author: McOLENDON, C. j.

text:
    JENKINS v. TAYLOR.
    (No. 7166.)
    Court of Civil Appeals of Texas. Austin.
    Feb. 23, 1928.
    Rehearing Denied March 14, 1928.
    1. Libel and slander <®=^10(2) — False state-merits that member of Legislature denounced medical profession held libelous per se.
    'Ealse statements that member of Legislature denounced medical profession, during debate on certain bill, in language which could not-have been more vehement had it been used in discussing class known to be criminal throughout, held, libelous per se.
    2. Libel and slander <&wkey;48(2, 3)— Conduct and character of public officials and candidates for ■ office are open to fair criticism and comment.
    Conduct and character of public officials and candidates for office have public interest and are open for discussion in press and otherwise so long as statements are fair criticism of or comment on acts and conduct.
    3. Libel and slander <&wkey;48(2, 3) — Rule as to false statement of fact regarding private Individual applies to candidates for office and public officials.
    Same rule with reference to false statement of fact regarding individual in private life applies to candidates for office and public officials, and law protects their reputation with same sanctity, notwithstanding rule that their conduct and character are open to fair criticism and comment.
    4. Libel and slander <&wkey;>IO(2) — Rule that statement concerning public official to be libelous per se must be such as would subject him to removal from office is inapplicable to member of Legislature (Const, art. 3, § II).
    Rule that statement concerning public official, in order to be libelous per se, must be such as would subject him to removal from office, does not apply to member of Legislature, since under Constitution removal is only affected by expulsion by two-thirds vote of House of. which he is member,, and under article 3, § 11, each House is given authority to punish members for disorderly conduct.
    5. States <&wkey;>28(l) — Member of state Legislature must represent all classes and profes•sions impartially.
    Clear duty of member of Legislature is to represent all classes and professions impartially.
    6. Libel and slander &wkey;>IO(2) — Statement that member of state Legislature charged legislative committee of State Medical Association with dishonesty is libelous per se.
    Statement that member of Legislature charged legislative committee of State Medical Association with dishonesty is libelous per se, since to falsely charge one with uttering slander or publishing libel is in itself libelous per se.
    7. Libel and slander <&wkey;48(2) — Immunity of member of state Legislature from civil liability for statements does not affect libelous character of false statements regarding his remarks.
    Immunity of member of state Legislature from civil liability for statements made in debate as to passage of certain bill does not affect libelous character of false statements as to what he said in such debate.
    8. Libel and slander &wkey;>5l(l) — Where jury found express malice in publication, it is immaterial on appeal whether letter was quall- ' fiedly privileged.
    Where jury in action for libel found express malice in publication, it is not material on appeal whether letter was qualifiedly privileged.
    9. Libel and slander <&wkey;>48(3) — Communication from secretary of State Medical Association to members, containing false statements as to what candidate for Legislature had said in debate on Medical Practice Act, held quali-fiedly privileged.
    Letter from secretary of State Medical Association, containing false statements as to What candidate for Legislature had said during debate as to Medical Practice Act (Acts 30th Leg. [1907] c. 123), held, qualifiedly privileged as communication between parties having common interest, since secretary, if acting in good faith, had right to transmit to members within candidate’s district copy of report as bearing on candidate’s qualifications, from viewpoint of members of association, as candidate for Legislature.
    10. Libel and slander <&wkey;>50 — Good faith affords immunity from liability for libel for false statements in qualifiedly privileged communication.
    Good faith affords immunity from liability for libel, where communication is qualifiedly privileged, even where false statements of fact are made.
    11. Libel and slander <&wkey;>ll7 — Candidate for Legislature held entitled to recover for injury to reputation generally and political career as well as to reputation as attorney.
    In action for libel by candidate for state Legislature, plaintiff held, entitled to recover for injury to Ms reputation generally and to Ms political career as well as to reputation as practicing attorney, especially where attack made on Mm was in connection with conduct as member of Legislature and while he was candidate for such office.
    12. Libel and slander <&wkey;33 — Damage is presumed where publication is libelous per se.
    Where publication is libelous per se, damage is presumed as matter of law and need not be proved.
    13. Libel and slander <&wkey;l24(8) — Instruction that jury could not find damages unless plaintiff was injured in business as attorney held erroneous in precluding recovery on presumption of damage from publication.
    In action by candidate for state Legislature for publication of letter libelous per se, instruction that jury could not find damages unless plaintiff was injured in business as attorney held. erroneous as depriving jury of finding damages based on general presumption of law that damages flow from publication of per se libel.
    Appeal from District Court, Brown County; J. O. Woodward, Judge.
    Action by C. H. Jenkins against Holman Taylor. Judgment for defendant, and plaintiff appeals.
    Reversed and remanded.
    E. J. Miller and R. L. McGaugh, both of Brownwood, for appellant.
    McCartney, Foster & McGee, of Brown-wood, and Freeman, MeReynolds & Hay, of Sherman, for appellee.
   McOLENDON, C. j.

Suit for damages for publishing a libel. Trial to jury; special issue verdict; judgment for defendant; plaintiff appeals.

There is no statement of facts, and the questions presented relate in the main to the charges given the jury. For purposes of the appeal the following statement from the record will suffice:

Plaintiff, Hon. C. H. Jenkins, was a member of the Texas Legislature in 1907, and took an active part in debating a bill known as the Medical Practice Act (Laws 1907, c. 123), passed at that session. The State Medical Association was interested in the bill and had a legislative committee from its membership charged with the duty of securing its passage. Judge Jenkins appears to have either opposed the bill or favored some amendment objectionable to the medical association. Judge Jenkins being a candidate for the Democratic nomination as Representative in the Legislature, defendant Holman Taylor, secretary of the State Medical Association, sent the following letter to Dr. A. L. Anderson, and other members of the medieal association in Judge Jenkins’ district:

“Fort Worth, Tex., June 22, 1926.
“Dr. A. L. Anderson, Brownwood, Texas-Dear Doctor: Please pardon the mimeographed communication. There'is not time for' anything else.
“In view of the candidacy for Representative from your county to the state Legislature, of Judge O. H. Jenkins, the following excerpt from the report of the committee on public policy and legislation of the State Medical Association of Texas, as published in the June, 1907, number of the journal, is respectfully called to your attention:
“ ‘Among the speakers against the bill were Representatives McGregor, of Houston, and Jenkins of Brownwood. Both of these gentlemen charged the medical profession with being full of politics, and tent upon crashing all rivals out of existence. They could not have been more vehement in their denunciation had they teen discussing a class known to he criminal throughout. Mr. Jenkins’ speech was about three hours long, and we verily believe that his intemperate abuse of the medieal profession did the cause of the Christian Scientists’ exemption amendment, for which he was laboring, more harm than good. He was frequently interrupted by questions from Judge Neblett, Dr. Dodd, Mr. Cocke, Mr. James, Judge Robertson, Mr. Cobb and others. He quoted freely from Mrs. Eddy’s Science and Health, an opposing medical journal, the Christian Science Journal and other soiirces, to prove the dishonesty of your committee and the unjustness of the proposed law.-’
“The debate referred to was in connection with the passage of the present medical practice act. There are other items equally distressing to the advocate of proper public health' legislation, bearing upon the legislative record of Judge Jenkins.
“Fraternally yours,'
“[Signed] Holman Taylor, “Secretary.”

The underscoring is our own and indicates the portions of the letter claimed to be libelous. Defendant claimed that the letter was mailed in good faith in the belief that its contents were true, and for the sole purpose of acquainting the members of the association with the record of Judge Jenkins in the Legislature regarding the Medical Practice Act, in which the association and its members were interested. Therefore it was asserted to be absolutely or qualifiedly privileged: First, as being a fair comment on the act of an official who was a candidate for public office; and, second, because made in good faith by the secretary of the association to its members, upon a subject in which the' association and its members had a mutual interest.

The issues submitted to the jury and the latter’s answers follow:

“1. Is it and was it true that the plaintiff, while a member of the Legislature in 1907, and in' discussing and debating the Medieal Practice Act then before said Legislature, charged the medieal profession with being full of politics and bent upon crushing all rivals out of existence?” Answer: “No.”
“2. Is it and was it true on said occasion and in said debate the plaintiff vehemently denounced the medical profession?” Answer: “No."
“3. Was it true and is it true that on said occasion and in said debate the plaintiff in his speech intemperately abused the medical profession?” Answer: “No.”
“4. Is it true and was it true that on said occasion and in said debate the plaintiff in his said speech charged the legislative committee of the State Medical Association of Texas of dishonesty, and did he -quote from Mrs. Eddy’s Science and Health and other publications to prove such charge?” Answer: “No.”
“If you have answered each and all of the foregoing questions in the affirmative, you need not answer the following questions, but if you have answered all or either of them in the negative, then you will answer the following question :
“5. What amount of actual damages, if any, would reasonably compensate the plaintiff for the injury he has sustained, if any, because of the publication and mailing out of said letter?” Answer: “None.”
“In considering this, you may take into consideration the injury to plaintiff’s feelings, to his reputation, and the injury, if any, that he has sustained, or may sustain, in his profession or business.
“If- you have answered each and all of the questions, Nos. 1 to 5, in the affirmative, you need not answer the following; but if you have answered each of or any of them in the negative you will answer the following questions:
“6. Was the defendant actuated by malice in mailing out the letter to Dr. A. L. Anderson and to other doctors in Brown and Coleman counties on June 22, 1S26?” Answer: “Yes.”
“If you have answered the next preceding issue in the negative, you need not answer this issue; but if you have answered the next preceding issue in the affirmative, then answer the following:
“7. What amount should the defendant be required to pay as exemplary damages, that is to say, in the way of punishment for having sent out and mailed out said letter maliciously, if in answer to special issue No. 6 you have said that he was actuated by malice in sending same out?” Answer: “One ($1.00) dollar.”

