Hill County v. Colonial Trust Co.

Appellee instituted this suit against appellant to recover judgment on two time warrants for $1,193.50 each, dated April 1, 1919, and payable April 1, 1922; said time warrants having been given by appellant to the Avery Company of Texas in part payment of two tractors purchased by appellant from said company. Said time warrants were thereafter for value transferred to appellee. Appellee further alleged that, if it was not entitled to recover on the time warrants, it was entitled to recover the amount of same, being the unpaid portion of the balance due on the two tractors which appellant had purchased from said Avery Company. Appellant invoked two defenses: First, that the time warrants sued upon were unenforceable because they were given in contravention of section 7 of article 11 of the state Constitution, which prohibits a county from creating a debt without making provision for the levying of a tax to pay the same; and, as a defense to the claim of appellee for the recovery of the value of the tractors, pleaded the statute of limitation; and, further, that appellee as the holder of the time warrants cannot maintain a suit for the value of the machinery delievered to the county by the Avery Company. The case was tried to the court and resulted in judgment being rendered for appellee for the balance due on the two warrants.

The record shows that in February, 1919, the commissioners' court of Hill county advertised for bids for certain tractors, graders, and plows, and bids with reference thereto were submitted. On February 28, 1919, the commissioners' court entered the following order: "On this day came on to be examined the bids for tractors, graders, plows, etc., and it appearing upon investigation that the following are the lowest bids: The Avery Company of Texas bid on 25-50 tractor 3375.00, bid on 40-80 tractor $300.00 — " (then follow bids by other parties on other material not necessary to quote) — "it is therefore the order of the court that the same be purchased from said companies, and that the above acceptance means for two graders and two tractors, and that the same be paid out of the funds of precincts 1 and 2 of said Hill County, Texas."

Appellee in its petition alleged that the order entered on the minutes of the commissioners' court, copied above, was for the purchase of two of the 25-50 tractors at a price of $3,375.00 each, or a total of $6,750, and that same were sold by Avery Company based on the bid which it had made to the county with reference thereto. Appellant alleged that the bid of Avery Company was to sell the two tractors to Hill county for the price of $3,375 each, to be payable in one, two and three years from date, with the understanding and agreement on the part of Avery Company that none of said purchase price was to be paid out of the funds for the year 1919, and that Hill County purchased said two tractors with that positive agreement, understanding, and contract. Appellant alleged in detail the terms of the bid and the agreement made between Hill county and Avery Company with reference to the sale and purchase of said two tractors, setting out specifically and definitely that under the bid and under the contract as made between them, there was to be paid no portion of the purchase price of said tractors during the year 1919; and that no provision was made by the commissioners' court at said time for the levying of any tax to pay said time warrants at the time they fell due.

Appellee offered in evidence the portion of appellant's answer setting out these defenses, and also offered in evidence the accounts presented by Avery Company at the time said time warrants were issued. W. T. Green, one of the county commissioners, the county judge, and the agent of Avery Company who carried on the negotiations with the county testified. Each of said witnesses testified, in effect, that the bid made by Avery Company to the county was that none of the purchase price of said tractors should be paid during the year 1919, but that same would be sold to the county on time, to be paid in one, two, and three years; the county judge and the commissioner who testified testifying that the tractors were being purchased to be used, one in commissioner's precinct No. 1 and the other in commissioner's precinct No. 2 of said county. W. T. Green was commissioner of precinct No. 2, and E. D. Ward was commissioner of precinct No. 1 at the time of the transactions in controversy. It was shown that Mr. Ward was dead at the time of trial and his testimony could not therefore be obtained.

