Ditto v. Ditto Investment Company

• Decision Date: 22 January 1958
• Docket Number: No. A-6449,A-6449
• Citation: 158 Tex. 104,309 S.W.2d 219
• Parties: James DITTO, Jr., Independent Executor of the Estate of James Ditto, Sr., Petitioner, v. DITTO INVESTMENT COMPANY, Respondent.
• Court: Texas Supreme Court

Page 219

309 S.W.2d 219

158 Tex. 104

James DITTO, Jr., Independent Executor of the Estate of James Ditto, Sr., Petitioner, v. DITTO INVESTMENT COMPANY, Respondent.

No. A-6449.

Supreme Court of Texas.

Jan. 22, 1958.

Cantey, Hanger, Johnson, Scarborough & Gooch, Jack C. Wessler & Carlisle Cravens, Fort Worth, Black & Stayton, Austin, for petitioner.

McGown, Godfrey, Logan & Decker, Winfred Hooper, Jr., and John W. McMackin, Fort Worth, for respondent.

SMITH, Justice.

Ditto Investment Company, respondent, sued James Ditto, Independent Executor of the Estate of James Ditto, Sr., on a claim for medical services allegedly rendered by Dr. H. Howard Ditto to his uncle, James Ditto, Sr., and for attorneys' fees. The claim of Dr. Ditto against the estate of his uncle is based upon an alleged oral agreement by James Ditto, Sr. that Dr. Ditto's medical bill would be paid out of Ditto, Sr.'s estate after his death. Dr. Ditto is the only living witness to the alleged agreement and it is conceded that without his testimony the agreement cannot be proved.

On December 11, 1956 the parties appeared and announced ready for trial. A jury was empaneled and sworn, and, thereafter, in the regular order of procedure, the respondent tendered Dr. Ditto as a witness. Thereupon, the petitioner requested of the court and was granted permission to examine the witness on voir dire out of the presence of the jury. The evidence elicited at this time and later on (January 21, 1957), in connection with the Bill of Exception, was, in substance, as follows:

The claim was for medical services rendered over a period of a little over five years; that James Ditto suffered from several different ailments, and that in his capacity as a physician numerous house calls, for the purpose of treating the deceased, were made; that medical treatment was given during said period of time, and that all such services were rendered pursuant to the oral agreement between James Ditto and the witness, Dr. Ditto; that, in accordance with the agreement, the witness, after the death of James Ditto, filed his claim in the sum of $19,280 with the independent executor of the estate. The claim was in all respects rejected. Without question, the provision of Article 3716, Vernon's Annotated Civil Statutes, would have compelled a trial court to sustain an objection based on that article to the testimony of the witness had he brought the suit in his own behalf. Dr. Ditto was so advised by counsel of his choice. The witness testified that, upon advice of counsel, he transferred the entire claim as a gift to his wife, and that no consideration was paid; that no gift tax was paid and no federal gift tax return was made by Dr. Ditto; that Mrs. Ditto formed a corporation, and the expenses in the sum of $260 incurred in forming the corporation, Ditto Investment Company, were paid out of the joint bank account of Dr. and Mrs. Ditto; that after the corporation was formed and immediately after Dr. Ditto had assigned the claim to his wife, she, in turn, joined by her husband, without consideration, transferred the claim to the corporation. The witness also testified that he is to pay the corporation's attorneys' fees; that the corporation is represented by the same attorneys he originally consulted. At the conclusion of this evidence, the petitioner objected to its introduction before the court and jury on the ground that it was violative of Article 3716, supra. Upon the respondent's declination to offer further evidence, the trial court discharged the jury, and on January 21, 1957 entered a take-nothing judgment in favor of the petitioner. The Court of Civil Appeals has reversed the judgment of the trial court and remanded the cause to that court for a new trial. 302 S.W.2d 692.

(1) Preliminary to a consideration of the question involved, we direct attention to the fact that although this was a jury trial and not a trial by the court, the respondent, after the petitioner's objection had been sustained and judgment had been entered, requested the filing of findings of fact and conclusions of law. The court, in response to such request, filed findings and conclusions and no objections to these findings of fact were made by the respondent. The filing of such findings and conclusions was neither necessary nor proper. There is no authority for the filing of findings of fact and conclusions of law under the circumstances we have here. See Rule 296, Texas Rules of Civil Procedure; Cox v. Rhodes, Tex.Civ.App., 233 S.W.2d 924, no writ history.