In connection with ’these issues the court gave the following definition:

“ ‘Malice’ is the intentional doing of an act without legal justification or lawful excuse, with the intent to injure another in his property or reputation. In determining this issue you may consider all facts and circumstances in evidence before you.”

The following special charges were given upon request of defendant:

“1. A reasonable or fair comment'or criticism of the acts of a public official is not libelous, or actionable.
“2. The communication set out in 'the plaintiff’s pleading, is one of qualified or limited privilege, and ‘malice,’ as that term is used in the court’s main charge, is such malice as actually existed in the mind of the defendant at the time of the communication, if any, and which inspired or colored the said communication. Such malice exists only where one casts an imputation upon another which he does not believe to be true and where the communication is actuated by some sinister or corrupt motive or personal spite or ill will.
“3. You will not find any sum in answer to special issues Nos. 5 and 7 of the court’s main charge, unless you find from the preponderance of the evidence before you that the writing in question was inspired by malice and that it tended to injure the reputation of the plaintiff as a practicing attorney and thereby to injure his said business.”

Plaintiff requested that the jury be peremptorily instructed to return a verdict for whatever amount of actual damages they might find from the evidence would compensate plaintiff for the injury suffered by reason of sending the letter “as shown by the evidence”; and also requested added to special issue 5 the words “or political career, if any,” so as to authorize the jury to include that element in the damage found. This special charge and request were refused. The contentions made by appellant are: First, that the publication was libelous per se; second, that being published with express malice as found by the jury, it was therefore actionable; third, that being libelous per se, he was entitled (a) to nominal damages in any event; and (b) to have the jury instructed that they might find damages without proof thereof, and not to have the damages found limited as in the court’s fifth special issue and in the third special issue given at defendant’s request.

The question of leading importance is whether the publication was per se libelous. We have reached the conclusion although not without some difficulty, that this question must be answered in the affirmative. We base this conclusion upon two grounds: First, we believe that to falsely accuse a member of the Legislature with denouncing the. medical profession in language that “could not have been more vehement” had it been used in “discussing a class known to be criminal throughout” was to charge such official with such conduct as would impair his fitness for the office of legislator, and subject him to censure or reprimand before the bar of the House of which he was a member; and, second, the statement that he quoted from health publications and journals “to prove the dishonesty of your committee” amounted to a statement that Judge Jenkins charged the members of the legislative committee of the State Medical Association with dishonesty in connection with the passage of the bill, and in effect was a charge that he was guilty of uttering a slander.

The conduct and character of public officials -and candidates for office have a public interest and'are open for discussion in the press and otherwise. So long as statements can be properly characterized as fair criticism of or comment upon their acts and conduct, there can be no action for defamation o'f character. This rule, however, has never been extended to statements of fact regarding acts and utterances of officers or candidates. .The same rule with reference to a false statement of fact regarding an individual in private life applies to candidates and officers; and the law protects their reputation with the same sanctity. Cotulla v. Kerr, 74 Tex. 89, 11 S. W. 1058, 15 Am. St. Rep. 819; Democrat Pub. Co. v. Jones, 83 Tex. 302,18 S. W. 652; Belo v. Looney, 112 Tex. 160, 246 S. W. 777; Galveston Tribune v. Johnson (Tex. Civ. App.) 141 S. W. 302 (writ of error denied); Ferguson v. Houston Press (Tex. Civ. App.) 1 S.W.(2d) 387; Times Pub. Co. v. Ray (Tex. Civ. App.) 1 S.W.(2d) 471.

Appellee contends for the rule recognized in this state that a statement concerning a public official, in order to be libelous per se, must be of such a character as, if true, would subject him to removal from office. Cotulla v. Kerr, supra. We do not think this rule applies to a member of. the Legislature to the extent that he must be charged with an offense of sufficient gravity to warrant his removal from office. Under' our Constitution such removal is only effected by expulsion by a two-thirds vote of the House of which he is a member. In addition, each House is given the express authority to “punish members for disorderly conduct.” Constitution, art. 3, § 11. This power of a legislative body to punish its own members for unseemly conduct seems inherent in our system of constitutional government, so as not to require an express grant of authority. The most frequent instances in which the utterances of a legislator hiave been made the subject of discipline are those in which some reflection has been cast upon members or officers of the legislative body. Adjudicated cases upon the subject are rare. Belknap v. Ball, 83 Mich. 583, 47 N. W. 674, 11 L. R. A. 72, 21 Am. St. Rep. 622, and Tawney v. Simonson, Whitcomb & Hurley Co., 109 Minn. 341, 124 N. W. 229, 27 L. R. A. (N. S.) 1037, seem very nearly in point, at least in principle.

In the Tawney Case, the following publication concerning a member of Congress who was a candidate for re-election was held to be libelous per se:

“Tawney proved a falsifier of public documents by his misquotation upon the floor of Congress of a letter from the Secretary of the Treasury and his misstatement of facts with respect to an investigation and exposure in the Bureau of Engraving and Printing.”

We see a close analogy between that case and the case at bar. There the charge was that Tawney on the floor of Congress willfully misquoted certain documents. Here the charge is that for the purpose of influencing legislation Judge Jenkins while a member of the House and in .the discharge of his duty as a legislator,' in the consideration of a bill then before the House vehemently denounced the medical profession in language that would be used in denunciation of the criminal classes. This is not in any sense a comment or criticism deduced from quoted, language of Judge Jenkins, but is a statement of fact that he used language of that character in debate before the House. We think the House of Representatives would have been justified, if that statement were true, in administering some character of discipline, to the offending party.

The natural effect of utterances of this sort by a member of the Legislature while on the floor of the House would, we believe, be to impair his usefulness as a member of the legislative body and injure his reputation as a candidate for a legislative office. The clear duty of such officer is to represent all classes and professions impartially. A wholesale denunciation of the medical profession in general cannot be reconciled with a proper discharge of that duty, nor defended upon any valid ground. This view, we think, clearly appears from the report of the legislative committee itself. If the statements therein contained were true, Judge Jenkins had justly merited the contempt and hatred of the entire membership of the medical profession in Texas; and it is clear that the resolution was intended to convey that idea. In fact, the resolution shows that in the opinion of the committee the asserted intemperate abuse of the medical profession by Judge Jenkins was of such a character as to do more harm than good to the Christian Science exemption amendment to the Medical Practice Act which Judge Jenkins was charged with sponsoring, thus implying clearly the revulsion of feeling created in the minds of other members of the Legislature by the language charged to have been used. On principle, we think it ought to be held that this statement, if false, as the jury found it to be,' was libelous per se.

In the Belknap Case a member of Congress, who was a candidate for re-election, was charged' with having written in an illiterate manner:

“I don’t propose to go into debate on the tariff differences on wool, quinine and all the things, because I ain’t built that way.”

The publication was a purported facsimile of a written statement made by the candidate, in which many words were misspelled. In holding that this publication was libelous, the Supreme Court of Michigan say:

“I am riot prepared to yield assent to the statement that all honest members of either political party would vote for a confessed ignoramus to represent them in Congress. The statement bears its own refutation on its face, for it is apparent that these publications are made for the express purpose of preventing presumably honest members, of the candidate’s own political party, as jwell as others, from voting for him. Couhsel omit in their statement one very important element, viz., intelligence. They would hardly be willing to assert that all honest, intelligent men would vote for a candidate of their party for an important office who has confessed such ignorance as to show unfitness, although ignorance be no legal disqualification. If defendant’s contention be . correct, then one may publish of a candidate that he cannot read or write, or that he has confessed that he cannot. No one would seriously contend that such a publication would not be injurious and libelous, and that it would not deprive the candidate of many votes. To hold otherwise would be an insult to the intelligence of our people. Yet no moral turpitude or crime or legal disqualification is charged, and therefore no libel is uttered. But why stop there if disqualification is to be made the test? Conviction of crime is not by the Constitution of the United States made a disqualification for the office of member of Congress. The only constitutional requirements, are that the member shall be twenty-five years old, seven years a citizen and an inhabitant of the state where he is chosen. . Aside from these the House of Representatives is the judge of the qualifications of its members. There are many crimes .■for the conviction of which that body would not consider a member elect disqualified; yet to ' publish of him, when a candidate, that he is guilty of such crime is admitted to be libelous if not true. Public journals are in the performance of a high duty when they truthfully place such charge before the public. To illustrate, that one has been a gambler does not disqualify him for the office. He may have reformed and become an exemplary citizen; but the fact that he has been a gambler is proper to be placed before the people. The electors are the ones to determine whether they wish such a man to represent them in Congress. Their verdict in his favor would undoubtedly be held conclusive of his right to the office. Disqualification to hold the office cannot therefore be made the test to determine the libelous character of the publication."