The agent of Avery Company testified that the bid of said company was that it would sell the two tractors to Hill County for $3,375 each, and that said bid was accepted by the commissioners' court, subject to satisfactory demonstration of said tractors; that In making said bid Avery Company agreed to make such terms as the commissioners' court desired; and that, at the time the bid was accepted and the order given for said tractors, it was specified that same were to be paid for by time warrants to be due in future years, bearing 6 per cent. interest; and that said deferred payments were evidenced by the time warrants thereafter issued. After said bid was accepted, Avery Company delivered to appellant the two 25-50 tractors, and, after same were tested and accepted, Avery Company, on March 26, 1919, presented its six accounts, two payable each year for three consecutive years, being one on each of said tractors for each of said years; and the three accounts for the tractor purchased for the use of commissioner's precinct No. 1 were O. K.'d by E. D. Ward as commissioner and by R. T. Burns, the county judge, and by the county auditor. Each of the accounts for the tractor purchased for the use of commissioner's precinct No. 2 were approved by W. T. Green, commissioner of said precinct, and by the county judge and county auditor. Thereafter the county clerk issued the time warrants, payable two due April 1, 1920, two due April 1, 1921, and two due April 1, 1922, each account for which the respective warrants were issued being for $1,125, plus 6 per cent. interest per annum on all of the unpaid portion against the respective tractors. The first four of said warrants were paid when they became due. When the last two fell due their payment was refused, and this suit was instituted by appellee to recover the amount thereof.

This is the second appeal of this case. Colonial Trust Co. v. Hill County (Tex.Com.App.) 294 S.W. 516. The former appeal was from the judgment of the trial court sustaining a general demurrer to appellee's petition. On the former appeal of this case the Supreme Court stated:

"If at the time the purchase was made it had been in contemplation that any part of the purchase price should be paid from taxes levied and collected for future years, the contract under this section would have been a prohibitive one. Andrus v. Crystal City (Tex.Com.App.) 265 S.W. 550.

"We think the order of the Commissioners' Court of February 28, 1919, was an appropriation of funds within the immediate control of the County for the payment of this obligation, and that this purchase did not have the effect to create a debt in contemplation of Article 11, § 7, of our Constitution. The fact that after the offer of sale was accepted and the tractors delivered time warrants were issued by order of the Commissioners' Court, payable in 1922, did not render void the obligation which was valid and binding when it was made."

After the cause was reversed, appellee, in a supplemental petition, for the first time alleged that the reason Avery Company presented said accounts to the commissioners' court of Hill county, payable in future years, was by reason of a subsequent ancillary agreement for the issuance of time warrants instead of demand warrants. Presumably, this was done to meet the suggestion contained in the opinion of the Supreme Court above quoted that "the fact that after the offer of sale was accepted and the tractors delivered time warrants were issued by order of the Commissioners' Court, payable in 1922, did not render void the obligation which was valid and binding when it was made." Appellee did not offer any evidence tending to show that any future or further order was made by the commissioners' court relative to the payment for said tractors other than that of February 28, 1919. If the time warrants were issued without any order of the commissioners' court, same would not be a binding or valid obligation against the county. Our Supreme Court, in the early case of Brown v. Reese, 67 Tex. 318, 3 S.W. 292, held that a warrant signed by the county judge was not enforceable unless same had been approved and ordered issued by the commissioners' court while in session. In said case it was held that parol evidence was admissible to show that such an order was actually made. Again, in Polly v. Hopkins, 74 Tex. 145, 11 S.W. 1084, the Supreme Court held that a contract made by the county judge without the approval of the commissioners' court, sitting as a court, was invalid. Again, it was held by the Supreme Court in Ball v. Presidio County, 88 Tex. 60, 29 S.W. 1042, that a debt against a county could not be created except by an order of the commissioners' court, duly made by said court.

As we understand appellee's contention in this court, it does not claim that any order was issued except the one of February 28, 1919, by the commissioners' court relative to issuance by the county clerk of, or the payment of, the warrants. Appellee's sole contention in this court, as we understand it, is that the order made by the commissioners' court on February 28, 1919, provides, in effect, that same was to be paid from the current funds of said county for 1919. Appellee contends that the order of the commissioners' court accepting the bid of Avery Company is unambiguous, and further, that appellant's pleadings do not raise an issue of ambiguity, and, further, that said issue cannot be raised except by a plea of fraud, accident, or mistake; and that for said reasons the testimony with reference to what was the bid and what was the contract and agreement between Hill county and Avery Company was inadmissible. Appellee further contends that the judgment of the commissioners' court as entered was conclusive of the fact that all of the purchase price of the tractors was to be paid out of the current funds for the year 1919.

