favor, although the title be taken in the husband's name and he execute notes himself for the subsequent payments. These authorities may not be exactly in point because in most of them there was some express agreement in regard to the deferred payments. They do, however, show that the character of the transaction is not to be determined alone from the form which it assumes, but may be determined from the understanding at the time as to the source from which the deferred payments are to be made. This disposes also, we think, of appellant's third assignment, under which it is asserted that, on account of the borrowing of the $120 to pay the last note, as above stated, the community estate would at least have an interest in the property to this extent in addition to that found by the court. The temporary borrowing of this money and payment under the circumstances should not, we think, affect the real nature of the transaction.

[2, 3] By their second assignment, the appellants contend that if any trust attached in favor of Joe C. Head and George W. Head, Jr., to the Houston county land, their right was to proceed to assert it against the purchasers of such land, and they had no inter

Tex. 362, 107 S. W. 528; Scranton v. Camp-her property, a trust will result in the wife's bell, 45 Tex. Civ. App. 388, 101 S. W. 285. But, if it be conceded that the status of the title is to be considered as fixed at the time of the taking of the deed, though the contract then remained executory, yet we think it can be truly said that the property was purchased with the proceeds of the sale of the Houston county land. To hold otherwise would, it seems to us, be to disregard the substance of the transaction for the form. If ne Houston county land had been exchanged for the land in controversy, or the Houston county land notes transferred to the vendor of the Hunt county land in payment therefor there could be no doubt as to the result. The execution by George W. Head, Sr., of his own notes, under the findings of the court, which are not challenged, and the borrowing of the $120 with which to make the last payment, with the expectation and intention that these notes were to be paid by collections from the Houston county land notes, were but incidents in the accomplishment of the real purpose of investing the proceeds of the sale of the Houston county land in the purchase of the Hunt county land. The payment of the $50 cash, received from the sale of the Houston county land, with the intention of paying the de-est in the proceeds of the sale of said lands, ferred payments out of the proceeds of the Houston county land notes, we think is sufficient to impress upon this land the same trusts and interests as attached to the Houston county land. Hornbeck v. Barker, 192 S. W. 276 (writ of error denied); Amend v. Jahns, 184 S. W. 729; McClintic v. Midland Grocery Co., 106 Tex. 32, 154 S. W. 1157; Levy v. Mitchell, 52 Tex. Civ. App. 189, 114 S. W. 174; Gilmore v. Brown, 150 S. W. 964; Kingman-Texas Implement Co. v. Herring National Bank, 153 S. W. 397; Perry on Trusts, § 133. The appellant cites, in support of his proposition, Oury v. Saunders, 77 Tex. 278, 13 S. W. 1030; Strnad v. Strnad, 29 Tex. Civ. App. 124, 68 S. W. 69; Lacey v. Clements, 36 Tex. 661; Allen v. Allen, 101 Tex. 362, 107 S. W. 528. In none of these cases, and many others that might be referred to in the same line, does it appear that the deferred obligations were executed and met under any such circumstances as appear in this case. In Oury v. Saunders Case prominence is given in the opinion to the fact that Saunders, at the time of the purchase of the property upon which a trust was sought to be impressed, "could not have contemplated the use of his children's property in paying for it." In Strnad v. Strnad the opinion refers to the fact that "there was no evidence tending to show that the purchase was

intended for" the wife. There are many cases that hold that, where property is purchased, partly on time, the initial payment being made out of the wife's separate property, and with the understanding that the

and consequently none in the Hunt county land. It is not shown that George W. Head, Sr., was the legal guardian of these children. It appears that upon the death of their mother he had in his possession certain personal property which belonged to them, and which he traded for the 100 acres of land referred to, and which he sold while they were still minors. No actual fraud may have been inthat at least as to the Houston county land tended against the children, for it appears

their father informed the children that it was bought with their property and belonged to them, but at least a legal fraud was perpetrated because the father had no legal right to thus dispose of the property of these children. It would appear, therefore, that, strictly speaking, a constructive trust was imposed by equity upon the 100 acres of Pomeroy's Equity Jurisprudence, §§ 1037, Houston county land in favor of the children. note B, pp. 190, 191. But whether the fa1040, 1051; Perry on Trusts (6th Ed.) § 127, ther was acting with authority or without în he took the title in his own name, equity trading for the Houston county lands, when would protect the rights of the children and grant them the beneficial interest in the land by application of its doctrine of constructive trusts. Under this doctrine the beneficiary may follow the trust property so long as it may be identified and has not been acquired by an innocent purchaser; he may hold the trustee personally liable for its convention or follow it into its various mutations and in whatever form it is ultimately found. The trustee is not to be permitted to

character of the trust property and the

2, 1918. Rehearing Denied
March 30, 1918.)