In Sillars v. Collier, 151 'Mass. 50, 23 N. E. ■ 723-, 6 L. R. A. 680, it was held to be libelous per se to falsely impute to a candidate for the Legislature “some incapacity or lack of due qualification to fill the position, or some positive past misconduct which will injuriously affect him in it, or the holding of principles which are hostile to the maintenance of government.”

We also think the statement in the letter that Judge Jenkins charged the legislative committee of the medical association with dishonesty is libelous per se. It has been repeatedly, held that to falsely charge one with uttering a slander or publishing a libel is in itself libelous per se. Sheibley v. Huse, 75 Neb. 811, 106 N. W. 1028, 13 Ann. Cas. 376; Allen v. Wortham, 89 Ky. 485, 13 S. W. 73; Patton v. Cruce, 72 Ark. 421, 81 S. W. 380, 65 L. R. A. 937, 105 Am. St. Rep. 46; Clark v. Binney, 2 Pick. (Mass.) 113; Snowdon v. Dindo, Fed. Cas. No. 13,152, 1 Cranch, C. C. 569; 36 C. J. 1172.

Nor would his immunity from civil liability in any way affect the libelous character of the charge made .against Judge Jenkins.

The principle here is analogous to charging one with having committed a crime already barred by limitation, and therefore no longer subjecting its perpetrator to prosecution. The uniform holding seems to be that the making of such .charge after as before the bar is libelous. The principle involved is that the injury is the damage to the reputation and not the liability of putting in motion the criminal processes of the courts; in other words, the natural effect of the charge made as subjecting one to contempt, hatred, and ridicule. This effect is not governed by the liability to or immunity from criminal prosecution. It is the estimate in the minds of men of the thing done as affecting the character and reputation, of the doer which incites the feelings of contempt, hatred, and ridicule, and not the liability of the doer to criminal prosecution or punishment. And so here to falsely charge one with having uttered a slander or published a libel is libelous regardless of whether the imputed slander or libel was ufron a privileged occasion. The moral obliquity which produces contempt, hatred, and ridicule is not lessened by the fact that the slander was uttered or the libel published under circumstances rendering the perpetrator immune from civil action. Rather such immunity would magnify than minimize the offense. To take advantage of a privileged occasion to utter a slander or publish a libel is more reprehensible than similar conduct under circumstances where full responsibility to the law may be exacted. See 36 O. J. p. 1196, § 106.

It is not material to this appeal whether the letter was qualifiedly privileged, since the jury found express malice in its publication. However, in view of another trial the question may be important. We believe the court correctly charged the jury that the publication was so privileged. This circumstances under which it was sent bring it clearly within the general rule that oral and written communications between parties who have a common interest are qualifiedly privileged. The medical association was interested in legislation affecting the practice of medicine and the public health. Defendant was its secretary and those to whom the letter was sent were its members. The quotation in the letter was taken from a report made by the legislative committee of the association and was embodied in the official minutes of the association. We think defendant had the right, if he acted in good faith, to transmit to the association’s members within Judge Jenkins’ district a copy of this report as bearing upon Judge Jenkins’ qualifications from the viewpoint of the members of the association as a candidate for the Legislature. New-ell, Slander & Libel (4th Ed.) p. 460 et seq.

There is this distinction between this character of privilege, and that which attaches generally. ,to statements concerning candidates and public officers. In tbe latter, as above held, false statements of fact as distinguished from fair comment and criticism are not protected. Whereas in the former good faith affords immunity even where false statements of fact are made. Missouri Pac. Ry. Co. v. Richmond, 73 Tex. 568, 11 S. W. 555, 4 L. R. A. 280, 15 Am. St. Rep. 794; Cranfill v. Hayden, 97 Tex. 544, 80 S. W. 609; Simmons v. Dickson (Tex. Com. App.) 213 S. W. 612.

The publication being /qualifiedly privileged, plaintiff was not entitled to a peremptory instruction unless the evidence conclusively showed express malice. As we have no statement of facts, we must necessarily hold that the peremptory instruction was properly refused.

We sustain the objection made to defendant’s special charge No. 3 as limiting the recoverable damages to injury “supported by evidence” to plaintiff’s reputation as a practicing attorney. The special issue in question conflicts with that portion of the charge of the court which authorizes the jury to take into consideration the injury to plaintiff’s feelings and reputation generally. The jury should not have been limited to the injury to plaintiff’s business; he was entitled to injury to his reputation generally, and also to his political career, especially the latter, since the attack made upon him was in connection with his conduct as an officer and while he was a candidate for the same office. The petition does not allege any special damage, and it was not necessary that any should be proved. The publication being libelous per se damage is presumed as a matter of law. The jury sould have been so instructed and should not have been limited in the manner complained of.

Special issue No. 3 expressly instructed the jury that they could not find damages either actual or exemplary unless from the preponderance of the evidence they found that plaintiff had been injured in his business as attorney. Clearly this charge deprived the jury of finding damages based upon the general presumption of law that damages flow from the publication of a per se libel.

The trial court’s judgment is reversed, and the cause remanded for a new' trial.

Reversed and remanded.
      ®^>Por other cases see same topic and KEY-NUMBER in all Key-Numbered Digests'and Indexes

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source: Caselaw Access Project

author: FLY, C. J.

license: Public Domain

text:
    STATE v. SCHOLZ BROS.
    (No. 7956.)
    Court of Civil Appeals of Texas. San Antonio.
    March 7, 1928.
    Rehearing Denied April 4, 1928.
    I.Bonds <&wkey;l9 — Bond is as binding on principal though unsigned by sureties as if sureties had signed.
    A bond is as binding on the principal though unsigned by sureties as if sureties had signed it.
    2. Contracts <&wkey;93(5) — Where mistake of one party was not induced by acts of other, it will not serve as basis for rescission, or defense when sued.
    Where mistake of one party to a contract, as a miscalculation or disappointment relating to facts connected with contract, was not induced by acts of the other party, it will not serve as a basis for rescission or as ground for defense when sued on contract.
    3.- Schools and school districts <&wkey;>85 — Where contractor fails to give statutory bond, such fact cannot be used by him as defense against breach of contract (Rev. St. 1925, art. 5160).
    Under Rev. St. 1925, art. 5160, which requires parties entering into contract with state or its counties, districts, and other subdivisions for construction of public buildings to give the “usual penal bond,” contractor’s failure to give proper-bond cannot be used by him as a defense against breach of contract.
    4. Schools and school districts <&wkey;85 — That contractors failed to obtain bond as required and, in bidding on work, made mistake in calculation, held not to justify their refusal to perform (Rev. St. 1925, art. 5160).
    In suit by state against contractors for breach of building contract, fact that contractors failed to obtain and execute bond, as required by Rev. St. 1925, art. 5160, and fact that, in bidding on work, they made a mistake in calculation of sums to be expended on structure held not grounds sufficient to justify their refusal to perform contract.
    Appeal from District Court, Kleberg County; W. B. Hopkins, Judge.
    Action by the State of Texas against Scholz Bros. Judgment for defendants, and plaintiff appeals.
    Reversed and remanded.
    E. H. Orenshaw, Jr., and Gus L. Kowalski, both of Kingsville, and Claude Pollard, of Austin, for the State.
    Tarlton & Lowe, of Corpus Christi, for ap-pellees.
   FLY, C. J.

This is an action by the state of Texas to recover damages from appellees, arising from the breach of a building contract. The court instructed the jury to return a verdict for appellees.

The testimony showed that appellant entered into a written contract with appellees, to erect, according to certain plans and specifications, a certain addition to the South Texas State Teachers College, at Kingsville. The contract was to be performed within 100 working days from the execution of the contract on August 25, 1926. The facts show the execution of the contract by appellees and an admitted breach of the same. Appel-lees sought to justify a failure to comply with the terms of the contract on the ground that it was not consummated because they failed to obtain and execute the bond they agreed to execute, and also that in bidding on the work they made a mistake in the calculation of the sums to he expended on the building. They did not claim that the mistake was caused by any act of appellant, but simply by an error in addition on their part. They do not claim that they were prevented from giving the bond by any one, but merely that they failed and refused to deliver the bond after they had executed it and obtained a surety company as a surety on the bond. The whole defense offered was that appellees had destroyed a solemn contract entered into by them with the state of Texas by not performing its terms. A mistake in arithmetic made by a party bidding on a contract to erect a building, such mistake not having been induced by the other contracting party, but arising solely on account of the ignorance or negligence of the bidder, has never been recognized as an excuse for breach of a contract. Such fragile and unreasonable excuse can never be entertained to justify a breach of a contract.

