Austin Moore, as receiver of Casualty Underwriters, a reciprocal insurance company, sued R. W. McKinney, a former policyholder, to recover an alleged balance due for premiums. McKinney was engaged in the business of contracting for and building public highways. On July 16, 1935, Casualty Underwriters issued to him two one-year policies, one a workmen's compensation policy, the other, public liability insurance; likewise, on July 16, 1936, two similar policies with identical coverages, and, at their expiration on July 16, 1937, issued two identical policies for the succeeding year.
In stating his cause of action, plaintiff alleged, among other things: "That under the foregoing policies, and each of them, a deposit premium was charged the defendant, and, in addition thereto, the defendant was obligated to pay such premiums as were earned, in accordance with the terms of the said policies. (The terms of the policies mentioned nowhere appeared in the pleadings.) That the amounts accruing to the Casualty Underwriters and to Austin Moore, Receiver, as premiums under the foregoing policies, the dates that such amounts had become due and the payments to which the defendant, R. W. McKinney, is entitled as credits are all shown in Exhibit `A' hereto attached." Also alleged: *Page 257 "That there is now a balance due for premiums under the foregoing policies in the sum of $5,973.79, with interest thereon at the rate of 6% per annum from August 9, 1938, all of which is more fully shown in Exhibit `A' hereto attached. That such account is based upon the written contracts aforementioned and the business dealings between the parties. The Exhibit reflects debits for money charged to R. W. McKinney and credits for money paid by R. W. McKinney over the period of time reflected in such Exhibit." Exhibit "A" referred to was an account, supported by the affidavit of plaintiff, made under the provisions of Art. 3736, R.C.S., Vernon's Ann.Civ.St. art. 3736, purportedly containing all debits for premiums and credits covering the three policy periods, revealing a balance, for the recovery of which the suit was brought.
The answer of the defendant was under oath, contained, among other defenses, a general denial, alleging settlements and payments to the Casualty Underwriters of all sums due for premiums accrued or earned under the policies, and that, instead of being indebted to the Underwriters at the inception of the receivership, defendant had overpaid the account $564.80. Defendant further alleged that the accounts between him and Casualty Underwriters were regularly audited by their auditor and, at the end of each policy year, a final audit was made and all amounts shown to be due and owing by defendant for premiums were paid to Underwriters, and that "at no time during all of said period from July 16, 1935, up to and until the receiver was appointed, was any demand of any kind or character made upon your defendant for additional premiums; and that said Casualty Underwriters during and at the end of each policy year accepted the sums which they, by their own audit, showed to be due in full and final satisfaction and payment of the premiums due by your defendant to them under their policies * * *. Further answering, if necessary, this defendant would show that during the last policy year, to-wit, on June 29, 1938, the authorized agent and representative of Casualty Underwriters, W. G. Godwin, made a final audit of the payrolls of your defendant, and accepted for and on behalf of Casualty Underwriters from your defendant all sums due by virtue of said final audit, and took up and cancelled the two policies then in force, * * * on a pro rata basis, and that at such time your defendant paid to Casualty Underwriters all sums then due them for premiums under said policies, leaving on the books of said Company the balance due this defendant by said Company of $564.80, as paid deposit premiums; * * * ". Thus it appears that plaintiff based his suit upon an itemized sworn account, composed of debits and credits, covering the three policy periods, showing a balance due, the amount in controversy. The defendant, in effect, pleaded that he had paid all he owed Casualty Underwriters — in fact, had overpaid the account.
At the trial, over defendant's objections, plaintiff was permitted to introduce the account, without offering any evidence as to its truth or justness, other than as shown by his supporting affidavit. After introducing the account, plaintiff rested his cause. The defendant thereupon, under leave of the court, filed a trial amendment, specifically denying under oath that the account was just or true, either in whole or in part. After filing the trial amendment, defendant moved for an instructed verdict, which was overruled, thereupon introduced evidence in support of his plea in settlement and payment, and rested. At this juncture, evidently doubtful as to the status of his case, plaintiff sought to introduce certain documentary evidence, consisting of the monthly pay-roll reports made by the defendant to Casualty Underwriters, and summaries of pay-roll reports made to the Highway Department; the contention of plaintiff being that the proffered evidence sustained the correctness of the account sued upon. Certain minor objections were urged by the defendant to the introduction of the evidence, but it was excluded on the major objection that it was not in rebuttal of any evidence offered by the defendant. Thereupon, the court instructed a verdict and rendered judgment for the defendant, from which plaintiff appealed.