BUILDING AND LOAN ASSOCIATIONS 26
UNAUTHORIZED REPRESENTATIONS
AGENT LIABILITY OF PRINCIPAL.

OF

change proves advantageous, the beneficiary REAGEN v. NATIONAL EQUITABLE SOC. may take advantage of it if he so elects, OF BELTON. (No. 7827.) and if the change proves disastrous the trus- (Court of Civil Appeals of Texas. Dallas. Feb. tee may be held liable for the conversion. Oliver v. Piatt, 3 How. 401, 11 L. Ed. 653; Kennedy v. Baker, 59 Tex, 150, and authori-1. ties above cited. "As a necessary consequence of this doctrine, whenever property subject to a trust is wrongfully sold and transferred to a bona fide purchaser so that it is freed from the trust, the trust immediately attaches to the price or proceeds in the hands of the vendor, whether such price be a debt yet unpaid, due for the purchase or a different kind of property taken in exchange of even a sum of money paid to the vendor as long as the money can be identified and reached in his hands or under his control." Pomeroy, Equity Jurisprudence, 1051; Schneider V. Sellers, 98 Tex. 380, 84 S. W. 421.

When Geo. W. Head, Sr., in whose name the title to the 100 acres of land in Houston county was taken, sold such land, the sale would include the equity of said children therein, and it is presumed that the purchasers thereof took it freed from their equity. Armstrong v. Hix, 107 Tex. 194, 175 W. 430; Saunders v. Isbell, 5 Tex. Civ. App. 513, 24 S. W. 307; Middleton v. Johnston, 110 S. W. 789. These facts distinguish this case from that of Arnold v. Ellis, 20 Tex. Civ. App. 262, 48 S. W. 883, relied on by appellants. In that case certain land had been conveyed to two minors, Beatrice and Bessie McKenzie. Their father executed a bond for title to said property, and invested the money received therefrom in the property involved in the suit. The children, after they attained their majority, ratified the sale of their property under the bond for title, and sought to enforce a trust against the property bought with the money received by their father on the bond. The court held that the attempted sale under the bond for title did not in the slightest degree affect their title to the land, standing in their name, and "they acquired no interest whatever in the consideration received therefor." In other words, the minors' land was not really sold, and they had no interest in the proceeds. The ground of this holding is emphasized by the quotation in the opinion from the case of Hadley v. Stuart, 62 Iowa, 267, 17 N. W. 500. In this case the land of Joe and George Head, Jr., was sold by their father, in whose name the legal title was standing, and they could right fully claim the proceeds or follow them into any other property in which they were shown to have been invested. In addition to authorities cited see Armstrong v. Hix, supra; Oakes v. West, 64 S. W. 1036; Baber v. Galbraith, 186 S. W. 345.

We find no error pointed out by any of the assignments, and therefore affirm the judgment of the lower court.

Where plaintiff, when he signed written application for a loan contract in defendant a co-operative loan contract society, and paid installments, knew that false representations of defendant's agents were unauthorized, he could not recover the installments on the ground that they were obtained by such representations, defendant not having led plaintiff to believe that representations were authorized or later ratified them. 2. BUILDING AND LOAN ASSOCIATIONS -UNAUTHORIZED ACTS OF AGENT-RATIFI

CATION.

26

ed installments paid by plaintiff upon conditions and terms of application for loan contract and the contract itself would not amount to a ratification of unauthorized false representations of its agent made in procuring the application.

That defendant loan contract society retain

Appeal from Navarro County Court; R. R. Owen, Judge.

Suit in justice court by C. W. Reagen against the National Equitable Society of Belton. Judgment for plaintiff was reversed by the county court on appeal, and plaintiff appeals. Affirmed.

W. W. Ballew, of Corsicana, for appellant. A. E. Firmin, of Dallas, for appellee.

RASBURY, J. Appellant sued appellee to recover $165 alleged to have been obtained upon certain false and fraudulent representations. Appellant secured judgment as prayed in justice court. In county court, whence appeal was taken, judgment was for appellee. From that judgment this appeal is prosecuted.

The con

No issue arises upon the pleading, and a statement of same is therefore unnecessary. It is also undisputed that appellee is a cooperative savings and contract loan institution incorporated under the laws of Texas, and received the money sued for. ditions under which it received the money is, however, in dispute. The facts proven by appellant in support of the issues raised by him are, in substance, that appellant, who desired to borrow $1,500 on lands he owned, was approached by agents of appellee, who said they wanted to make loans in Navarro county, and represented to him that appellee would loan upon lands 85 per cent. of their value at 5 per cent. per annum interest, and complete such loans in from 30 to 40 days, the amount borrowed to be repaid in monthly installments of $15. Appellant advised such agents that if he could borrow $1,500 upon his property at once, he would "give them the business," to which the agents replied that all that was necessary was for appellant to sign an application for mem