It would wreck the law of contracts and render all business transactions uncertain and unstable if a party could cancel a contract because he had not exercised reason and discretion in making the contract, no fault whatever being attributable to the oth-. er party. This was a voluntary contract upon the part of appellees, with a knowledge of all the facts surrounding the transaction. It was duly signed and executed by the parties, and appellees duly signed the bond which bound them to execute the contract. That bond was as binding on them as though signed by a dozen sureties, and no immunity can be claimed by them from performing the contract because they refused to allow sureties to sign the bon'd. They cannot plead their failure to perform their contract to release them from its obligations.

The mistake pleaded by appellees was unilateral, and it is the well-established rule that a contract will not be rescinded on account of the mistake of one party to the contract, not induced by the acts of the other party. May v. San Antonio R. Co., 83 Tex. 502, 18 S. W. 959; Price v. Biggs (Tex. Civ. App.) 217 S. W. 236. There are no facts or circumstances connected with the mistake that would open the door to a court of equity to appellees. Where there, is an error, miscalculation, or disappointment relating to the facts connected with a contract, upon the part of one party, such error, mistake, or miscalculation will not entitle the disappointed party to any relief either by way of canceling the contract and rescinding the transaction, or of defense to a suit brought for its enforcement. “In such classes of agreements and transactions, the parties are supposed to calculate the chances, and they certainly assume the risks, where there is no element of bad faith, breach of confidence, misrepresentation, culpable concealment, or other like conduct amounting to actual or constructive fraud.” Pomeroy’s Eq. Jur. Fourth Ed. § 855. To hold that a party to-a contract can cancel or breach the same because he finds that he will not maké money by it, would render contracts a. farce and destroy the fundamentals of business transactions.

Article 5160, which requires parties entering into contracts with the state, or its counties-, districts, and other subdivisions thereof, for the construction of public buildings to give the “usual penal bond,” cannot, when the contractor fails to give the bond, be used as a defense against breach of the contract. The requirements of that article are in the interest of the state, and not the delinquent contractor, who seeks to evade his contract by canceling the bond given by him. Appellees after making the contract could have been compelled to give the bond. The contract was binding' without it. The defenses set up by appellees were without merit, and the court erred in instructing a verdict for appellees.

The judgment is reversed and the cause remanded.
      ®5»For other eases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes


author: COBBS, J.

text:
    KOCH v. VAL VERDE MERCANTILE CORPORATION et al.
    (No. 7957.)
    Court of Civil Appeals of Texas. San Antonio.
    March 14, 1928.
    1. Pleading <&wkey;204(2) — It is error to sustain general demurrer to petition if it discloses one good cause of action.
    It is error to sustain general demurrer to petition, however defective it may be in many respects, if it discloses one good cause of action,
    2. Corporations <&wkey;376 — Corporation may under certain circumstances purchase and acquire its own stock.
    Under certain circumstances corporation has power to purchase and acquire its own stock.
    3. Corporations <&wkey;>82 — In plaintiff’s action to enforce agreement to repurchase corporate stock on termination of his services for corporation, sustaining general demurrer and dismissing case on ground of fundamental error held error.
    Where corporation agreed to repurchase plaintiff’s stock on termination of his services as secretary, sustaining of general demurrer and dismissing of plaintiff’s action to recover value of such stock under such agreement, on ground of fundamental error, which was assigned in very general terms, held! error where there was nothing shown by transaction tending to show any injury to corporation or creditors.

      4. Abatement and revival <§=>58(2) — In action against stockholder of corporation to enforce agreement to repurchase stock, it'was proper to interplead defendant’s representative after his death, since cause of action survived.
    Action against one who held practically all stock of corporation to enforce agreement to repurchase plaintiff's stock at termination of his services for corporation as secretary, held not to abate on death of such person, so that it was proper to interplead his representative.
    Appeal from District Court, Hidalgo County; J. E. Leslie, Judge.
    Action by Henry Koch against the Val Verde Mercantile Corporation and others. Judgment "for defendants, and plaintiff appeals.
    Reversed and remanded.
    Ramsower & Seawell, of McAllen, for appellant.
    Elmer Graham, of Houston, for appellees.
   COBBS, J.

The appellant, Henry Koch, instituted this action against the Val Verde Mercantile Corporation, and the Val Verde Country Club, Inc., both being private corporations duly incorporated under the laws of the state of Delaware, and having permits to transact their business in Texas, with their principal offices in the town of Donna, Hidal-go county, Tex., and H. P. Hansen, in the Ninety-Third district court of Hidalgo county, Tex., to recover the sum of $4,000, which appellant alleged he paid to appellees for 30 shares of stock in the Val Verde Mercantile Corporation of the par value of $100 each, and 10 shares of stock in the Val Verde Country Club of the par value of $100 each, and that as a part of the consideration and the inducement for the purchase, of said stock, it was agreed by the appellees that appellant should be employed by the corporations in the capacity of secretary at a salary of $200 per month, with an additional amount at a later date of $50 per month, and that upon the termination of his services, as aforesaid, said corporations would return to appellant the said $4,000, upon the delivery to them of the shares of stock, as aforesaid, and that appellant was induced to purchase said shares of stock from appellees’ corporations upon the express agreement with all of ap-pellees that they would return to him the par value of said stock paid for by him when-' ever his services and salary were discontinued by them, and that acting and relying upon said agreement he paid to appellees said sum of $4,000, and that after remaining in the service of appellees’ corporations from about the 24th day of October, 1924, until the 17th day of May, 1927, appellees discharged him from his position and discontinued his salary, and that upon demand and tender of his stock as aforesaid to appellees, they refused to pay him the $4,000, and he continued his tender of said stock in his petition, and demanded judgment against all of the appel-lees, and in the alternative against each corporation separately for the par value of the stock purchased from each or' against each corporation, and appellee H. P. Hansen, or against eách appellee separately.

The appellees answered, pleading: (a) Amicus curise, suggestion of death of H. P. Hansen, and entering the appearance of Elmer Graham, his executor; (b) plea in abatement ; (c) general exception; (d) general denial.

The court revived the cause against the said H. P. Hansen in the name of Elmer Graham, executor, and granted the request of the said Elmer Graham to be made a party defendant herein. The plea in abatement was by the court overruled. The court sustained the general exception of the appellees, and appellant refusing and failing to amend, his cause of action was dismissed, and a judgment was rendered by the court in behalf of appellees upon their general exception to the petition of appellant, and appellant duly excepted to the action and judgment of the court, and in open court gave notice of appeal.

We have copied appellant’s statement of the ease because appellees say, “Appellant’s statement of the case is correct.” Besides the issues controlling the disposition of the case are well set out therein. The brevity and terseness exhibited by appellees in their brief are so unusual that we shall here copy his entire brief:

“Appellant’s statement of the case is correct. The appellee relies upon the following authori-Ities as sustaining the trial court’s action in holding a general demurrer good against plaintiff’s petition: Eletcher on Corporations, vol. 3, p. 2956; Guernsey v. Cook, 120 Mass. 501; Jones v. Williams, 139 Mo. 1, 39 S. W. 486, 40 S. W. 353, 37 L. R. A. 682, 61 Am. St. Rep. 436; Scripps v. Sweeney, 160 Mich. 148, 125 N. W. 72.”

The assignment challenges the ruling of the court, in the most general way in sustaining the general demurrer and dismissing the case. We have just discussed and held at this term of the court, that it is error to sustain a general demurrer to a petition, however defective in many respects, if it discloses therein one good cause of action. A. E. Rankin v. W. L. Parker (Tex. Civ. App.) 4 S.W.(2d) 227, decided the 29th day of February, 1928. An examination of the authorities cited by appellee do not show them in point, nor as sustaining the action of the court in dismissing the cause of action. If the whole transaction were void on the ground of public policy they would be in point.

As a part of the inducement for the purchase of the stock it was definitely agreed that appellant should be employed by the corporation in the capacity of secretary at a stipulated salary, and when the employment ceased said corporations would return the money upon the delivery of the stock to them. His employment was of a clerical nature. He was given no exclusive general management or control of the affairs and destinies of the corporation superior to the others. Of course, he acquired stock in the corporation that gave him voting power, even so as a director. We cannot perceive that the contract under discussion here contained the same vice and was subject to 'the same invalidity as was the alleged contract stated in Guernsey v. Oook, 120 Mass. 501. It is not susceptible to the interpretation that appellant was granted an advantage, a private advantage, not shared in by other stockholders, because of his election as secretary or treasurer, but as a stockholder or director he stood in the same relation as the others. The contract under discussion in the case last mentioned supra, was held to be illegal and unenforceable “because the court will not lend its aid to enforce an illegal contract.” However, this holding is somewhat contrary to the recent holding of our Supreme Court in Sluder v. San Antonio, 2 S.W.(2d) 841, just decided by the Commission of Appeals, and approved by the two Associates of the Supreme Court, apparently not by the Chief Justice, whose name is not signed to the approval, wherein the services alleged to be performed by an attorney on a contract on its face in plain violation of the city ordinances was allowed to recover his fees on the ground that the city received the benefit of his services, and therefore “common honesty” required it to pay the price.