Plaintiff contends, among other things, that neither the truth nor justness of the sworn account sued upon was denied under oath before an announcement for trial, and that the trial amendment, filed by the defendant after plaintiff had introduced the sworn account and rested, came too late, and could not be given the evidentiary effect of destroying plaintiff's prima facie case. On the other hand, the defendant contends that the account sued upon was not in compliance with Art. 3736; furthermore, that his amended original answer was a *Page 258 sufficient sworn denial of the truth or justness of the account; and that, at all events, his trial amendment destroyed the prima facie evidence feature of the account; and finally having conclusively established by evidence, neither contradicted nor rebutted, that he had paid all premiums earned or accruing under the policies in question, was entitled to judgment; hence, the court did not err in instructing a verdict in his favor.
The controlling statute, Art. 3736, provides among other things that, when an action or defense is a claim "for liquidated money demands based upon written contracts * * *, on which a systematic record of said account has been kept, supported by the affidavit of the party * * * the same shall be taken as prima facie evidence thereof, unless * * *."
It is obvious, we think, that the account sued upon falls within the category described in the provision of the statute just quoted. The statute clearly contemplates that a claim for liquidated money demands, based upon a contract, may be the subject matter of the sworn account, but we think before such account could be accepted as prima facie evidence, suitable allegations under oath should have been made, setting forth provisions of the contract, and the fact or facts under and by virtue of which it is contended the liquidated money demand arose. In the preliminary statement heretofore given, we set forth all of plaintiff's allegations bearing upon this particular point, and think it obvious that plaintiff failed to set up any provisons of the contract, or to allege any fact or facts showing how the premiums charged in the account accrued. These matters were left to conjecture, which we do not think the court was authorized to indulge, hence do not think plaintiff's sworn allegations brought the account within the meaning of the statute.
Besides, the account contains a number of entries made out of order, revealing, to that extent at least, that a systematic record of the account had not been kept. The statute contemplates a systematic record of the account. "Systematic," within the meaning of the statute, is an orderly, methodical account of debits and credits, entered in regular sequence. The sworn account contains items aggregating an amount in excess of the sum sued for, that were entered during the year 1939, after the defendant had made a full and final settlement, according to the audit of June 29, 1938. Evidently, these entries were made after the appointment of the receiver.
Besides, we think the justness of the account sued upon, necessarily, was challenged by the sworn allegations of the defendant's first amended original answer. The pertinent parts of this pleading are set out in our preliminary statement, and are to the effect that, a complete settlement of defendant's account with Casualty Underwriters had been made, and all premiums accruing under the policies had been paid — in fact, overpaid — prior to the appointment of the receiver. We do not think it was necessary, in order to destroy the prima facie effect of the sworn account, that it should have been denied in haec verba; necessarily, if paid in full, it was no longer a just account, and unjust thereafter to sue the defendant upon it. See Hood v. Robertson, Tex. Civ. App. 33 S.W.2d 882, and Magee v. Barnes, Tex. Civ. App.135 S.W.2d 1038, 1039. In the latter case, Judge Tirey, speaking for the Waco Court, used the following pertinent language; he said: "While the article of the Revised Statutes, Vernon's Ann.Civ.St. art. 3736, with reference to sworn accounts in a sense affects the manner of pleading, in the final analysis it creates merely a rule of evidence to be applied solely to proving open accounts under certain given conditions. * * * The defendant having denied the plaintiff's account in toto under oath, he thereby put the plaintiff to proof of his entire case." However, if it can be correctly said that the sworn allegations of defendant's amended original answer were insufficient under the statute, as a denial of the truth or justness of plaintiff's account, still, we think, the specific denial contained in the trial amendment accomplished that result, and put plaintiff upon proof of the correctness of the account sued upon. As before shown, after plaintiff had introduced the sworn account and rested, by leave of court, the defendant filed his trial amendment. The filing of this pleading under the circumstances was a matter within the discretion of the trial court; but, having been filed under permission, should have been given legal effect and, in our opinion, was sufficient to destroy the account as prima facie evidence, and put plaintiff upon proof of his claim. However, as plaintiff stood upon the case made, and *Page 259 the court having refused to instruct a verdict for the defendant, he was compelled to introduce evidence in support of his defense of payment.
