The plaintiff-appellee, G. B. Howell, sued American Livestock Insurance Company on a livestock insurance contract to recover for the death of Riches I Seek-a two year old thoroughbred horse. The trial concerned the "actual cash value" of the colt as of its death. The jury returned a verdict for the plaintiff for $25,000, the maximum amount payable under the policy. On appeal the insurance company attacks the judgment on the ground that the trial judge abused his discretion in refusing to permit the company to introduce certain evidence aimed at proving bias on the part of one of the witnesses who corroborated the plaintiff's estimate of the horse's value. The plaintiff cross appeals on grounds that his recovery should have included a statutory penalty and a reasonable attorney's fee. We affirm on both of these issues.

Riches I Seek died of a kidney infection on November 27, 1971. Howell, d/b/a Howell Breeding and Training Farms, had purchased the horse, then a yearling, a year earlier for $6,000 with the intention of training him to be a race horse. Howell felt that the pedigree of Riches I Seek was "not the greatest", but he was familiar with the colt sire and had bred ten mares to him. Howell was impressed with the colt's conformation, and he thought that Riches I Seek resembled the sire. Shortly after the purchase, however, the horse sustained an injury to his foot which never properly healed. As a result of the injury, Howell eventually decided that the horse could never race, but could be used only for stud.

Howell and the insurance company stipulated at trial that the death of the horse was a risk insured against loss under the policy between them. The testimony at the trial centered on determining the value of the horse. Howell sought to prove that at the time of the injury the horse was worth more than $25,000, the limit the Schedule in the policy allowed as recovery for Riches I Seek. The insurance company sought to prove that the horse was worth no more than $3,500. Three of the plaintiff's witnesses ventured estimates of the value of the horse. The plaintiff testified that he would not have considered selling Riches I Seek for less than $100,000; that the colt possessed unlimited potential for breeding with quarter mares. Charles W. Cascio had been the plaintiff's trainer during 1970 and 1971 and, according to his testimony, had been on a list of the top ten trainers for ten of the preceding twelve years. Cascio had accompanied Howell at the time the horse was purchased, and Howell had consulted him with regard to the amount of insurance to be carried. Cascio testified that he had never seen a colt that equaled Riches I Seek in appearance and conformation. He felt that he could have found a buyer of Riches I Seek for $25,000; that the horse was worth this much because of its value as a stallion. The third witness was S. E. Heatley, a neighbor of the plaintiff, who was also engaged in raising horses. Heatley testified that he estimated the horse's value at the time of its death at between $20,000 and $30,000.

The defendant produced only one witness who estimated the value of the horse. This was Mrs. Sandra Dunn Clark, a woman from Kentucky who serves as the Director of Research for the Cromwell Blood Stock Agency. She testified that her duties in that capacity involved primarily keeping statistics and preparing pedigree analyses on literally thousands of horses for use by the Agency's international clientele. This witness testified that she had conducted a pedigree analysis of Riches I Seek, which included a detailed survey of the racing records of all of the foals sired by Riches and Honor and the foals out of Eye Sultry. Riches and Honor, the sire, had entered only one official race; he won it, but the race was at a minor racetrack in Ireland. Eye Sultry, the dam, had entered seven races, but had never finished in the money. Based on Mrs. Clark's analysis, she estimated that Riches I Seek, an unproven horse with undistinguished ancestors, was worth no more than $3,500.

No doubt to the surprise of the Jockey Club and the American Quarter Horse Association, the jury returned a verdict for the plaintiff for $25,000. The plaintiff then filed a claim asserting that he was entitled to an additional 12 percent of the recovery and a reasonable attorneys fee under article 3.62 of the Texas Insurance Code1 V.A.T.S. The trial judge overruled the plaintiff's claim, holding that New Mexico law applied to the case. This appeal and the cross appeal followed.