Though not shown by the record, appellant states in the brief, and it is not denied, that the opinion of the trial court was based somewhat on the ground that the corporation could not make a binding agreement to repurchase the stock after the determination of the employment, because such a contract, being against public policy, is unenforceable, both against the corporations and said Hansen. That a corporation has the power to purchase and acquire its own stock is no longer an open question. It may do that under certain circumstances. There will be found in the case of San Antonio Hardware Co. v. Sanger, 151 S. W. 1105, decided by this court, an interesting opinion covering this entire question. Unless some bad faith is shown or some irreparable and harmful injury is done to the corporate affairs, or some undue and unfair advantage is given to the one party over the others, that is not common to all, we cannot see why the contract is void as against public policy. It does not appear that the agreement to repurchase its own stock with the funds of the corporation is misusing and wrongfully converting such funds. There is nothing shown by the transaction tending to show any injury to the corporation or to any of the creditors. Richards v. Ernst Wiener Co., 145 App. Div. 353, 129 N. Y. S. 951.

In speaking of contracts of this character, it is said in Schulte v. Boulevard Co., 164 Cal. 464, 129 P. 582, 44 L. R. A. (N. S.) 156-160, Ann. Cas. 1914B, 1013, that this is more than a contract to sell and buy; the plaintiff seeks to “enforce a part of an entire contract under which the stock was originally issued to him. The right to return the stock and receive” the agreed sum “was a material and indivisible part of the consideration upon which the plaintiff agreed to become a stockholder. As between the parties it would be manifestly unjust to permit the corporation to retain the money jteid by plaintiff, and at the same time to repudiate the promise which it gave in exchange for the money. The obligation to pay, upon a return of the shares, the sum agreed to be paid, is not to be viewed as a new undertaking arising after the plaintiff has assumed the relation of stockholder. It came into being coincidentally with the contract by which plaintiff became a stockholder. The sale to plaintiff was conditional. He never became a stockholder, except subject to the qualification that he might return his shares upon the stipulated terms.”

The cause of action survived against Hansen, and it was proper to interplead his representative. Williams v. Harris (Tex. Civ. App.) 193 S. W. 403. Hansen owned practically all the stock of the corporations, he controlled and dominated their affairs, and it is alleged that he induced appellant to purchase the stock and make the agreement supposedly not only for the benefit of the corporations, but for his own individual benefit, and when the employment terminated good faith required that the stock so tendered should be paid for. It is urged by appellant that “it would so smack of dishonesty that the courts will not permit the corporations to gain by such conduct.” That is a very good argument (upon the side of “common honesty,” but courts are controlled by the law.

We think the court erred in sustaining the general demurrer and dismissing the case on the ground of fundamental error, which was but in very general terms assigned. Cavitt v. Cavitt (Tex. Civ. App.) 295 S. W. 193; Nalle v. Eaves (Tex. Civ. App.) 298 S. W. 447.

The court erred in its ruling, and the judgment is reversed and the cause remanded for a new trial.
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author: SMITH, J.

text:
    COWDEN v. WALLACE et ux.
    (No. 7970.)
    Court of Civil Appeals of Texas. San Antonio.
    March 28, 1928.
    1. Appeal and error <§=77 (2) — Probate court’s decision perpetuating temporary guardian’s appointment without making affirmative disposition of contestants’ application held final judgment supporting appeal to district court.
    In proceeding for appointment of guardian, probate court’s decision perpetuating appointment of temporary guardian without making affirmative disposition of contestants’ application held, sufficient as final judgment to support appeal by contestant to district court, since, in perpetuating appointment of temporary guardian, contestants’ application was necessarily denied by implication.
    2. Guardian and ward <§=I3(8) — On appeal from probate court’s decision perpetuating appointment of temporary guardian, district court may consider contestants’ application for appointment (Rev. St. 1925, art. 4327).
    On appeal from order perpetuating appointment of temporary guardian, in which no affirmative disposition was made of contestants’ claims, district court was authorized to consider contestants’ application for appointment, since under Bev. St. 1925, art. 4327, appeal carried whole case into district court for trial de novo.
    3. Guardian and ward <§= 13 (8) — -Jury’s verdict as to relative suitability of parties seeking appointment as guardian is conclusive where evidence was sufficient to raise such issue.
    In proceeding for appointment of guardian in which evidence raised issue of relative suitability of respective parties seeking appointment jury’s verdict will not be set aside.
    Appeal from District Court, Uvalde Couni ty; L. J. Bracks, Judge.
    Appointment of Mrs. Mary Jane Cowden as temporary g-uardian of James T. Cowden, Jr., was contested by K. IT. Wallace and wife. Mrs. Cowden’s appointment was made permanent in probate court and contestants appealed to the district court. From an adverse judgment Mrs. Cowden appeals.
    Affirmed.
    6. B. Fenlfey, of Uvalde, for appellant.
    Atlas Jones, of Uvalde, for appellees.
   SMITH, J.

In the disastrous storm which visited the town of Rock Springs, Edwards county, on April 12, 1927, James T. Cowden and wife, Hattie, lost their lives. They were survived by their respective parents, and an only child, James T. Cowden, Jr., then less than two years of age. The paternal grandparents, Mary Jane Cowden and husband, reside in Kerr county; the maternal grandparents, R. F. Wallace and wife, Belle, reside in Edwards county. Shortly after the death of the child’s parents, its grandmother Mary Jane Cowden was duly appointed temporary guardian of the person of the child, in the probate court of Edwards county. In due course, the child’s maternal grandparents, the Wallaces, filed a contest of the appointment of Mrs. Cowden, -and prayed that they, instead of Mrs. Cowden, be appointed joint guardians of the minor, and that the grandfather, R. F. Wallace, be appointed, in Mrs. Cowden’s stead, as guardian of the minor’s estate. The contest was tried in the probate court, and the appointment of Mrs. Cowden was made permanent. The Wallaces,appealed from this order to the district court of Edwards county, but, by agreement of the parties, the ease on appeal was transferred to Uvalde county, and there tried with a jury. From an adverse judgment, based on the jury’s verdict, Mrs. Cow-den has appealed.

In finally disposing of the contest in the probate court it was simply provided in ■the decree that the appointment of Mary Jane Cowden as temporary guardian of the minor be made permanent. No affirmative disposition was made of the application of the Wallaces to be substituted as such guardians in the place of Mrs. Cowden. Appellant contends that because of this omission from the decree, the order which merely perpetuated the appointment of appellant was not a final judgment such as would support an appeal. We are of the opinion, however, that the judgment was sufficient for this purpose, for in perpetuating appellant’s appointment the application of appellees to be appointed to the position in controversy was necessarily denied by implication. It was a contest between the two parties as to which of those parties should be appointed guardian, the decision in favor of one amounted to a denial of the application of the other, and the resulting order appointing the one was, in effect, an order overruling the application of the other for the same appointment.

So, an appeal from that order carried the whole case into the district court, in which the statute provides for a trial de novo. Article 4327 (Bev. St. 1925). Appellant contends that because the appeal was simply from an ordér perpetuating her appointment as guardian, the district court was limited to a consideration of that one question, and could not go further and consider appellees’ application for appointment in lieu of appellant. We overrule this contention. For the effect of the appeal was to bring the whole ease, with its subject-matter and all the parties concerned in the county court proceedings into the district court.

“The jurisdiction thus acquired by that court was as broad and comprehensive as to the entire proceedings as that originally vested in the county court, and any person interested in the estate has the right to intervene in a probate proceeding after an appeal from the county to the district court; and. in the trial de novo in the district court, that tribunal may do all that the county court could have done in the matter.” Pipkin v. Turner (Tex. Oiv. App.) 277 S. W. 221.

Appellant complains that the evidence in the district court did not warrant the judgment setting aside her appointment. We conclude, however, that this complaint is not sustained by the record, for the evidence raised the issue of the relative suitability of the respective parties seeking the appointment as guardians. This issue was submitted to the jury, who found in favor of appellees, and we have no warrant to set aside that finding.

- The judgment is affirmed.
      <§s»For other eases see same topic and KEY-NUMBER in all Key-Numbered Digests and indexes


author: HALL, C. J.

text:
    WESTERN UNION TELEGRAPH CO. v. ALRED.
    (No. 2890.)