We think the pleadings of appellant were sufficient to raise an issue of ambiguity. It has been held specifically that it is not necessary to allege fraud, accident, or mistake as a predicate for the introduction of testimony to show that an instrument is ambiguous. Curry v. Texas Co. (Tex.Civ.App.) 8 S.W.2d 206 (error dismissed).

We think clearly that the order as entered by the commissioners' court on February 28, 1919, at the time it contracted to purchase the tractors in question, is ambiguous. Appellee, in attempting to state its cause of action and its construction of said order and explanation of what it considered same meant, took about six or eight typewritten pages; and appellant, in order to explain its contention relative thereto, required about an equal number of pages. The judgment as entered recites that the bid of Avery Company was accepted, and that the same was to be paid out of the funds of precincts 1 and 2. It does not state that the payment is to be made presently, that is, by demand warrants against current funds within the immediate control of the court. It does not order the issuance of a warrant of any kind for such payment. It did not attempt to provide how or when such payment was to be made. It did not state whether same was to be paid before or after the tractors were delivered, or whether the tractors were to be approved and accepted before the warrants were issued. Neither does it state whether the two tractors were to cost $3,375 each, or whether they were to cost $300 each, or whether the county was to take one of each of the two tractors named and embraced in the bid; namely, one for $3,375 and the other for $300. It does not state the terms or the provisions of the bid as actually made by Avery Company. The order as entered simply recites that the bid of the Avery Company for tractors was examined and found to be the lowest bid, and that its bid on "25-50 tractor was 3375 (does not state whether it was dollars, or what), and bid on 40-80 tractor was $300.00, and that the acceptance by the County of said bid means for two tractors, to be paid out of the funds of precincts 1 and 2 of Hill County." While, without any testimony relative thereto, it might be presumed as a matter of fact that it was the intention of the commissioners' court and the Avery Company that the tractors should be paid for out of funds of the current year, a presumption of fact is always disputable, and always gives way to proof to the contrary. Largen v. State, 76 Tex. 323, 13 S.W. 161; American Central Ins. Co. v. Heath, 29 Tex. Civ. App. 445, 69 S.W. 235 (error refused); Moore v. Supreme Assembly, 42 Tex. Civ. App. 366, 93 S.W. 1077 (error refused). The order of the commissioners' court being ambiguous, especially with reference to the time and manner in which the payments for the tractors should be made, it was not error for the trial court to admit testimony showing the real contract. The Supreme Court held in Mecom v. Ford, 113 Tex. 109, 252 S.W. 491, that an order made by a commissioners' court which was not placed on the minutes at all, could be proved in a collateral proceeding, and that it could be shown by parol testimony that the order was actually made. In Eastland County v. Davisson (Tex.Civ.App.) 290 S.W. 196, the rule was laid down that: "When there is ambiguity in a judgment, parol evidence is admissible to show what was involved and settled by the judgment, and, further, where the judgment is silent and omits to explain matters and recitations, and the effect is not to contradict same, that then parol evidence is admissible to explain it."

34 C.J. p. 503, lays down the rule that, where the language of a judgment is ambiguous or its meaning doubtful, reference may be had to the pleadings in the case and the judgment interpreted in the light which they throw upon it. Again, 34 C.J. p. 506, lays down the rule: "Evidence outside the record, even parol, is admissible to show for what the judgment was recovered, that is, what was the real cause of action. A judgment may be construed in the light of the circumstances under which it was rendered."