The defendant's appeal rests entirely on the refusal of the trial judge to allow the insurance company to introduce evidence which the company believed would demonstrate bias on the part of Charles Cascio, the horse's former trainer. The defendant sought to introduce evidence concerning the settlement of a suit between Cascio and the plaintiff. The defendant's counsel first mentioned the suit in the jury's presence, during his cross-examination of Cascio. He had opened a line of questioning by asking Cascio whether Howell had instituted a suit against him, and whether the suit had been for an accounting of funds. Cascio had answered yes to both questions. The trial judge at that point intervened, on his own motion, to prevent the defendant's counsel from pursuing the line of questioning any further.

The defendant filed a bill of exceptions to the judge's ruling, and a hearing on that bill was held out of the presence of the jury. Both Howell and Cascio testified about the suit between them. Their testimony established that Howell had instituted suit against Cascio on August 15, 1971, some seven months before the filing of the complaint in this suit, and some fifteen months before the trial. His claim had been for about $35,000. Cascio apparently filed a counterclaim in the suit, although neither he nor Howell described the specific nature of the counterclaim. Cascio testified that he had given a deposition in the suit in November 1971 and that Howell's deposition in that suit was never taken. Both Cascio and Howell testified that they had discussed the suit together informally on occasions scattered throughout the spring and summer months of 1972, that their lawyers had not participated in those discussions, and that it was during those discussions that they came to an understanding about dismissing their claims against each other. Howell testified that to the best of his recollection they had reached agreement by August 1972. Howell testified that the suit had not been dismissed by the time of his testimony, on October 26, 1972, because the lawyers for the two men had been negligent in dismissing the suit; he attributed the negligence in particular to the involvement of one of Cascio's attorneys in some form of political activities, the specific nature of which he did not describe. Cascio testified that Howell had notified him in late September or early October that he, Howell, had instructed his lawyers to dismiss the suit. In any event, the suit was finally dismissed at 9:31 a. m. on October 27, 1972, the final day of the trial in this case.

Both Cascio and Howell emphatically denied that they had ever discussed Riches I Seek or the suit against the insurance company during the discussions of the settlement. Cascio testified that Howell had first asked him to testify in this suit about two weeks before the trial, and that Howell had said that if Cascio refused to testify voluntarily he would be subpoenaed. Cascio said he had agreed to testify because he thought the position of the insurance company "wrong".

The trial judge refused to permit any of this testimony to be introduced before the jury. We conclude that his refusal did not constitute an abuse of judicial discretion.

The extent to which a witness may be cross-examined for the purposes of showing bias rests on the sound discretion of the trial judge. See, e. g., Alford v. United States, 1930, 282 U.S. 687, 696, 51 S. Ct. 218, 75 L. Ed. 624. The task of the trial judge is to balance the probative value of the evidence sought to be introduced against the risks its admission may entail. The potential risks may include the possibility of undue prejudice, embarrassment, or harassment, either to the witness or to a party; the possibility of misleading or confusing the jury; or the possibility of undue delay or waste of time. See, e. g., United States v. 412.93 Acres of Land, 3 Cir. 1972, 455 F.2d 1242, 1247; Rule 403, Proposed Federal Rules of Evidence (1972).

In the present case we are unable to say that it was not within the discretion of the trial judge, when he invoked these considerations, to conclude that the risks involved in admitting the evidence outweighed any possible benefits admitting it might have had. When we look at one side of the balance, we find that there were grounds on which the judge might well have decided that the evidence would have had little probative value. In the first place, the tendency of the evidence to prove that there was any connection between the settlement of the suit and Cascio's appearance as the plaintiff's witness here was, to say the least, slight. Perhaps more important, there were at least two grounds on which the judge might reasonably have concluded that the proffered testimony was wholly unnecessary. First, there was other evidence in the record which went to the general issue of Cascio's reliability: the jury heard that Cascio and Howell had been acquainted since childhood, for fifteen or twenty years; that Howell had employed Cascio as a trainer; and, most important, that there had been a suit between them for an accounting. Second, the material part of Cascio's testimony-his estimate of the value of the horse-was corroborated by two other witnesses. His testimony was by no means so critical that the trial judge should have been alert to let the jury hear every piece of evidence, however fragile, which might have influenced the jury's estimate of his credibility.

