (Tex.Civ.App.) 187 S.W. 532; Weller v. Burns (Tex.Civ.App.) 210 S.W. 861.

In this case it is said:

"The burden of proof was on Weller [the defendant] to establish his plea of compromise and settlement."

The cases of Telegraph Co. v. Luckett and Clark v. Hiles have not the remotest bearing on this question.

We submit that this question was wrongly decided. Nor can this error be disposed of on the ground that it was harmless.

As we have attempted to show, the question as to whether order No. 3 adjudicated the debt, which appellee admits he owed, is most vital. We will hereinafter attempt to show that the evidence introduced by appellee did not raise the issue of res adjudicata, and that such evidence as was offered was incompetent and inadmissible. If the burden was on appellant, to urge these points would become futile, for to show that the issue was not raised by competent evidence would avail us of nothing, if we were required to disapprove the allegations of the defendant's answer, because, in such case, the presumption would still obtain that the plea was good. Where the court incorrectly instructs the jury as to the law, injury is presumed. The Court of Civil Appeals is not authorized to disregard a material error in misdirecting the jury as to the law, under rule 62a, Lancaster v. Fitch, 112 Tex. 293,246 S.W. 1015; Eastern Electric Co. v. Baker (Tex.Com.App.) 254 S.W. 933. This rule has been consistently applied by this court. Lancaster v. Bradford (Tex.Civ.App.) 279 S.W. 607.

In Wichita Valley Railway Co. v. Williams, 288 S.W. 425, this court in an opinion by the same justice who wrote in this case so held and so plainly stated.

In order for an erroneous charge to be classed as harmless error, lack of prejudice must clearly appear. Osceola Oil Co. v. Stewart, 258 S.W. 806.

In this case, the Court of Civil Appeals' decision was reversed for the very error appearing in this decision.

To the same effect is Humble Oil Refining Co. v. McLean, 280 S.W. 557, both by the Supreme Court, opinions by the Commission.

The learned trial court, in effect, charged the jury that the burden was upon appellant to show that the items sued for were not settled by order No. 3, which, on its face, related to matters entirely different from the ones in suit.

With these observations, we now proceed to a consideration of the question as to whether any competent evidence was introduced to support the judgment. The first question is whether the parol evidence offered contradicted in any manner the recitals in order No. 3. If such is the fact, then the evidence is not receivable. This cannot be denied. In section 767, p. 1624, Freeman on Judgments (5th Ed.), the rule is stated:

"Parol evidence is admissible only in aid of the record. It is important, therefore, that the evidence offered to explain a record should not contradict it."

See S.W. Dev. Co. v. May (Tex.Com.App.) 235 S.W. 529, where it is said:

"This issue involves a proper construction of the verdict and judgment in the former case. They must be construed by their own recitals read in the light of the record in the case in which they were rendered. Parol evidence is not admissible to contradict, vary or limit them."

Order No. 3, in effect, recites that appellant was due Davisson the amount of the principal and accrued interest of 495 bonds of $1,000 each, which was due for work and labor furnished during the months of July, August, September, October, November, and December, 1921.

Now the appellee says he can, in this proceeding, be permitted to show that, in entering this order, he was allowed credit for an additional sum of $64,160, and that what the court really did was to adjudge that the sum due him on estimates was $565,160. It would seem just as proper, in a case where a court had decreed plaintiff a certain sum on a cause of action, to allow him subsequently to show in another controversy that the court really allowed him twice that much without amending the judgment. Where the commissioners' court finds a certain sum due, it is certainly varying that order to prove that he allowed a different one.

In addition to the above, the uncontradicted testimony of Davisson shows that he waived the matter on which he now relies and thereafter agreed with the commissioners' court that he did owe the item of $56,160.

It is well settled that if a party to a decree thereafter enters into a stipulation or agreement with adversary with respect to the merits of the former adjudication, or thereafter proceeds to trial and a new judgment, he waives the first decree. Stephenson v. MillerLink Lumber Co. (Tex.Com.App.) 277 S.W. 1039.