(2, 3) The sole question on this appeal is whether or not the evidence affords a rational basis for the inference that the transfers of the claim as above outlined did not divest Dr. Ditto of his beneficial interest in the claim. In order words, did the evidence show that Dr. Ditto's testimony was barred by Article 3716, supra. The question of the competency of the witness was one for the trial court to determine, and when objection is made, as it was here, it is proper for the court to hear the objection and the evidence and enter its ruling thereon. We are of the opinion from all the facts and circumstances in evidence that the trial court did not abuse his discretion in sustaining the objection to the evidence. Therefore, the excluded testimony was inadmissible, and the take-nothing judgment was proper. See Ragsdale v. Ragsdale, 142 Tex. 476, 179 S.W.2d 291; O'Brien v. First State Bank & Trust Co. of Taylor, Tex.Civ.App., 241 S.W. 556, wr. dism.

The judgment of the Court of Civil Appeals is reversed and that of the trial court affirmed.

NORVELL, Justice (concurring).

I concur in the opinion and order reversing the Court of Civil Appeals and affirming that of the trial court. The bar of the dead man's statute relates only to 'parties.' However that term as used in Article 3716, Vernon's Ann.Civ.Stat., includes one who at the time of trial has a real ownership or beneficial interest in the claim or property which is the subject matter of the litigation. When Dr. Ditto offered to testify as to transactions with his deceased uncle the judge was required to pass upon his competency as a witness. This inquiry resolves itself into a simple question of fact, namely, did Dr. Ditto, at the time he offered his testimony, possess a beneficial interest in the claim asserted by Ditto Investment Company against the estate of James Ditto, Sr., deceased? Although this question is one of fact it relates to the qualification or competency of a witness and hence, in civil cases, the decision lies within the province of the Court. McCormick & Ray, Texas Law of Evidence, §§ 2 and 256.

The trial judge has held that Dr. Ditto was an incompetent witness which necessarily includes the finding that at the time of the trial he had a beneficial interest in the claim asserted against the estate of James Ditto, Sr., deceased. This holding does not constitute an abuse of discretion in view of the record, but is supported by the circumstance that Dr. Ditto was the original holder of the claim and had transferred it to another person prior to the time he offered to testify.

The dead man's statute has been vigorously attacked both by those who think its exclusionary effect is too limited in that it does not proscribe the testimony of all those who at any time may have had an interest in the disputed claim and by those who seriously question the wisdom of any exclusionary rule based upon pecuniary interest. There is likewise a compromise view that the evidence of holders of claims against a decedent should be received under the safeguard of a precautionary instruction. All these matters are discussed in Texas Law of Evidence by McCormick & Ray (2d Ed.) § 337, which sets out a proposed statutory modification of Article 3716. See also, Wigmore on Evidence (3rd Ed.) § 578. However that may be, the statute as written and as it has been construed by this Court in the leading case of Ragsdale v. Ragsdale, 142 Tex. 476, 179 S.W.2d 291, presents this ABC situation. If A has a claim against B and the circumstances giving rise to the claim are known only to A and B; A, upon B's death, holds a claim which is worthless in his hands because he cannot establish the same in court. However, such claim would have value in the hands of C, an assignee, who could use A's testimony to establish the claim, providing, of course, A assigns the claim to C and retains no interest therein.

An assignment thus made should receive careful scrutiny. The circumstances in themselves suggest the possibility or even probability that as between A and C, A may retain a secret beneficial interest. Our trial judges should not be required to accept these transactions at their face value but should be allowed to pass upon the credibility of the witness who asserts he has no further interest in the claim.

Insofar as this Court is concerned, the circumstance that the original transfer was made to the wife has little or no significance, regardless of what weight it might be given by the authority charged with the responsibility of determining the credibility of witnesses. Certainly there is no moral issue raised by the assignment of a just debt to 'avoid' the rather arbitrary bar of the statute. I think my brother GARWOOD has made this abundantly clear. A debt does not become an unjust claim upon the death of the debtor. The statute, however, undoubtedly has as its objective the protection of decedents' estates from false and unfounded claims, and the fact that the exclusionary operation of the statute may be predicated upon the perhaps unsatisfactory basis of pecuniary interest will not justify its judicial repeal.

Under various factual situations it is the policy of the law to require the proponents of a proposition to carry conviction to the trier of facts with his evidence and the mere production thereof, although undisputed, is insufficient for this purpose. In cases involving fiduciaries, the...