University Savings & Loan Ass'n v. Security Lumber Co., B-261

• Decision Date: 29 November 1967
• Docket Number: No. B-261,B-261
• Citation: 423 S.W.2d 287
• Parties: UNIVERSITY SAVINGS & LOAN ASS'N et al., Petitioners, v. SECURITY LUMBER COMPANY, Incorporated, Respondent.
• Court: Texas Supreme Court

Page 287

423 S.W.2d 287

UNIVERSITY SAVINGS & LOAN ASS'N et al., Petitioners, v. SECURITY LUMBER COMPANY, Incorporated, Respondent.

No. B-261.

Supreme Court of Texas.

Nov. 29, 1967.

Dissenting Opinion and Rehearing Denied Jan. 17, 1968.

Eastham & Meyer, Sam Dawkins, Jr., Townes & Townes, Edgar E. Townes, Jr., Houston, for petitioners.

Bracewell & Patterson, William K. Wilde and Ronald C. Kline, Houston, for respondent.

CALVERT, Chief Justice.

The trial court, in a trial without a jury, awarded Security Lumber Company, Inc. a joint and several judgment against Wieghard Construction Company, Jack C. Westmoreland, Harold A. Currlin and Thomas A. Wieghard for the sum of $12,284.36, plus interest and attorney's fees. The principal recovery represented the value of materials alleged to have been furnished to Wieghard Construction Company for construction of improvements on three city lots. Liability of Westmoreland, Currlin and Wieghard was based on written contracts, required by Security before it would deliver materials, guaranteeing payment of the construction company account. The trial court judgment also established validity of statutory mechanic's and materialmen's liens on the three lots in favor of Security; established priority of such liens over deed of trust liens on the three lots held by University Savings & Loan Association, which had foreclosed its liens under a power of sale and bought the lots, to the extent of material furnished before recordation of University's deeds of trust; awarded Security a money judgment against University in a sum representing the value of materials furnished for improvements on the three lots before execution of the deeds of trust, and against purchasers of two of the lots for their respective shares of such sum; foreclosed the mechanic's and materialmen's liens on the three lots and directed issuance of an order for sale of the three lots to satisfy the judgment. The judgment against Wieghard Construction Company and Thomas A. Wieghard was by default.

The court of civil appeals reformed and affirmed the trial court's judgment. Security's mechanic's and materialmen's liens were given priority over University's deed of trust liens to the extent of the value of all materials furnished for improvements on the three lots, both before and after execution of the deeds of trust; a money judgment was rendered against University for the value of all such materials, and against the purchasers of the two lots for the value of all materials furnished for construction of improvements on their respective lots. Security Lumber Company v. Wieghard Construction Co., 413 S.W.2d 745. We affirm the judgment of the court of civil appeals.

A joint application for writ of error was filed in this court by University and the two lot owners, and a separate application was filed by Westmoreland. Both applications were granted. Westmoreland's application raises only one basic question, viz: Is there in the record evidence of probative force supporting that part of the trial court's judgment awarding Security a recovery of money for materials furnished? The application filed by University and the lot owners raises the same question as Westmoreland's application and two additional questions: (1) Is Security's right to assert the priority of and to foreclose its liens barred by the two-year statute of limitation? (2) Are Security's liens prior and superior, in whole or in part, to University's deed of trust liens? The questions will be discussed in the order in which they are listed.

The court of civil appeals held that the trial court's money judgment for Security is supported by evidence. The holding is based in large part on certain business memoranda or records of Security which were admitted in evidence over objections by the defendants who are petitioners here. Westmoreland contends that the records were not admissible under Article 3737e, Vernon's Ann. Texas Civil Statutes, the Business Records Act, and are therefore hearsay and incompetent to prove Security's claim. University contends that even if the records were admissible under the statute to establish Security's claim against the construction company, they were not admissible against it; that it was not the purpose of the statute to make a record of transactions with one person admissible in a suit against a third person who is not in position to disprove its accuracy.