In Magnolia Warehouse Storage Co. v. Davis Blackwell,108 Tex. 422, 195 S.W. 184, it was held that parol evidence was admissible in order to remove ambiguity from a written contract and in order to make complete the terms thereof, which terms were incomplete as written. To the same effect is Miller v. Wilson (Tex.Civ.App.) 258 S.W. 540. In Head v. Cleburne Bldg. Loan Ass'n (Tex.Civ.App.) 25 S.W. 810, and in Rawls v. Pool (Tex.Civ.App.)135 S.W. 247, it was held that parol testimony is admissible to show the maturity date agreed upon for the payment of a note, when the maturity date is not stated therein. In Armstrong v. Wilson (Tex.Civ.App.)109 S.W. 955, it was held that, where a note recited in its face that it was secured by securities mentioned on the reverse side, and no securities were so mentioned, that parol evidence was admissible to show what securities were intended. In Zavala Land Water Co. v. Tolbert (Tex.Civ.App.) 184 S.W. 523, it was held that, where a written contract provided that "it is agreed to bore on land above described, 10% inch casing, guaranteeing water," parol evidence was permissible to show that such agreement meant sufficient water for irrigation purposes. In support of the same doctrine, see Ewing v. Duncan, 81 Tex. 230, 16 S.W. 1000; Britton v. Baxley (Tex.Civ.App.) 252 S.W. 880; Pyron v. Brownfield (Tex.Civ.App.) 238 S.W. 725, and authorities there cited; Meyers v. Maverick (Tex.Civ.App.) 28 S.W. 716; Curry v. Texas Co., supra; Missouri, K. T. Ry. Co. v. Bodie, 32 Tex. Civ. App. 168, 74 S.W. 100; Hart v. Light (Tex.Com.App.) 245 S.W. 671; Ranger Cisco Oil Co. v. Consolidated Oil Co. (Tex.Civ.App.) 239 S.W. 648; Shields v. Perrine (Tex.Civ.App.) 181 S.W. 232; Glasgow v. Hill County (Tex.Civ.App.)25 S.W. 989.

It is a well-established rule of law that the acts of the parties themselves, indicating the construction they mutually placed upon a contract at the time, may be considered in interpreting such contract. Ranger Cisco Oil Co. v. Consolidated Oil Co., supra; Moore v. Waco Building Ass'n, 9 Tex. Civ. App. 404, 28 S.W. 1033. It appears from the record in this case that Avery Company, after its bid had been accepted, in compliance with its understanding thereof, brought the tractors to Hill county and had same tested and accepted, presented the three accounts for each tractor, payable in one, two, and three years from said date, including 6 per cent. interest per annum, and accepted time warrants in payment for said tractors in conformity with said accounts.

Appellee's contention that it is entitled to recover for the value of the machinery, although the warrants are invalid, is, we think, untenable. There is no allegation in appellee's petition, neither is there any testimony, that in any way indicates or suggests that at the time appellee purchased the warrants in controversy that it knew the consideration for which same had been issued, or that it purchased any equitable rights, liens, or claims that the Avery Company may have had against Hill county. Rogers National Bank v. Marion County (Tex.Civ.App.)181 S.W. 884 (writ refused); Farmers' Loan Trust Co. v. Beckley,93 Tex. 267, 54 S.W. 1027. In addition, we think the claim for the value of the machinery was barred by the statute of limitation at the time the suit was filed. It appears that the machinery was purchased in February, 1919, and this suit was not filed until January, 1926. Gould v. City of Paris, 68 Tex. 511, 4 S.W. 650; Texas Water Gas Co. v. City of Cleburne, 1 Tex. Civ. App. 580, 21 S.W. 393.

The trial court in its judgment stated that it thought the law was with appellee, and for said reason rendered judgment in its favor. Whether its opinion was based on its construction of the opinion of the Supreme Court in the former hearing, or whether it was based on the testimony offered in the trial of the case, is not revealed. We do not think the evidence is sufficient to sustain a presumed finding by the trial court that the tractors in controversy were to be paid for out of funds of the current year of 1919. Neither do we think the trial court was warranted as a matter of law in holding, under the facts in this case, that the warrants were valid and subsisting obligations against appellant.

The judgment of the trial court is reversed, and the cause remanded.