However, if the correctness of the several contentions of the plaintiff be conceded, that is that his sworn account was sufficient under the statute to make out a prima facie case, that defendant's first amended original answer was not an effective denial of the justness or truth of the account sued upon, within the meaning of the statute, and that the belated denial contained in defendant's trial amendment did not destroy plaintiff's prima facie case, yet we do not think it follows that the court erred in refusing to direct a verdict and render judgment in his favor, because it is our opinion that the evidence, which was undisputed and unrebutted, conclusively showed that McKinney paid Casualty Underwriters for all premiums earned under the policies, before the insolvency of Casualty Underwriters or the appointment of the receiver.
Each of the compensation policies provided for the payment of a deposit premium and, in addition, that the assured "* * * shall render over his signature, on or before the tenth day after each of the following dates: August 1st, and the 1st day of every month thereafter during the existence of this insurance, a statement of all remuneration paid during the preceding period to the employees covered by this policy, and will within ten days thereafter pay to the Company a premium based upon such remuneration and computed at the Company's rate or rates respectively applicable thereto." Thus, it appears that the actual premium earned depended upon three elements: (1) The amount of remuneration paid by the employer; (2) the application thereto of the correct premium rate; (3) determined by the risk the employees incurred in the particular classification of employment at which they were engaged. In determining the premium earned in a particular instance, the correct rate, ascertained by correct classification of the employes, as to the degree of hazard involved, applied to the remuneration paid, as revealed in the payroll reports.
Mr. W. G. Godwin was agent and representative of Casualty Underwriters, with full authority to act in regard to all matters pertaining to the defendant's dealings with Underwriters. We think the evidence conclusively establishes that fact. He made monthly audits of defendant's account; also made an audit at the end of each policy year. In order to make a correct audit and determine the amount of premiums earned, Godwin testified that he went upon the job, checked the employes against the pay-roll reports, to ascertain the proper classification. Underwriters having instructed Godwin to cancel the two policies issued July 16, 1937, accordingly they were canceled on June 29, 1938, a few days before the end of the policy period, and, at that time, a final audit was made and a final and full settlement between the defendant and Casualty Underwriters was made, the defendant paying all premiums accrued. The witness being asked, "Every amount that you demanded that Mr. McKinney was due in each and every audit he paid it, did he not?" answered, "Yes sir." Throughout his testimony, the witness repeatedly testified that the defendant paid all sums which could have been due the Casualty Underwriters under the policies, and that no audits of the account were made except by witness. The defendant testified to the same effect, stating that he had paid Casualty Underwriters all he owed them, or could have owed them, for the coverage afforded by these policies. This testimony was neither contradicted nor rebutted, hence we do not think the trial court erred in instructing a verdict and rendering judgment for the defendant.
However, plaintiff contends that the court committed reversible error in excluding the documentary evidence offered by him after the defendant had introduced his evidence and closed. Arts. 2180 and 2181 provide in substance that the party upon whom rests the burden of proof on the whole case shall first introduce his evidence, and that, later, the defendant shall introduce his evidence in reply; and further that, at any time before the conclusion of the argument, the court may permit additional evidence to be offered to supply an omission, where it clearly appears to be necessary to the due determination of justice. So, the question presented is, did the trial court abuse its discretion in rejecting the evidence on the ground that it was not in rebuttal of any evidence offered by the defendant? Obviously, the evidence offered was not in rebuttal, but was for the sole purpose of establishing the correctness of the account *Page 260 sued upon, the contention of plaintiff being that it would have substantiated the correctness of the account.
After duly considering the case as a whole, we do not think it can be said that the trial court abused its discretion in rejecting the evidence. As heretofore shown, premiums earned under the policies could not, in every instance, be determined alone from the pay-toll reports, because, before the correct premiums earned could be ascertained, the auditor was required to visit the job in person, to ascertain the classification of the employes actually at work on the job. This procedure was followed for practically three years; Godwin, Casualty Underwriters' representative, made monthly audits, and, at the end of each policy year, an audit and settlement was had, it appearing that the defendant paid for all premiums earned according to these audits, and as demanded by Godwin. During the entire period, no complaint was made by Casualty Underwriters that the defendant had not paid all premiums earned under the policies, and it is not charged that collusion existed between Godwin and the defendant, the claim by the receiver being that a mistake was made by Godwin and the defendant in consummating the settlements hereinbefore mentioned.
Therefore we cannot say that the court abused its discretion in rejecting the documentary evidence offered by plaintiff, or that error was committed in directing a verdict and rendering judgment for the defendant; hence the judgment below is affirmed.
Affirmed.