bership in appellee society, pay a fee of $15,, the terms and conditions of the contract, and advance in cash 10 monthly payments, which he read at the time he signed same. or $150, and furnish an abstract of the title At trial he admitted the signatures, and to his land. Acting and relying upon such knowledge of both contracts, but says that representations, appellant signed a written appellee's agents represented that such application for the loan, paid the agents the course was necessary in order to secure the membership fee of $15, forwarded his ab-loan, and that he relied upon the agents in stract of title, and mailed his check for $150 that respect. Appellee did not authorize any to appellee, who accepted both. Appellee representations by the agents other than the never did make the loan, though repeatedly agreements in the application and contract, requested to do so by appellant over a pe- and repudiated the promises of the agents riod of several months. Finally, when ap- when discovered. The application for loan pellee notified appellant that due to its in- took the course provided by the contract, and ability to secure money it was uncertain was never made, for the reason that the sowhen it could make his loan, appellant de- ciety's funds or accumulations were insufmanded a return of his money and his ab- ficient. stract of title. The abstract was returned, but not his money.

[1] Counsel for appellants contends, in substance, that the trial court erred in its judgment for the reason (1) that it appears without dispute in the testimony that appellant was induced by the false representations of appellee's agents to pay the money sued for; and (2) that appellee, even though appellee's agents exceed their authority, ratified the fraud of its agents by retaining appellant's money after discovering the fraud.

The facts relied upon by appellee in defense were, in substance, an application for membership in appellee society signed by appellant, which recites that appellant thereby applies for one of the society's $1,500 contracts in accordance with the society's plans, and had paid to the agent $15 there on, and would thereafter pay monthly a similar amount as dues on said contract until We are of opinion that the facts related it was surrendered for paid-up certificate of show at most, unauthorized acts and repdeposit, or cash surrender value, or until resentations of appellee's agents, upon which a loan was granted in accordance with the appellant in good faith relied, but which apcontract. In the application it was also re- pellant knew to be unauthorized, and which cited that the agents were only authorized appellee, by no act or omission, led appelto sell contracts, and that appellant had ex-lant to believe were authorized, and which amined and read a copy of such contract, appellee in no respect ratified. As a conseand made the application expressly and sole- quence, the case is, in our opinion, within ly thereon, and not upon the faith of any the ruling in National Guar. L. & T. Co. v. statement, promise, or undertaking or guar-Thomas, 28 Tex. Civ. App. 379, 67 S. W. anty made by the agents, and that such agents were not authorized to collect more than $1 on each $100 of the face value of such contract. Upon receipt of application for membership, appellee forwarded appellant the contract described in the application, which was what is known as an investment contract of the kind issued by the institution already referred to. It has numerous provisions, among them being those which, in substances, provide that the society will deposit 85 per cent. of the money paid upon such contracts to the credit of its loan reserve fund, from which fund, whenever the accumulation is sufficient, the society agrees to loan its contract holders the face value of such contracts, secured by 85 per cent. of the value of the acceptable real estate at 5 per cent. per annum, whenever 10 monthly payments have been made upon the contract, either in advance or in the order of their maturity, such loans to be made with reference to priority of applications of its members. At the time appellant signed and forwarded his application he had before him a copy of the contract for which he was subscribing. After his subscription he signed the form of acceptance of said contract printed thereon which recited that

454. Appellant knew, notwithstanding the agents' promises, that the application for purchase of the contract, and the contract itself, which he examined and was familiar with before purchasing it, contained no such agreement as he had with the agents; in fact, he states in his testimony that he signed such papers because the agents said it was necessary in order to secure the loan, and on which representations he relied, notwithstanding he knew the agents were not authorized to make the promises.

[2] The keeping of the money was not, as matter of law, a ratification of the unauthorized acts of the agents, since it was retained upon the conditions and terms of the application for contract and the contract itself, and not upon the unauthorized representations made by the agents, which were repudiated by appellee when made known. However, if it can be said that the testimony raises the issue that appellee induced appellant to rely upon the unauthorized acts of its agents or ratified same, the evidence in that respect raises no more than an issue of fact, which was for the determination of the jury, or the court in case jury was waiyed. In our opinion, we would be authorized, under no analysis of the evidence, in

showed a participation in, or a ratification where the amount involved is exactly $500 of, the unauthorized acts of the agents so as to make the issue one of law arising upon undisputed facts. The judgment of the court warrants the assumption that no such representations were made, or, if made, that appellant did not rely thereon. The written evidence and the admissions of appellant will support such a finding. We therefore conclude that we are without authority to disturb the judgment, and it is accordingly affirmed. Affirmed.