    Court of Civil Appeals of Texas. Amarillo.
    Oct. 26, 1927.
    Rehearing Denied Jan. 4, 1928.
    !. Telegraphs and telephones <©=359 — Recovery may be had against telegraph company failing to properly transmit and deliver telegram either in action ex contractu or ex delicto.
    Recovery may be had against telegraph company for failure to properly transmit and deliver a telegram either as for a breach of contract, express or implied, or for a failure by company to perform duties imposed on it by common law.
    2. Telegraphs and telephones <§=>35, 36 — (Telegraph, company must receive all messages and transmit them with due care.
    Duty is imposed by law on telegraph company to receive and transmit, with due care, all messages tendered to it.
    3. Telegraphs and telephones <§=>66(4) — Evidence in suit against telegraph company for failure to properly transmit and deliver tele- . gram held to establish contract to transmit message.
    In suit to recover damages against telegraph company for failure to properly transmit and deliver a telegram, evidence held, sufficient to establish a contract or undertaking on part of company to transmit telegram in accordance with its common-law duty.
    4. Evidence <§=>54-yOne fact may be presumed from proof of another.
    In many cases one fact may be presumed from proof of another fact.
    5. Telegraphs and telephones <§=>66(2) — Téle-gram held admissible in suit for damages for failure to properly transmit and deliver message, as showing receipt with undertaking to transmit.
    In suit to recover against telegraph company for failure to properly transmit and deliver a telegram, message itself, though not positive proof that sender contracted with defendant’s agent for its transmission, is admissible as evidence tending to show that company did receive and undertook to transmit it in accordance with its common-law duty.
    6. Telegraphs and telephones <§=>65(1) — Petition alleging failure to properly transmit telegram advising plaintiff of father’s death held to support recovery.
    In suit against telegraph company to recover damages for failure to properly transmit and deliver a telegram alleging that defendant’s agent failed to properly transmit message advising plaintiff of father’s death, whereby plaintiff was led to believe that father’s condition was better, and was prevented from attending funeral, held, sufficient to support a recovery based either on a breach of contract or failure to fulfill duties imposed on company by common law.
    7. Evidence <§=>314(3) — Death may be proven by hearsay.
    Death is a fact which may be proven by hearsay evidence.
    8. Appeal and error <§=>544(1), 719(5) — Admission of evidence held harmless, without contention that it was incompetent, or bill of exception to its admission.
    Admission of testimony, if error, was harmless, in absence of contention that it was incompetent, or bill of exception in record to its admission.
    9. Telegraphs and telephones <§=>66 (I)— Damages for telegraph company’s failure to transmit and deliver telegram advising plaintiff of father’s death need not be proven.
    In suit against telegraph company to recover damages for failure to properly transmit and deliver a telegram advising plaintiff of death of his father, whereby he was prevented from attending funeral, it was unnecessary to prove damages, since fact of mental anguish in such case may be presumed, making it unnecessary to introduce testimony as to extent of suffering.
    10. Telegraphs and telephones <§=>71 — $400 for telegraph company’s failure to properly transmit and deliver telegram advising plaintiff of father’s death held not excessive.
    Four hundred dollars as damages against telegraph company for failure to properly transmit and deliver telegram advising plaintiff of father’s death, whereby he was prevented from attending funeral, held not excessive.
    Error from District Court, Wichita County ; E. G. Thornton, Judge..
    Suit by E. E. Aired against Western Union Telegraph Co. Judgment for plaintiff, and defendant brings error.
    Affirmed.
    W. H. Flippen and Jno. T. Gano, both of Dallas, for plaintiff in error.
    Fischer & Fischer, of Wichita Falls, for defendant in error.

      Writ of error refused.

   HALL, C. J.

Defendant in error, Aired, instituted this suit to recover of plaintiff in error damages for failure to properly transmit and deliver to defendant in error a telegram sent from Ethel Aired, at Lubbock, Tex., to him at Wichita Palls, Tex., advising him of the death of his father. He alleges that the telegram was worded as follows: “Papa gone to sleep. Services this evening. Notify A. C. Howard.” He further alleges that said message was transmitted to him by the receiving office at Wichita Palls over the telephone by defendant’s agent, and that such agent transmitted only the following portion of said telegram: “Papa gone to sleep. Notify A. C. Howard.” He further alleges that because of such failure to properly transmit such message plaintiff believed that his father’s condition was better, and did not understand’ that he was then dead, and that plaintiff was thereby prevented from attending the funeral of his father, to plaintiff’s damage in the sum of $15,000.

Defendant company answered by general demurrer, general denial, and specially answered that it handled the suit message with all reasonable and seasonable dispatch; that the failure to deliver,.if any, was in no wise attributable to any act of omission or. commission on its part, but through an agency beyond its control, and further specially alleged that the failure to deliver, if any, and the damages resulting, if any, were directly and proximately caused by the negligent acts of commission or omission on the part of the plaintiff directly contributing thereto. The case was submitted to the jury upon special issues, and upon the answers judgment was rendered in favor of plaintiff for the sum of $400 and costs.

The first proposition urged is that it is necessary for plaintiff, in suits of this character, to both allege and prove that the company had contracted to transmit and deliver the suit message before he can recover against the telegraph company. It is insisted, under ‘ this proposition, that there is no testimony whatever that plaintiff’s sister, Ethel Aired, delivered the telegram to defendant’s agent at Lubbock for transmission and delivery, or that said agent accepted tiie telegram and agreed to transmit it. We cannot assent to this proposition. Plaintiif may recover either upon a breach of the contract, express or implied, or he may recover for a failure by the company to perform the duties imposed upon it by the common law. 26 R. O. L. 590, § 90. In other words, he may recover either in an action ex contractu or ex delicto.

With certain exceptions, not involved in this case, the duty is imposed by law upon telegraph companies to receive and transmit with due care all messages tendered to them. Jones on Tel. & Tel. §§ 38, 40; 37 Oyc. 1659, 1665. The copy of the message in question which was delivered to plaintiff some days after its contents had been phoned to him was introduced in evidence. It is dated Lubboctq Tex., June 27, 8:23 a. m. The written part of the message shows that it was received at Wichita Falls, Tex., on June 27,1926, at 8:36 a. m. It is addressed to the plaintiff, E. E. Aired, gives his street number as 1505 Kemp boulevard, and phone number 9336, at Wichita Palls, and signed Ethel Aired. A further notation written on the face of thp telegram indicates that it was phoned to plaintiff on that day at 8:45 a. m.

The plaintiff testified that the charges for transmitting the telegram were paid by him through the- telephone company.' These facts are not denied. We think this is sufficient evidence to show a contract, or rather an undertaking, on the part of the company to transmit the telegram in accordance with its common-law duty, for which it has been duly compensated. Whether a contract was, in fact, made by Ethel Aired with the company, if indeed a formal contract is required, is shown by these circumstances. It is a fundamental rule of evidence that in many cases one fact may be presumed from proof of another fact. Luten v. M., K. & T. Ry. Co. (Tex. Civ. App.) 184 S. W. 798; 10 R. C. L. 868. The company’s agent at Wichita Palls testified that the message was received at Wichita Palls, and that she called Mr. Aired over the phone and read it exactly as it was received. No attempt was made during, the trial by the defendant to deny that such a telegram had been received at its office in Lubbock, nor does any one testify that the company had not been compensated for its services in transmitting and delivering it. While the telegram itself is not positive proof that Ethel Aired contracted with the defendant’s agent at Lubbock for its transmission, it is admissible, and should be considered as evidence tending to show that the company did receive and undertook to transmit, in accordance with its common-law duty, the message written upon its face. Standard Paint Co. v. San Antonio Hardware Co. (Tex. Civ. App.) 136 S. W. 1150; Western Union Telegraph Co. v. Carver et al. (Tex. Civ. App.) 222 S. W. 333.

The allegations in plaintiff’s petition are sufficient to support a recovery based either upon a breach of contract or a failure to fulfill the duties imposed upon the company by the common law, and since the evidence shows a breach of its common-law duty, it is sufficient. 37 Cyc. 1728.

By the second proposition, the appellant insists that it was necessary for the plaintiff to both allege and prove in this ease that his father was dead and that his funeral was held before he can recover any damages. The plaintiff testified -that his father was dead, and that if the message had been read in full to him he could and would have reached Lubbock in time to have attended the funeral.

Death is a fact which may he proven by hearsay. The plaintiff also testified that his father was buried at Lubbock at 6 p. m., on the day of his death. No objection was made to this testimony. The appellant knew from the face of the message that the relatives intended to bury plaintiff’s fatter ttat afternoon. It was uncontroverted ttat tte funeral was beld about 6 p. m. on June 27tt. It is not insisted here ttat this testimony was incompetent, nor is there any bill of exception in tte record to its admission. The admission of the evidence, if error, was, therefore, harmless, and especially in view of the fur7 ther fact ttat through defendant’s negligence, tte message was not delivered to plaintiff until the third day after tte funeral. Plaintiff knew and testified as to how long it would have taken him to make the drive from Wichita Ealls to Lubbock, and his statement that he could have reached there in time for the funeral is, so far as tte record shows, a statement of a fact. Baker v. Nance Bros. (Tex. Civ. App.) 294 S. W. 290. He was corroborated upon' this point by the witness Boone, who had made tte trip by automobile several times.

