poses. He also represented that the land in the interest of Black and appellee. Black would produce two crops a year and the crops would be worth $250 an acre; that the owner had made large money in farming the land; that other parties were anxious to purchase the land; that they had sold 90 per cent. of the land from the Cross S ranch; that they had nine automobiles and an agency in five states; that the river had from 6 to 8 rises every year; that the well on the land produced water good for irrigation; and that it would furnish from 500 to 600 gallons a minute. He also told appellee that it would be wise to buy Binder's half interest in a certain 400 acres and locate a dam on it.

These representations, appellee swore were made on his first visit to the land, but were not acted upon there, and appellee and Black returned to San Antonio, where he states the following matters occurred:

"With reference to what occurred after we came back to San Antonio from that trip with reference to me taking the whole ranch or part of the ranch between Black and I, I would say after making all these representations he got me interested, and I was willing to buy $50,000 worth of the land. Then he told me that his company would not sell a part of it, but that they wanted to sell it all. Then I suggested that I might get interested in the company-in the parent company-and we talked about the party who lives in Philadelphia. He told me he was connected with the Penn Life Insurance Company. That name has slipped my memory, but he told me he either owned or controlled $30,000 worth of the interest in the concern, and he wired that company or that gentleman inquiring what he would take for his stock, and I do not remember what the reply was; but I was not given an opportunity to buy that at least. Then I told Mr. Black that the proposition was entirely too large for me to take on and I did not care to enter in the purchase of the whole property. Then, possibly five or six hours after this, he came to me again and said to me if I would purchase the property he would take one-half interest in it. He told me of his ability to take care of that half interest, and that he had two or three farms in Iowa, and under that promise I did buy the whole property. I then signed the preliminary contract very soon after that. I would not be positive as to whether it was that day, or the next day, I signed it and put up a check of $1,000, is my recollection, I think it was that day or very soon after. This contract that you show to me, dated the 25th of April, 1911, is the one that I refer to."

had turned aside from the faithful and loyal prosecution of the work of the agency; he had assumed to enter into a partnership with a prospective buyer of the subject of the agency and to contract for privileges for the partnership inimical to the interests of the principal. This act of his destroyed the agency, and when he made the preliminary agreement he acted only in his interest and that of his partner. That contract was so one-sided and unfavorable to his principal that it was promptly repudiated. Appellant, not understanding the relation between the parties, could not understand the inducement for such an agreement. He immediately wrote Black:

"I am surprised that you would sign any agreement agreeing to release any of our land on the payment of $15 per acre. Do you realize what this would mean; and that you agree to accept $6,000 and release acres of cleared land; together with our improvements? This is exactly what your agreement says. And again, would you agree to release 5,000 acres of river land for $75,000, and then we hold the 17,000 acres of prairie land for the balance of the $225,000? You know well enough that 17,000 acres of prairie land are not worth $225,000, and it would be extremely foolish for us to agree to release the best part of our lands on the same ratio as the prairie land, with the probability of the party laying down and our keeping the prairie land at the rate of $15 an acre. Personally I cannot imagine what you were thinking of."

His imagination would not have been severely taxed if he had known that his agent was a purchaser of part of the land. Appellant knew nothing about this fact until December, 1912, over a year after the sale was made. In pursuance of the verbal agreement of partnership in the land made before the first contract was executed, the agreement was reduced to writing and signed by Black and appellee on May 27, 1911, about a month after the preliminary contract had been signed by the parties, and about two weeks after the final contract was made with appellant.

[2] Appellee knew that Black was merely an agent to procure a purchaser, he knew that he could not make a binding contract without consulting his principal, and he knew The first contract was not made, it ap- that he and Black were endeavoring to lead pears, until after Black had entered into a the principal into an agreement that was detpartnership with appellee to buy the land, rimental to his rights and injurious to his inand the contract was really one of sale to terests. It is a salutary and well-establishBlack and appellee, made by Black and ap-ed rule that persons dealing with an agent pellee. Before the contract of sale was must act in good faith, and not seek an unmade, the agent had turned aside from his conscionable advantage over his principal. agency and was acting in behalf of his own The rule is thus stated by Mechem, in his interest. In that contract, which was repudi- work on Agency (section 751): ated by his principal, Black endeavored to bind his principal to release to appellee any of the land sold by him, upon a payment by him of $15 an acre, which placed it in his power to have the best land released for that price and leave the less valuable land as security for deferred payments. It was an [3] The law abhors double dealing, espeagreement clearly adverse to appellant and cially upon the part of one in whom a trust

"Collusion with the agent to take advantage of the apparent at the expense of the real authority, the willful shutting of eyes to restrictions which would otherwise be obvious, or any other practice to pervert the rules of law to a purpose not contemplated by them, should be fatal to a recovery."