For the reason that the district court had no jurisdiction to try this case, the appellee's motion for a rehearing is granted, the judgment of this court heretofore rendered reversing and remanding the case for a new trial is set aside, and the judgment of the district court reversed and the cause remanded, with instructions to that court to dismiss the same.

of the contract, and had offered to perform | suit was upon a "verbal contract” and not a them; that appellee had refused to perform written contract. the things required of him by the contract, and had refused to pay the $500 agreed to be paid by him as liquidated damages in the event of a breach of the contract on his part, although he had been often requested to do so. The prayer is that appellant have judgment for his debt of $500, with interest thereon at the rate of 6 per cent. per annum from the date of the alleged breach of the contract, and is the usual prayer in actions for debt. The decision of the question turns on whether the interest prayed for is recoverable, under the allegations of appellant's petition, as an element of the damages necessary to the complete indemnity of appellant for the detention of the sum of money claimed to be due him, or as interest eo nomine, under the statute fixing the legal rate for the detention of money. Article 4977 of Vernon's Sayles' Texas Civil Statutes provides:

"On all written contracts ascertaining the sum payable, when no specified rate of interest is agreed upon by the parties to the contract, interest shall be allowed at the rate of six per cent. per annum from and after the time when the sum is due and payable."

In such a case the interest which may be recovered for a breach of the contract is a creature of the statute and allowed eo nomine and not as compensation for the detention of that which is due on account of injury inflicted, as "an element of damages necessary to the complete indemnity of the injured party." The claim sued upon in this case grows out of and is based on a "written contract ascertaining the sum payable" in case of its breach. That sum, according to the stipulations of the contract and the allegations of appellant's petition, is $500. The suit is not to recover general damages for the alleged breach of the contract, but to recover exactly $500 which it is alleged appellee agreed by the terms of the contract to pay as liquidated damages for such breach. That is the estimate made and agreed to by appellant and appellee in advance of the damages which either would suffer in case of a breach of the contract by the other, and that estimate, $500, was written in the contract as the measure of either's damages and the limit of recovery in the event of such breach. The suit is therefore clearly one upon a written contract which expressly names the amount recoverable for a failure or refusal of either party thereto to perform it, and that amount being exactly $500, exclusive of interest, the district court was not clothed with jurisdiction to hear and determine it. The cases cited by appellant in reply to appellee's motion for a rehearing were essentially different in their facts. The case most like it is Robinson v. Lingner, 183 S. W. 850. That case, however, is radically different in that the

1.

GRAYSON COUNTY et al. v. HARRELL et al. (No. 1280.)

(Court of Civil Appeals of Texas. Amarillo. March 13, 1918. Rehearing Denied March 27, 1918.)

APPEAL AND ERROR 719(4)

ASSIGNMENTS OF ERROR-FUNDAMENTAL ERROR. Any error in overruling a general demurrer to the petition is fundamental error, which will be considered on appeal, even if the assignment of error would otherwise be insufficient because not set out in the motion for new trial. 2. COUNTIES 196(3)-ROADS-BONDS-COMMISSIONERS' COURT DIVERTING FUNDS-INJUNCTION.

If the proposition for issuance by a county of bonds for improving roads submitted at an election, and voted on, specified the roads that would be improved, the commissioners' court could be enjoined from diverting the funds to the improvement of other and different roads. 3. COUNTIES 183(1)-ROADS-BONDS-PUBPOSE OF ELECTION-ORDER AND NOTICES.

Under Rev. St. 1911, arts. 627-633, providthat on petition the commissioners' court shall ing for issuance by counties of bonds for roads; order an election to determine whether they shall be issued, of which election notice by publication and posting shall be given for specified periods; and that the general laws relative to county bonds, when not in conflict with such articles, shall apply; and article 606 part of such general laws, providing that the proposition to be submitted for the issuance of bonds shall distinctly specify the purpose for which they are to be issued-the purpose of election is to be determined from the order of the commissioners' court submitting the proposition, which purpose be repeated in the order declaring the result of should appear in the official election notices, and the election, without regard to mere statements or promises made by the commissioners during the campaign, as to roads to be improved. 4. INJUNCTION 118(1) PETITION NEGATIVING INFERENCES.

Petition for injunction should negative fair inferences of facts therefrom, under which facts plaintiff would not be entitled to the relief. 5. CONTRACTS ~~108(2) — VALIDITY — PUBLIO POLICY.

Any agreement by the commissioners' court, tending to preclude it from full and free exercise of its discretion as to the roads to be improved with the proceeds of bonds voted to be issued for improvement of roads generally, would be against public policy.

6. INJUNCTION 76 ROADS BONDS IMPROVEMENT-ENJOINING COMMISSIONERS' COURT-FRAUD OR "ABUSE OF DISCRETION."

The discretionary power conferred on the commissioners' court to determine the roads to be improved with proceeds of bonds can be interfered with by injunction not for a bad mistake in judgment, but only where the proposed action is fraudulent or a gross abuse of discre