Admissibility and competency of the business records as proof of Security's claim must be determined in the following procedural and factual context. Security's action was founded upon a sworn account as authorized by Rule 185, Texas Rules of Civil Procedure. Westmoreland filed a written denial, stating under oath that the account was not just or true, in whole or in part. As proof of the indebtedness, Security offered in evidence a large number of invoices and "delivery tickets."

The invoices are printed forms with blank spaces to be filled in showing to whom materials are sold, the quantity of materials ordered, the date of the order, the price of various materials included in the order and the total charge for all included materials. The first line of each of the invoices introduced in evidence contains this statement: "Sold to Wieghard Construction Company * * *" The words "Sold to" are printed and the words "Wieghard Construction Company" are written in with ink or a pencil. Each invoice contains a list of the materials ordered, the date of the order, the price of the various materials included in the order and the total charge for all included materials.

Security's president testified that the invoices were made in the regular course of business; that in the regular course of business an employee took the orders for the materials and wrote them down on cardboard "loading tickets" which were sent to employees whose duty was to load the materials for delivery; after the listed materials were loaded on trucks, the loading tickets were then returned to the office and from them other employees made up the invoices showing the sale to Wieghard Construction Company of the same materials as were listed on the loading tickets and the date of sale and delivery; another employee then checked the materials on the trucks against the invoices to make certain the orders were properly filled, and gave the truck drivers two copies of the invoices, one to be turned over to the purchaser upon delivery and the other to be signed by someone at the construction project and returned to the office as a "delivery ticket"; prices were then entered on the invoices and on fourth copies which were mailed to the construction company. Security's president also testified that the construction company was given a written quotation of prices before any materials were ordered.

Article 3737e provides:

"Section 1. A memorandum or record of an act, event or condition shall, insofar as relevant, be competent evidence of the occurrence of the act or event or the existence of the condition if the judge finds that:

"(a) It was made in the regular course of business.

"(b) It was the regular course of that business for an employee or representative of such business with personal knowledge of such act, event or condition to make such memorandum or record or to transmit information thereof to be included in such memorandum or record;

"(c) It was made at or near the time of the act, event or condition or reasonably soon thereafter.

"Sec. 2. The identity and mode of preparation of the memorandum or record in accordance with the provisions of paragraph one (1) may be proved by the testimony of the entrant, custodian or other qualified witness even though he may not have personal knowledge as to the various items or contents of such memorandum or record. Such lack of personal knowledge may be shown to affect the weight and credibility of the memorandum or record but shall not affect its admissibility.

" * * * "

Under the provisions of the statute, the invoices were business memoranda and were properly admitted as competent evidence of acts or events included therein if their identity and mode of preparation in accordance with paragraphs (a), (b) and (c) of Section 1 were proved by a qualified witness even though the witness had no personal knowledge as to the various items or contents of the invoices. The president of Security was a qualified witness within the meaning and intent of the statute, and his testimony undoubtedly supports the implied finding of the trial judge that the invoices were made in the regular course of business and were made at or near the time of the recorded act or event or reasonably soon thereafter. The testimony of the president also supports a finding that it was the regular course of Security's business for an employee having personal knowledge that Wieghard Construction Company had ordered certain materials delivered to it to transmit that information to other employees for filling the order and, after the loading for delivery, thence to still other employees to be included in the invoices. The invoices were admissible in evidence and under Art. 3737e the entries therein are competent evidence that Wieghard Construction Co. had offered to buy the listed materials and Security had accepted the offer.

But Westmoreland argues that there are no entries in the invoices and no independent evidence tending to establish two essential elements of a sale, to wit: (1) that the prices charged were agreed to or were reasonable, and (2) that the materials were actually delivered to and received by the construction company. The answer to the argument is that there is ample independent evidence which will support a reasonable inference by the trial court of the existence of these two elements of a sale. Upon proof that in the regular course of Security's business materials which were ordered were loaded on trucks for delivery and that the "delivery tickets" were returned to the...