is reposed and confidence given; and when, a contract should be signed by which the sethe agent turns aside from the plain paths curity of appellant would be greatly impairof his agency and seeks individual advan-ed, a fraud was being perpetrated upon aptage inconsistent with, and antagonistic to, pellant, which would destroy any rights that the rights and interests of his principal, his appellee might have against appellant arisauthority is automatically destroyed anding from misrepresentations made by Black agency revoked. He cannot be permitted to to him. His collusion with Black worked hold a position where self-interest and hon- an estoppel against any claim he might have or become contending forces, and where dire temptations would assail and ordinarily conquer him. Quoting the same author (section 754):

based upon fraud is that fraud will only prevent the running of statutes of limitation until the fraud is discovered or by the use of reasonable diligence might have been discov

Kuhlman v. Baker, 50 Tex. 636; Kennedy v. Baker, 59 Tex. 160; Cooper v. Lee, 75 Tex. 114, 12 S. W. 483. The rule is well established; but it is the contention of appellee that it does not apply to a case of this character, where the defendant seeks a recovery of damages arising from fraud as an offset to the claim of appellant. In other words, the contention is that the claim for damages based on fraud used in obtaining the contract as a defense will not be barred by any lapse of time, but that the defense will be available when a suit is filed on the contract. To sustain this proposition, the following Texas cases are cited: Moore v. Ha

ion, and appellee knew that fully. There [6] The rule in regard to suits or defenses was no evidence that showed that the land was not good for agricultural purposes, nor that it would not produce two crops a year and the crops worth $250 an acre, or that the owner had not made money cultivatingered. Bremond v. McLean, 45 Tex. 19; the land, or that other parties were not anxious to purchase the land. What difference could it have made if Black and his principal were not the expert land sellers he said they were, or whether they owned nine or ninety automobiles and had agencies in five states? Those representations could not have influenced any sane, well-balanced man, and it was not shown that they were untrue. Appellee thoroughly investigated the land, he knew or could have known the kind of water in the well, and why it would be any inducement for the river to rise six or eight times a year does not appear. Texas farmers usually fear rises in the rivers even once a year. Appellee could have eas-zelwood, 67 Tex. 624, 4 S. W. 215; Rutherily tested the flowing capacity of the well by a few minutes' test. The opinion of Black as to the purchase of a certain 400 acres of land for a site for a dam could not have influenced a purchase except as to that particular tract. Appellee must have known of the truth or falsity of any and all of the representations two or three years, or more, before he alleged them in his answer. Even after he was sued, the representations of Black did not occur to him until the expiration of four months, although he had filed an answer in the cause less than three weeks after the suit was filed.

Appellee was called upon to exercise some diligence to discover the fraud, especially when the least diligence would have disclosed the falsity of any and all of the representations in a short while after they were made. If the river did not overflow six or eight times a year, that fact could have been ascertained in one year; if the land was not irrigable, that should have been known in a few months. And this is true in regard to every alleged representation made by Black to appellee. Appellee has offered no sufficient reason for his failure to discover the fraud. In 1911, when he and Black sought to build a dam, it was stated in the contract: "At ordinary stages the river has very small flow and frequently none, but is subject to occasional rises." Appellee had one of the rises in the river, which he claims were inducements to his purchase; but the result was great injury to his dam. No expert was requested to estimate the number of acres that could be irrigated until preparation for the trial of this cause was being made. The expert advised appellee to have the estimate made shortly after appellee bought the land, but he refused to have it done. His partner had an analysis made of the water in the well in 1911, but appellee claims he did not see it. He knew the water was not palatable. Gor

ford v. Carr, 99 Tex. 101, 87 S. W. 815; Gilmore v. O'Neil, 107 Tex. 18, 173 S. W. 207; Rosborough v. Picton, 12 Tex. Civ. App. 113, 34 S. W. 791, 43 S. W. 1033; Snow v. Gallup, 57 Tex. Civ. App. 572, 123 S. W. 227; Ft. Smith v. Fairbanks, 101 Tex. 24, 102 S. W. 908.

In no Texas case, coming to our notice, has it been held that a cross-action against a plaintiff will not be barred by limitation. A review of the cited cases will show this. The case upon which most reliance seems to be placed is that of Rosborough v. Picton, decided by the Galveston Court of Civil Appeals, in which it was held:

"The statute of limitation, in our opinion, has no application to the case. It is not a suit is the assertion of a partial defense to the notes to recover anything from the defendants, but which were made the basis of the proceeding to sell under the trust deed, and which defense might become ineffectual if the sale were allowed to proceed. It has been held that a defense of this character can be made to a suit for the purchase money whenever it may be brought, and that the statute of limitations has no application."

That case was one for an injunction to restrain the sale of land under a trust deed on the ground that there was a deficiency of 1,200 acres in the land. The court held that the petition set up defensive matter. court held that the cause of action never arose until there was a proceeding to sell.