In that case, in declaring the rule as to the conclusiveness of a former judgment, it is said:

"Of course, if the judgment in the injunction proceeding had been set aside, or if in the subsequent proceedings any agreement has been made, * * * or other fact whatsoever would require the application of any principle of equity to relieve against the otherwise binding effect of this prior judgment, we would not, * * * hesitate to look most diligently into such contention. It has been held that one who has caused a second judgment to be entered cannot claim the earlier one to be the final judgment. So a vacation of the first judgment may be implied where the parties by agreement thereafter proceed to trial and a new judgment."

The statement in the opinion that Davisson did consent to the order postponing payment is incorrect, as the record shows that Davisson on two occasions thereafter agreed with the court to the entry of orders recognizing his indebtedness to the county for this item. In February, after order No. 3 was entered in January, he sold out to Smith Bros., he procured the entry of an order authorizing the transfer of his contract to Smith Bros., and in this order it was recited that Davisson should remain liable to the county for all indebtedness due by him to the county. S. F. p. 186-189. And this, after the entry of Order No. 3, which he now says settled all his debts to the county. In the order entered in February, Smith Bros. assumed all the indebtedness due the county that appeared on its books except the item sued for. In December he agreed that the payment for the item of $56,160 should be postponed. Davisson testified:

"You ask me if I was not asked the question whether or not you stated either to Judge Starnes or any one else representing the county that anything was to be done with this $56,160 that that was to be wiped out or not, and if I did not answer that everything was to be cleaned up at that time, as I understood from them. The $56,000 was not to be collected until such time as the county could make the money available at which time they could. I was willing to go ahead and do the work under the contract and to pay the $56,160. I now answer, Yes, sir.

"You ask if Judge McRae did not ask me this question. All right now, then, you are suing here. You are offsetting this $64,160 that is still due on these bonds, is it not, that has not been settled and if I did not answer then, only $56,160, Judge, but not $64,160. I answer now, I am certain I answered that way, that I had not settled. S. F. p. 111.

"You ask if the real truth of the matter is not that (referring to the item of $56,160) was to be deferred until this money could be collected, and I answer that is the way this order reads. That is correct, and, as it now appears, it really was not taken out. When this money becomes available, under my contract, I am ready to pay it. * * * The order postponing it was made after order No. 3. S. F. p. 113.

"You ask if I was not asked the question on another trial. You proposed and it was then agreed that the payment of that $56,160 should be postponed until such time as the money was available, and if I did not then answer. They proposed that to me, and I accepted. I now answer, I am certain that is correct." S. F. p. 113.

The statement in the opinion that Davisson did not consent to the order postponing the payment of the item of $56,160 is not only without anything to support it, but is in direct contradiction to the testimony as copied above.

This testimony conclusively shows that Davisson did consent to the entry of these orders and expressly recognized, after order No. 3 was entered, that he was indebted to appellant in the sum of $56,160.

As to the item of $8,000, he does not contend that it was settled by said order No. 3. In answer to questions by his own counsel, as shown on page 111, S. F., he states that he was only claiming an offset as to the $56,160, and not the $8,000.

Starnes, the only other witness who testified on the point, says:

"None of us took into consideration * * * that $8,000 at that time."

"I mean that we did not all consider the $8,000 item that we claimed the bank had converted." S. F. p. 73.

How, in the face of this testimony, can Davisson's contention that order No. 3 settled these items be sustained? No more pertinent situation to the rule announced in Stephenson v. Miller-Link Lumber Company, supra, could be imagined. Here, for nearly a year after the order pleaded as a bar was entered, we find appellee, time after time, procuring and consenting to orders recognizing the validity of his indebtedness and providing for its payment. When his attention was first called to this matter, on the first trial, he relied on order No. 38 to defeat appellants' suit. He did not then plead nor contend that order No. 3 released him from the items sued on, but claimed that, if order No. 38 did not defeat the county's suit, he was entitled to spend the amount of $400,000 in which he would pay the $64,160, and brought suit and enjoined the county from spending any of the bond money, which suit is now pending. This plea of res adjudicata is an afterthought.