When we look at the other side of the balance, we find grounds on which the trial judge might have concluded that introducing this evidence entailed any of three of the risks we mentioned above. In introducing the evidence, the defendant would have been implying that Cascio and Howell were guilty of conspiring to deceive the court; certainly the trial judge might have found this involved the possibility of undue prejudice, harassment, or embarrassment, either to Cascio or to the plaintiff. Considerations of time and judicial economy might also have entered the trial judge's calculation. It is unlikely that the contest over the issue of Cascio's credibility could have stopped with the limited testimony which the judge had heard on the bill of exceptions. Howell undoubtedly would have wished to produce evidence to rebut the defendant's charge, and he would have been entitled to do so. The possibility that the trial would become involved in a lengthy wrangle over a side issue was not absent. Finally, reviewing Cascio's and Howell's testimony on the bill, and noting the little it contains establishing any real connection between the settlement and Cascio's appearance, we can understand how the trial judge could have concluded that admitting the evidence would run the risk of misleading or confusing the jury.

In sum, then, while we are not prepared to say that we find the proffered evidence wholly irrelevant, or even that it clearly appears that it should have been excluded, at the same time we are unable to say that the district judge roamed beyond the bounds of his discretion in ruling as he did. In consequence, we cannot disturb the judgment rendered at trial.

The appellee's cross appeal is predicated upon article 3.62 of the Texas Insurance Code. This article provides that whenever an insurance company fails to pay any policyholder any amount due under a life, health, or accident insurance policy within thirty days of demand, the insurance company is liable for damages of 12 percent of the amount due, as well as for a reasonable attorneys fee sustained in the collection of the amount.2

The plaintiff makes a delicate argument for the applicability of this provision to the facts of this case. He notes that Klaxon v. Stentor Electric Mfg. Co., 1941, 313 U.S. 487, 61 S. Ct. 1020, 85 L. Ed. 1477, requires that we apply Texas choice of law rules to determine what law is applicable. He then points to another provision of the Texas Insurance Code, article 21.42, as constituting the Texas choice of law rule requiring application of Texas law. Article 21.42 provides by its terms that any contract of insurance between a Texas resident and any insurance company which is doing business in Texas is to be governed by Texas law.3 The plaintiff, Howell, is a citizen of Texas, although his farm, the Howell Breeding and Training Farm, is located in New Mexico. The defendant did business in Texas as well as New Mexico. Thus, if we pay attention only to the express terms of article 21.42, the plaintiff appears to present us with an airtight case for his recovery of the penalty and attorneys fees.

The Supreme Court of Texas, however, has taken the view that article 21.42 is not to be applied in cases such as the one before us. Austin Building Co. v. National Union Fire Ins. Co., Tex.1968, 432 S.W.2d 697, held that the statute was not to be given extraterritorial effect. In that case the Court said that such statutes as article 21.42 cannot

". . . be given extraterritorial effect so as to apply to a policy or bond written or executed by a foreign insurer in another state, even though the insured was a citizen or resident of the state which had adopted the statute in question, and even though the foreign insurer also did other business within that state."

432 S.W.2d at 701, quoting 2 Couch on Insurance Sec. 16:20 at 31 (1959). The Texas Court read article 21.42 as designed only to assure that Texas law will apply to contracts made between Texas citizens and insurance companies doing business in Texas, when and only when those contracts are made in the course of the company's Texas business. Otherwise, the law to be applied was to be the law the parties intended to apply, which, in the absence of any contrary indication, was presumed to be the law of the state where the contract was made.4

In Austin Building Co., a contract made and executed in Kansas covered property situated in Kansas. The Texas Court held that Kansas law should be applied. Here, the contract was made and executed in New Mexico. Riches I Seek was kept on Howell's farm in New Mexico from the time he was first transported there immediately after Howell had purchased him in 1970. It is fair to assume, in the circumstances this case presents that the parties intended New Mexico law to apply. Under the principle of the Austin Building Co. case, the district judge was correct in applying New Mexico law.

The judgment is affirmed.