The court said:

The

"He neither has nor asserts a cause of action

to recover money paid, because he has not paid anything in excess of what he owed, and such a cause as that only arises when the vendee has paid more than was due for the land which he actually got."

That decision does not hold that a crossaction based on fraud will not be barred as long as the contract upon which it is based is in force.

In the cited case of Moore v. Hazelwood, the facts showed mutual mistake as to the

tiff. As stated in article 1329, Revised Stat- facts in this case bring it peculiarly within utes:

"If the plaintiff's cause of action be a claim for unliquidated or uncertain damages, founded on a tort or breach of covenant, the defendant shall not be permitted to set off any debt due him by the plaintiff; and, if the suit be founded on a certain demand, the defendant shall not be permitted to set off unliquidated or uncertain damages founded on a tort or breach of covenant on the part of the plaintiff."

the scope of Ft. Smith v. Fairbanks, 101 Tex. 24, 102 S. W. 908, in which it was held that limitation does not run against a claim of failure of consideration pleaded as a defense to plaintiff's suit on the contract; but where defendant pleads same, not in avoidance of such liability, but as a basis for a cross-action for damages, limitation applies to such cross-action.

Under that law appellee could not have used the matter of damages as an offset to the notes sued on, because one was liquidat-not ed and the other unliquidated. But, as said by the Supreme Court in Egery v. Power, 5

The part of the judgment as to Black is before this court and will not be disturbed, but the judgment as between appellant and appellee is reversed, and judgment here rendered in favor of appellant for the amount of his notes, interest, and attorney's fees, and all costs of this and the lower court; that his lien be foreclosed as prayed for; and that appellee take nothing by his

cross-action.

On Motion for Rehearing.

As one of the grounds relied upon to attack the contract of purchase of the land, appellee alleged that:

Black "asked the defendant to agree to sell him a one-half interest in the ranch on the contracting to buy same, and told the defendant basis of the same price that the defendant was that he wanted to form a partnership with the defendant to handle and dispose of the ranch, and wanted to own one-half of the ranch, and its that could be made out of the ranch, and by represented to the defendant the enormous profsuch representations and such conduct the said John R. Black succeeded in forming a partnership with the defendant to manage, run, operate, and sell the ranch, and by such representations and conduct induced the defendant not to make any other investigation, but to rely upon the statements of the said John R. Black."

[8] It follows that appellee's claim for damages, being unliquidated, could not be pleaded in offset or for compensation against the notes, and necessarily in order to sustain it the plea must be one in reconvention. That was the only plea that he could present to the court. It is evident that appellee did not intend the plea to be one of a partial or total failure of consideration because he sought not only to cancel the notes, but to obtain a judgment for any balance on damages over against appellant. The answer was not verified as required by law. It was not objected to, however, on that ground, and the lack of verification is mentioned merely to show that it was not intended as a plea of failure of consideration. The Supreme Court, in the case of Nelson When those allegations were made appelv. San Antonio Traction Co., 107 Tex. 180, lee deemed the offer of partnership, which 175 S. W. 434, lays down this principle of was accepted, as one of the strongest matlaw, which is applicable in the present case: ters offered to show fraud upon the part of "It is well settled in the authorities and be- Binder through his agent, Black. He failed yond question that, if the traction company could have maintained the suit against Nelson to comprehend the position in which he plac to recover the amount paid for the repairs on ed himself when he solemnly pleaded that he the pavement, it was not a payment upon the had made a contract with the agent of Binsum agreed to be paid to Nelson, but would constitute damages which it was entitled to der, before the contract of purchase, to take recover because the failure of Nelson to perform him in as a partner in the land. He not the work compelled the defendant in error in only made the allegations that he had knowperformance of its contract with the city to ingly assisted the agent in acting for himpay the amount claimed. *The conclusion, then, is necessarily reached that if it was self and contrary to the interests of his the subject of an independent action by the principal, but he did all in his power with traction company against Nelson, and did not his testimony to sustain the allegations. constitute payment to Nelson for any part of the contract made with the traction company, Appellee swore positively that he did not the statute of limitation would begin to run sign any contract until the offer of partnerfrom the time each item of the claim against ship was made by Black and accepted by Nelson originated; and, if due and payable him. After making the allegations, after more than four years before the institution of the action by Nelson against the traction company, such claims of the traction company were barred by * * limitation."

*

The suit for damages arising from fraud was open to appellee at any time after the fraud was discovered or could have been discovered by the exercise of reasonable diligence, and the statute of limitation would begin to run from that time. Howard v.

swearing to them and testifying in a forceful manner to uphold them, he now appears before this court and asseverates with much heat and emphasis, in many pages of his motion for rehearing, that this court in taking appellee's allegations as true, and whether true or not, as binding on appellee, and that his evidence in support of his allegations was to be accepted rather than that of