By the third proposition, it is insisted that plaintiff failed to prove that he suffered any damages by reason of defendant’s negligence and his consequent inability to attend tte funeral of his father. Where tte relationship of father and son, or other such relation, exists between tte plaintiff and the deceased, the fact of mental anguish may be presumed by the jury, and it is not necessary for the plaintiff to testify as to the extent of his suffering. Western Union Telegraph Co. v. Porter (Tex. Civ. App.) 26 S. W. 866; Western Union Telegraph Co. v. Adams, 75 Tex. 531, 12 S. W. 857, 6 L. R, A. 844, 16 Am. St. Rep. 920.

The fourth proposition assails the judgment as being excessive. We overrule this contention.

Finding no reversible error, the judgment is affirmed.
      @=For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes


text:
    WESTERN UNION TELEGRAPH CO., Plaintiff in Error, v. Ernest HILL, Defendant in Error.
    (No. 2889.)

    Court of Civil Appeals of Texas. Amarillo.
    Oct. 26, 1927.
    Rehearing Denied Jan. 4, 1928.
    Error from District Court, Wichita County; E. ,G. Thornton, Judge.
    W. H. Flippen and Jno. T. Gano, both of Dallas, for plaintiff in error.
    Fischer & Fischer, of Wichita Falls, for defendant in error.

      Writ of error refused.

   HALL, C. J.

Defendant in error, Hill, sued the Western Union Telegraph Company to recover damages for the failure to deliver to him, with proper diligence, a telegram sent by one Earl at Cameron, to plaintiff at Wichita Falls, advising the latter of the death of his mother and requesting him to wire if he was

coming. It is alleged that the telegram was received by the defendant’s agent at Wichita Falls at 11:57 a. m. on the date it was sent, and that the company negligently failed to deliver it until about 9:00 p. m. on that date, and because of such negligence, plaintiff was unable to attend the funeral of his mother. He prays for $2,000 damages.

The defendant answered by general demurrer and general denial, and specially answered that the failure to make an earlier delivery was not due to any negligence on its part; that diligent efforts were made by its employees to make a speedy delivery of the same, and that the delay was wholly due to the absence of the the addressee, over which the defendant had no control. It is further alleged that the plaintiff was guilty of contributory negligence in failing to ascertain the schedules of trains immediately upon receipt of the message, which would have enabled him to reach Cameron in time for the funeral. A trial to a jury resulted in a judgment in favor of plaintiff in the sum of $1,150.

The appeal is presented here upon four propositions, which are identical with the propositions presented by defendant in cause No. 2890, Western Union Telegraph Co. v. Aired, 4 S. W. (2d) 666, this day decided by this court, The issues presented by the pleadings and upon which testimony was offered furnish no additional reasons in support of the contentions here than were presented in the Aired Case. Counsel for appellant, in oral argument, stated that the questions of law in the two cases were, for all practical purposes, identical, except that the amount of the judgment in this case was much larger than in the Aired Case.

For the reasons stated in the Aired Case, all of the propositions are overruled and the judgment is affirmed.


author: McCLENDON, C. j.

text:
    THOMASON v. MILLER et al.
    (No. 7185.)
    Court of Civil Appeals of Texas. Austin.
    March 1, 1928.
    Rehearing Denied March 21, 1928.
    1. Appeal and error ¡§=3916(1) — Allegations of sustained plea In abatement are assumed as true on appeal in absence of statement of facts.
    Where there is no statement of facts upon hearing of plea in abatement, court on appeal from dismissal after sustaining plea must assume as true, allegations of plea.
    2. Bankruptcy ¡§=299 — All solvent stockholders within reach of court’s processes held necessary parties to suit to enforce stockholders’ liability for deficiency between par value and amount paid.
    In suit by trustee in bankruptcy of insolvent corporation to enforce stockholders’ liability as upon subscription to capital stock for deficiency between par value of stock and amount paid therefor, held, that all stockholders who are solvent and within reach of court’s processes are necessary parties.

      3. Bankruptcy @=>145(2)— Cause of action for alleged fraudulent overvaluation of property paid for by stock, held not to pass to trustee in bankruptcy of corporation.
    Cause of action for alleged fraud in overvaluation of oil leases turned over to corporation in consideration of its capital stock, is personal to particular creditors of corporation defrauded and is not an asset of corporation passing to its trustee in bankruptcy, and latter cannot maintain an action for suck fraud.
    4. Corporations <§=99(1) — “Watered stock” is that issued without consideration .or for less than par value, or for labor, services, or property worth less than par value.
    Watered stock is stock issued as bonus or otherwise without consideration or issued for a less sum of money than par value, or issued for labor, services, or property which at a fair valuation is less than the par value.
    [Ed. Note. — For other definitions, see Words and Phrases, First and Second Series, Watered Stock.]
    5. Bankruptcy @=145(4) — Action for fraud perpetrated against corporation passes to its trustee in bankruptcy.
    An action for fraud perpetrated upon a corporation itself passes to its trustee in bankruptcy as an asset of its estate.
    Appeal from District Court, Brown County; J. O. Woodward, Judge.
    Action by A. N. Thomason, Trustee in bankruptcy of Patterson Oil Company, against E. J. Miller and another. From a judgment of dismissal, plaintiff appeals.
    Affirmed.
    Critz & Woodward, of Coleman, and McCartney, Foster & McGee, of Brownwood, for appellant.
    Harrison & Woodruff and Jenkins, Miller & Wilson, all of Brownwood, for appellees.
   McCLENDON, C. j.

Suit by A. N. Thoma-son, as trustee in bankruptcy of Patterson Oil Company, against E. J. Miller and T. F. Patterson as organizers and subscribers to the capital stock of the oil company, to recover balance of proved claims against the corporation after all its assets had been applied thereto, on the ground that property consisting of oil leases turned over to the corporation in consideration of its capital stock had been grossly and fraudulently overvalued. Defendants filed a plea in abatement, listing a large number of other parties who were interested in the oil leases and had received stock in consideration for their interest, and asserting that they were necessary parties to a proper determination of the ratable amount each should pay to make up the deficiency in the corporate assets, m ease there was any liability on the part of the stockholders to do so. This plea was sustained. Plaintiff declined to make additional parties, and the suit was dismissed.

Briefly stated, plaintiff’s petition alleges the following: The oil company was incorporated under the laws of Texas on May 9, 191S, with a capital stock of .$100,000. The charter was obtained upon affidavit of Miller. Patterson, and one McCully, to the effect that Miller and Patterson had subscribed the, amount of the capital stock, and had paid for it by transferring to the corporation certain oil leases stated to be of the value of $100,-OOO. On August 19, 1919, the capital stock was increased by $200,000, and this increase was authorized under an affidavit of Patterson, Miller, and McCully, that Miller and Patterson, the latter as trustee, together with others named in the affidavit, had subscribed the increase, and had paid for it by transferring certain other oil leases to the corporation. It was alleged that the leases transferred in payment of the original capital stock were worth not exceeding $2,000, and that those transferred in payment of the increase were of no value whatever; that the valuations stated in the respective affidavits were false and fraudulently made. The petition'shows the insolvency of the corporation, its adjudication as a' bankrupt, the appointment and qualification of the trustee, the ad-, ministration of all assets of the corporation, and a balance of proved claims amounting to $35,000. A list of the holders of these claims is given, and it is alleged that each relied upon the capital stock being fully paid and were deceived and defrauded by the representations and affidavits of defendants in that regard. The prayer was for recovery for the. amount of the unpaid claims.

The plea in abatement gave the names and residences of a large number of original stockholders of the corporation within the jurisdiction of the court. It was alleged that each of these stockholders was interested in the leases transferred to the corporation; that théir stock was issued to them under the same circumstances and conditions as' was the stock issued to defendants; and that if the latter were liable the other named stockholders were in like manner liable ratably with the defendants. The plea denied that there were any stock subscriptions as spch, and that all the stock was issued in the manner alleged, in consideration of the leases so transferred. It was further alleged that the property was of the value stated in the affidavits ; that the Secretary of State made an investigation as to its value and approved the charter; and, further, that there was no fraud in the transaction, but the leases were turned over to the corporation in good faith and at a valuation which the incorporators believed to be fair.'

There is no statement of the facts upon the hearing of the plea, and we must, therefore, assume as true the allegations of the plea to the effect that the named parties were also stockholders of the corporation under the saíne conditions and circumstances as the defendants, and were liable the same as the defendants.

We have reached the conclusion that the trial court’s order sustaining the plea and judgment dismissing the suit should be affirmed upon the following holdings:

1. In so far as recovery was sought to enforce liability as upon subscription to capital stock for deficiency between par value and the amount paid therefor, all stockholders who were solvent and within reach of the court’s processes, were necessary parties defendant, and the order and judgment of the trial court were correct.