Furthermore, the testimony shows that the claims which Davisson now claims were offset against the item sued for were settled by the allowance of an amount not to exceed $40,000, and that the engineer finally allowed $36,388, which was accepted by Davisson in full settlement of his claims, which he now says were used to offset the amount due by him on said bonds.

Starnes says:

"We did have before us at that time [the time order No. 3 was entered] these various claims [the claims Davisson is now urging], it seems to be these amounts, but they were on white paper and also other claims, one for attorney's fees and one for difference in the maturity either fifty or sixty thousand. I have forgotten. As to how much was allowed on these claims, the discussion with Mr. Echols was that there was at least $40,000 of them that ought to be paid and the court allowed not to exceed $40,000. You ask if I had credited on the books at the time in favor of Fleming-Stitzer Road-Building Company, thirty six thousand and some odd dollars. I answer that I think that the notations were made after the court orders." S. F. p. 80.

Davisson testified:

"You state you will read the other question again. I believe you have testified you took that at the time in full settlement and I answer, yes; and then the further question was asked me, of all claims you had against the county up to that time [when order No. 3 was entered], and I then answered, Yes; that is my understanding. Yes, sir. I now answer, Yes, sir; that is right." S. F. p. 117.

The witness De Graffenreid, in reference to this matter, said:

"There was some claims that aggregated $89,000 and I was directed to allow some $36,000 out of that and all the rest of his claims. You ask if I was directed by the commissioners' court and highway engineer to allow thirty six thousand odd dollars out of the claims presented. I answer they allowed approximately $40,000." S. F. p. 18.

The testimony of appellees was that all these claims, some for wrong classification, for attorney's fees, and for damages in the difference in the maturity of the bonds, were all presented and the commissioners' court allowed thereon an amount not to exceed $40,000, to be figured by the engineer. The engineer calculated the amount due to be approximately $36,000, and this was allowed and entered on the books of the county. See ledger sheet, S. F. 264. Here was a definite order made by the commissioners' court and evidence thereof entered of record. This destroys the claim of appellees that said amounts were offset against the item sued for.

The written account on which the commissioners' court acted was in evidence (S. F. p. 193), and it shows conclusively that the items sued on were not settled nor before the court at the time order No. 3 was entered, but that all of Davisson's claims against the county were presented and he was allowed $499,888.45 and bonds of the county delivered to him in payment therefor, and of the claims which he now claims were used to offset the $64,160 due for the bonds, $36,388.49 was allowed in full settlement therefor.

There is no testimony that the commissioners' court offset the $64,160 with claims Davisson had against the county. All Starnes testified was that the court considered the $56,160 and did not think there was much merit to it. He further says that the items in controversy were not deducted from the amount Davisson claimed. That Davisson said, "Let's forget that $56,160; let's end it, and go on with the other accounts"; and that he, witness, did not think Davisson morally owed it.

Davisson says that it was his understanding that the $56,000 was to be wiped off and he would not have to pay it, and, when pressed as to the details, admitted the court never did allow the $56,160 to be offset by his claims. All such testimony as to Davisson's understanding and what Starnes thought are mere conclusions and cannot form the basis of a verdict or judgment.

Starnes never stated anything stronger than that the $56,160 was considered, neither did Davisson.

The issues were, did the commissioners' court take into consideration the item sued for and was payment made therefor by balancing off a sum, its equal or more, due Davisson by the county? Where is the testimony that the commissioners' court allowed Davisson more on his claim than the $36,388 credit?

The testimony of Davisson that he had a settlement and that the county agreed to "clean up" with him is merely a conclusion and cannot be used to override the positive testimony to the effect that long thereafter he admitted to the commissioners' court that he owed this $56,160, and agreed to pay it and on the stand testified that he never had paid it. His testimony in this respect is as follows:

"It was my understanding that $56,160 was to be wiped off the slate and I would not have to pay it, but we were to close up all our accounts one way or other, and I think I testified it was my idea that I would not have to pay that $56,160.

"I did not pay them anything for that, nor did I do any work for it. They was just to release me from it." S. P. pp. 112, 113.