2. In so far as recovery was sought upon allegations of fraud, the cause of action was personal to the particular creditors defrauded, was not an asset of the corporation that passed to its trqst'ee in bankruptcy, and was therefore not maintainable by him in that capacity.

The cause of action asserted in the petition is one for recovery, to the extent nee-essary to satisfy creditors, of a deficiency in value paid to a corporation for its capital stock issued as fully paid and nonassessable, generally designated as “watered” stock. This term embraces a variety of transactions which may be classed as follows: (1) Where stock is issued as a bonus or otherwise without consideration; (2) where it is issued for a less sum of money than the par value; and (3) where it is issued for labor, services, or .property, which at a fair valuation is less than the par value.

Under our Constitution and statutes prohibiting issuance of stock except for money, services, labor, or property equal in value to its par value, the decisions of this state place the transactions in the first two classes in substantially the same category as unpaid stock subscriptions, at least in so far as the rights of creditors are concerned. O’Bear, etc. v. Antiexplo Co., 101 Tex, 431, 108 S. W. 967, 109 S. W. 931, 16 L. R. A. (N. S.) 520, 130 Am. St. Rep. 865; Park v. Rich (Tex. Com. App.) 212 S. W. 947; Mathis y. Pridham, 1 Tex. Civ. App. 58, 20 S. W. 1015.

Where under constitutional and statutory provisions authority is given to issue stock in consideration for property, there are two lines of decision upon the liability of the stockholder.

Under' the one it is held that where the transaction is fair as between the corporation and the stockholder in the valuation placed upon the property, that is, where there is no fraud in overvaluing it, the stockholder is not liable for any deficiency between the actual fair value of the property he transfers and the par value of the stock he receives.

' Other courts construe these constitutional and statutory provisions to mean that the subscriber is obligated absolutely to deliver to the corporation property fairly worth the full par value of the stock he receives, and for any deficiency therein he is liable to creditors.

We find two decisions in this state upon this question and they are in apparent conflict. The Galveston Court of Civil Appeals in Cole v. Adams, 19 Tex. Civ. App. 507, 49 S. W. 1052 (Judge Pleasants writing) in speaking of the line of decisions holding stockholders “not liable to creditors, as for unpaid stock, if overvaluation was bona fide, and without intent to defraud on the part of said corporation and those receiving the stock,” holds:

“While it is true this proposition is sustained by the decisions of courts of high respectability, we think the wiser and better rule is that, as to creditors without notice, property conveyed in payment of stock is not to be considered as a payment except to the extent of its money or actual value. Vide Crawford v. Rohrer, 59 Md. 599; Shickle v. Watts, 94 Mo. 410, 7 S. W. 274; Libby v. Tobey, 82 Me. 397, 19 A. 904; and Boynton v. Andrews, 63 N. X. 93.”

The Beaumont Court in the more recent case of Pedon v. Jenkins, 203 S. W. 180 (writ of. error refused), followed the line of decisions holding stockholders not liable to creditors in the absence of fraud. A careful reading of the latter ease may disclose that the holding was not essential to the decision. It is also to be noted that it was decided subsequently to the enactment of those provisions of Revised Statutes, arts. 1308,1309, and 1313,- which (1) require an affidavit showing the manner in which the stock subscriptions are paid, and description and value of the property where it enters into the consideration for the stock, and (2) charge the Secretary of State with the duty of ascertaining the correctness of the stated valuation and confer upon him authority to refuse the charter if the property is overvalued; whereas, the Cole decision was rendered prior to those enactments. A decision of this question is not essential to the case at bar. If .the doctrine announced in the Cole Case applies, then clearly the right of action in so far as fraud is not essential is the same as if the stock had been issued for cash but less in amount than the par value. The amount of recovery against each stockholder under this doctrine, in the absence of fraud, would be the deficiency between the actual value of the property transferred and the par value of the stock.

Under this view the question of necessary parties is ruled by the decision in Nathis v. 'Pridham¡ above. The opinion in that case was written by Judge Williams, is well considered and has never been questioned on this holding so far as we have been able to find. The case there under consideration involved “watered” stock, issued either without consideration, . or for an amount of money less than the par value. The decision draws no distinction between tbe liability upon “watered” stock so issued and the liability for unpaid stock subscriptions. It is recognized that this liability ■ may be severable and the individual stockholder sued alone without the joinder of other stockholders in an ordinary action at law. But where, as here, the corporation has become insolvent and its entire affairs are being wound up by a receiver or trustee, and it is necessary to resort to unpaid stock subscriptions or liability of holders of “watered” stock to satisfy its indebtedness over and above its assets, all stockholders who are solvent and within the court’s jurisdiction are both proper and necessary parties. We quote from the opinion:

“In this character of suit it is essential to the completeness of the remedy that the amount of the indebtedness of the corporation, the amount of unpaid stock in the aggregate, the amount due from each stockholder, and the proportion thereof necessary to discharge the debts, should be definitely and finally ascertained. It might also become necessary to ascertain who, among the subscribers, are solvent and who insolvent, in order that the solvent ones be required, as far as their subscriptions suffice, to contribute enough to make up the deficiencies arising from insolvency of the others. It is apparent, therefore, that, in order to render certain and uniform justice to each creditor and each stockholder, they should all, as far as practicable, be brought into court. Accordingly we find the rule that equitable suits of this character must be brought by and for the benefit of all the creditors and against all delinquent subscribers to the stock of the corporation who are solvent and within the jurisdiction of the court so well established by authority that we need only to refer to some of them.”

Under this holding the trial court correctly sustained the plea of nonjoinder of necessary parties defendant.

It may be conceded that in so far as the action was one of actual fraud all joint tort-feasors were severally as well as jointly liable, to the full extent of the deficiency between the actual value of the leases and the full par value of the entire capital stock issued in so far as it was necessary to satisfy unpaid creditors. The authorities, however, seem to be uniform that such cause of action based upon fraud or deceit does not pass to the trustee in bankruptcy, but is personal to such creditors as may have been-defrauded. Ryerson v. Peden, 303 Ill. 171, 135 N. E. 423, 24 A. L. R. 1273; State Bank v. Kenney Bank, 143 Minn. 236, 173 N. W. 560; In re Beachy (D. C.) 170 F. 825; Courtney v. Georger (C. C. A.) 228 P. 859; S. C. (D. C.) 221 P. 502; In re Huffman, etc. (D. C.) 234 F. 798; Simons v. Thompson (C. C. A.) 289 P. 693; Collier on Bankruptcy, 13th Ed. vol. 2, pp. 1730-1733 and notes.

In those states where the liability is- held to be absolute to make up the deficiency, regardless of good faith, suit by the trustee in bankruptcy is maintainable. See Babbitt v. Read (D. C.) 215 P. 395; and In re Remington, etc. (C: C. A.) 153 P. 345.

In those states, however, which require that recovery be predicated upon fraud, ac-. tual or constructive, the trustee in bankruptcy cannot maintain the action. This distinction is clearly pointed out in the several federal court decisions above cited. The difference in the two holdings is illustrated in the Missouri decisions on the one hand, and the Alabama decisions on the other, each having constitutional provisions similar to our own. Under the Missouri decisions the stockholder is liable absolutely, regardless of fraud, and the deficiency between the value of the property given and the par value of the stock received is held to be a trust fund for the benefit of creditors, the same as the liability for unpaid stock subscriptions, and passes to the trustee in bankruptcy as an' asset of the corporation. In Alabama the liability Is predicated upon fraud, actual or constructive, and the holding is that such liability does not pass to the trustee in bankruptcy as an asset of the bankrupt’s estate.

The distinction should not be lost sight of between an action .founded on fraud upon the corporation itself, and one where the fraud was upon the creditors only. In the former the corporation can maintain the action, and it passes to its trustee in bankruptcy as an asset of its estate. Thus in Brooks v. Buys, 217 Mich. 263, 186 N. W. 472, where the articles recited transfer of certain property to the corporation' for its stock, and the property was not in fact transferred to it, the holding was that the corporation could recover the property or its proceeds. See also Seegmiller v. Day (C. O. A.) 249 P. 177. In the latter the creditors alone may sue; and their right of recovery is dependent upon whether they were in fact defrauded.

Under the trust fund theory the liability is absolute, and each stockholder is liable ratably for the deficiency between what he paid in money or property and the par value of the stock he received. Under the holding in Mathis v. Pridham, above, all solvent stockholders within the jurisdiction of the court who are liable under this theory are necessary parties where the action, as here, is to satisfy the balance due creditors in the final winding up of the corporation’s affairs. Under the fraud theory there is no right of action in the trustee in bankruptcy, but the right of action is personal to the several creditors who may show themselves defrauded. The action of the trial court in requiring that additional parties be .made and upon failure thereof in dismissing the suit was proper.

The trial court’s judgment is affirmed.
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