It is well settled that a verdict cannot be based on the conclusions of a witness. Holstein v. Adams, 72 Tex. 490, 10 S.W. 563. In this case, Stayton, Chief Justice, wrote:

"The bill of exception shows that appellant proposed to prove by his own evidence and that of two other witnesses that he had made the improvements alleged, and that they were of the value stated in his plea, and further that they were placed on the land in good faith. The bill is full as to the two items of evidence first named, but is it sufficient as to the last? The witnesses would not have been permitted to state that the improvements were made in good faith but would have been required to state the facts. * * * The bill of exceptions not showing that either of the witnesses would have stated a single fact from which the court might have found good faith we cannot presume that they would." Stovall v. Martin (Tex.Civ.App.) 210 S.W. 321.

In that case, a verdict was rendered in favor of the defendant on the issue of ownership of cattle sued for. The defendant testified on the witness stand that the cattle belonged to him, but the testimony also, with reference to the marks and brands admitted by him, showed that the cattle were not his, and the Court of Civil Appeals for the Second district held the evidence insufficient and reversed the case, although the appellees contended, as here, that there was evidence sufficient to raise an issue based on the defendant's testimony that the cattle belonged to him, but the court held that this testimony amounted to a conclusion only, and could not override the other uncontradicted facts and circumstances in the case.

We submit that this case is on all fours with the case at bar. Davisson's and Starnes' testimony that there was a settlement, and that they understood that everything was to be wiped off and cleaned up, cannot override the language of order No. 3 itself, and the positive testimony that long thereafter, with the consent and with the procurement of the defendant Davisson, his indebtedness to the county was recognized, and that he agreed to pay it as soon as the money was realized out of the defunct bank.

In the case of Cullers v. Gray (Tex.Civ.App.) 57 S.W. 305, a witness was permitted to testify that the wood in controversy belonged to the debtor in execution, and on this testimony a verdict was rendered, and the Court of Civil Appeals held that this was but a conclusion and inadmissible.

In the case of Webb v. Reynolds (Tex.Com.App.) 207 S.W. 917, the plaintiff sued upon a note which was on its face the property of an estate. He testified on the trial that he was the owner of the note sued on, but other facts and circumstances introduced, which were not denied by him, showed that the note was the property of the estate. The Supreme Court, speaking through the Commission of Appeals, held that his testimony that he was the owner of the note was a mere conclusion and insufficient and inadmissible. This same principle was recognized by the court in the case of Austin v. Conaway (Tex.Civ.App.) 283 S.W. 189. In that case, quoting the rule as stated in Freeman on Judgments (5th Ed.) 132, it is said:

"While it [speaking of a judgment] can be neither sustained nor explained by reference to the understanding of the parties, even though entered pursuant to stipulation, or the prior or subsequent statements of the court as to its intention when the judgment was rendered, nevertheless the effort should be to give effect to it in its entirety and to sustain the judgment as a whole where this can be done."

In the case of Hightower v. Bennight, 53 Tex. Civ. App. 120,115 S.W. 875, it was held that it was incompetent for a judge to testify as to his understanding and intention in rendering a judgment. That this is all that Starnes and Davisson testified to; they testified to their understanding. Nobody ever testified that the commissioner' court ever agreed to allow Davisson more than $40,000 on the claims he presented; an amount not to exceed that sum. In fact, with the uncontradicted testimony showing that this amount was allowed on this claim precludes any idea that a greater sum was allowed. It is not permissible for a partner or witness to testify as to his understanding. He must testify to what was said or the substance thereof.

In 22 C.J. Title, "Evidence," p. 515, the rule is stated:

"A witness cannot state his understanding of the language used in a written contract, deed, letter, or other writing, or of the meaning of words, phrases, statements, or figures therein, or what was the intention or understanding on which it was executed. Neither can a witness state the impression made on him by oral statements, his inference as to whether the statements of practice at an interview resulted in a contract, or whether there was an understanding between them on a given point, or his understanding as to what the contract is. Nor can one who heard a statement or conversation testify as to what he or another person understood by it." Shaller v. Johnson (Tex.Civ.App.) 189 S.W. 553; Edwards v. State, 78 Tex. Crim. 210, 181 S.W. 195; Buzard v. McAnulty,77 Tex. 438, 14 S.W. 138.

The decision herein says that while order No. 3 seems to contradict the contention urged by appellee that the debt had been settled by order No. 3, but that the same is merely argumentative, and it does not appear that the orders were made at the solicitation or knowledge of Davisson. As we have heretofore shown, the record is uncontradicted, and Davison testified, "they proposed and he accepted" the terms of order No. 38, and that both the orders made in February authorized him to transfer his contract to Smith Bros., provided that Davisson should not be released, but should remain liable for all indebtedness due the county, and the only indebtedness due the county and carried on the county's books was the item of $56,160. The item of $8,000 had not then been entered on the books, and the court further says that if said order No. 3 was a settlement of Davisson's indebtedness to the county, then said order became the judgment of the commissioners' court and was binding on all parties, and that orders entered thereafter with reference to said matter would be void. In making this statement, the court overlooked the positive testimony, uncontradicted, that before order No. 3 was ever entered an agreement was had between Davisson and the commissioners' court, that of all the claims which Davisson then had pending against the county, and out of which he seeks to offset the item sued for, that the commissioners' court agreed to allow him an amount not to exceed $40,000, and that Davisson accepted that offer and that the engineer was directed to calculate the amount, which he did, and entered his credit upon the books, and this was accepted by Davisson and the bonds delivered to him on that basis. When this was done, under the holding in this opinion, this transaction became an order of the commissioners' court, and no understanding or agreement thereafter could effect or change it.

Appellant pleaded accord and satisfaction and a full settlement of these claims for $40,000. If the opinion of the court is the law, appellant had to do nothing more than plead this settlement in bar of appellee's claims, and the burden was on appellee to show that they were not settled by the allowance of $40,000, as alleged. We then have the anomalous situation of the burden of proof being on both parties, and all subsequent transactions barred from the evidence as invalid and void. A mere statement of this situation shows the incorrectness of the judgment herein.

The effect of the testimony being that the county was to postpone the payment of these items until the money was realized of the defunct Security Bank Trust Company, a finding that it had been paid is without evidence to support it.

This is simply a case where, then, the evidence is stripped of conclusions (which cannot support the verdict), that then the verdict is without evidence to support it.

The commissioners' court could not release the debt. Article 3, § 55, of the Constitution, forbids this. Bland v. Orr, 90 Tex. 492,39 S.W. 558; Slaughter v. Hardeman County (Tex.Civ.App.) 139 S.W. 662; Tarrant County v. Butler, 35 Tex. Civ. App. 421, 80 S.W. 656.

The bonds must have been paid for in cash at par accrued interest or in its equivalent in work or material. In order to defeat the recovery, the evidence must show that payment was, in fact, made, not that the commissioners' court said it was. American Surety Co. v. Hill County (Tex.Civ.App.) 254 S.W. 241; Id. (Tex.Com.App.) 267 S.W. 265.

Davisson having accepted $36,388 in full settlement of all his claims against the county at the time order No. 3 was entered, his cross-action therefore fails.

When he (Davisson) transferred his control to Smith Bros., he did not reserve any claim thereunder, and the right to work out the amount impounded in the bank passed to his assignee. While Smith Bros. owned the contract, they agreed with the commissioners that no further work would be done under the contract. After this suit had been filed and once tried, appellee secured an assignment of Smith Bros' rights thereunder, for a recited consideration of $1, and on this assignment predicate the cross-action for lost profits, on account of not being allowed to work out the amount impounded by the bank failure referred to. The contract having been terminated by mutual consent as to further performance by the county and Smith Bros., the latter had nothing to reassign to appellee, as this court held in Eastland County v. Davisson, 277 S.W. 781.

In view of the fact that Davisson, Gregg, and the Southern Surety Company were all liable for the face value of the bonds at the time they were delivered, they would remain liable until payment was made, in fact. American Surety Co. v. Hill County, supra.

The commissioners' court being without power to release or extinguish, or to compromise or settle the debt in any manner than by actual payment, such court could not, by any act, direct or indirect, release either Gregg or the surety company.

The judgment of the trial court should be reversed and here rendered for appellant.