author: HENDRICKS, J.

text:
    INTERNATIONAL & G. N. RY. CO. v. PERKINS et al.
    (No. 964.)
    (Court of Civil Appeals of Texas. Amarillo.
    April 19, 1916.)
    1. Railroads ©=>265 — Receivers—Liability oe Road.
    A railway company, in the absence of statute, is not liable for the acts of a court receiver by reason alone of his relation to the property of the road.
    [Ed. Note. — For other cases, see Railroads, Cent. Dig. §§ 838-853; Dec. Dig. @=265.]
    2. Railroads @=265 — Receivers—Liability oe Road.
    Damages to third persons occurring while a railroad is operated by a receiver are a part of his expenses incurred in running the road, and payable out of current earnings, which, if diverteid by him and placed in permanent improvements, or turned over to the road without a sale, makes the road liable to the extent of the earnings diverted or turned over.
    [Ed. Note. — For other cases, see Railroads, Cent. Dig. §§ 838-853; Dec. Dig. @=265.]
    3. Railroads ' @=265 — Receiver — Snowme oe Liability.
    In suit against a railroad for loss of goods while in hands of a receiver, a state of facts must be shown creating a liability on the road, which is not primarily liable for the acts of the receiver.
    [Ed. Note. — For other cases, see Railroads, Cent. Dig. §§ 838-853; Dec. Dig. @=265.]
    4. Railroads @=258 — Receiver—Purchase oe Road — Liability eor Receiver’s Acts.
    Generally, the purchaser of a railroad at a sale made under the order of a court holding custody of the property by a receiver takes the property free from claims against the receiver arising out of the operation of the road, unless the court ordering the sale imposes on the purchaser liability for such debts as part of the consideration.
    [lid. Note. — For other cases, see Railroads, Cent. Dig. §§ 799-801; Dec. Dig. @=>258.]
    5. Railroads @=>265 — Receiver — Repurchase of Property by Road — Liability for Receiver’s Act.
    Where a railroad, after receivership, purchased and paid for its former property, including money on hand and current assets sold by the receiver under order of court, it was not liable, in the absence of assumption of liability in some manner, for a claim against the receiver for loss of goods in transit.
    [Ed. Note. — For other eases,- see Railroads, Cent. Dig. §§ 838-853; Dec. Dig. @=>265.]
    6. Railroads @=>265 — Receiver—Liability —Pleading.
    In action against a railroad, for its receiver’s negligence in losing goods in transit, brought after the receiver has sold the property and current assets by order of court, it must be pleaded and proven that the road in some manner assumed the liability.
    [Ed. Note. — For other cases, see Railroads, Cent. Dig. §§ 838-853; Dec. Dig. @=>265.]
    Appeal from Hardeman County Court; D. E. Magee, Judge.
    Suit by J. J. Perkins and another against the International & Great Northern Railway Company and others. From a judgment against the named defendant, it appeals.
    Reversed and remanded in part, and affirmed in part.
    See, also, 184 S. W. 725.
    Wilson, Dabney & King, of Houston, and J. A. Clarke, of Quanah, for appellant. Berry, Stokes & Morgan, of Yernon, and Marshall & Perkins and M. M. Hankins, all of Quanah, for appellees.
   HENDRICKS, J.

The appellees, Perkins and Watkins, sued the appellant, the International & Great Northern Railway Company, along with the Ft. Worth & Denver City Railway Company, and the Mallory Steamship Company, to recover as upon a breach of contract in writing for failure to deliver a case of shoes. The trial judge, without the aid of a jury, rendered judgment only against the International & Great Northern Railway Company for the wholesale value of the shoes.

The first assignment of error is that:

“The undisputed evidence, as well as the findings by the trial court, show that the International & Great Northern Railway Company, at the time of the loss of the shoes in controversy, was in the hands of a receiver, appointed by the United States Circuit Court, for the Northern District of Texas, and at the time this suit was brought said Railway had been sold out under order of said court and delivered to said defendant as the assignee of the purchaser; and plaintiffs neither alleged nor proved any fact or facts necessary to show liability of said defendant for the loss of the case of shoes in controversy by the receiver of its property while the same was in his hands as such.”

It is further assigned — and which seems to be the ground of the principal controverting argument between the parties — that there was a failure of allegations and proof that any of the revenues of the receivership were expended in betterments to the property while the same was in the hands of the receiver; the appellee contending that the order of the federal court showing that moneys and current assets were delivered by the receiver to the purchaser is a sufficient predicate for the judgment rendered by the trial court in this case.

The property of the railway company, as assumed by appellee, was not redelivered to it without a sale. The record shows that the property and franchises of the company were actually sold and paid for. A railway company, in the absence of a statute, is not liable for the acts of a court receiver by reason alone of his relation to the property of said company. Texas & Pacific Ry. Co. v. Johnson, 76 Tex. 421, 13 S. W. 463, 18 Am. St. Rep. 60.

Damages occurring while the railroad is operated by such receiver are, of course, a part of the receiver’s expenses, incurred in running the road, and are payable out of his current earnings, which, if diverted by the receiver and placed in permanent improvements, or turned over to the railroad company, without a sale, makes said company liable to the extent of the earnings diverted or turned over. Railway Co. v. Johnson, supra; Holman v. Railway Company, 14 Tex. Civ. App. 503, 37 S. W. 464.

The railroad company not being primarily liable for the acts of the receiver, arising from his negligence, on account of being an independent agent of the court, a state of facts must be shown creating the liability of said company. Hicks v. International & Great Northern Ry. Co., 62 Tex. 40; Ryan v. Hays, Receiver, 62 Tex. 43; H. & T. C. Ry. Co. v. Crawford, 88 Tex. 277, 31 S. W. 176, 28 L. R. A. 761, 53 Am. St. Rep. 752; S. A. & A. P. Ry. Co. v. Bowles, 88 Tex. 634, 32 S. W. 880.

“As a general rule, the purchaser of a railroad at a sale, made under an order of a court, holding the custody of the property by a receiver, takes the property free from claims against the receiver arising out of the operation of the road,” unless the court ordering the sale imposes upon the purchaser of the property liability for such debts as a part of the consideration of the purchase. Railway Co. v. Crawford, 88 Tex. 279, 31 S. W. 176, 28 L. R. A. 761, 53 Am. St. Rep. 752. The purchaser would necessarily buy the betterments, and the creditor would be required to look to the fund paid for the property. If, however, the property, as the order of the federal court in this case shows, was actually purchased and paid for, and though it may have included money on hand and current assets, and though the property afterwards was delivered to the railway company, the receiver, and not the railway company, having been originally liable for the claim, the ease of Hicks v. International & Great Northern Ry. Co., supra, would control this record. That was an action of damages, brought by Hicks against the railway company, after the receiver had been discharged. The liability was one against the receiver, based upon the negligence of his servants. The road was purchased and reconveyed to the railway company. “The claim * * * was not one for which the appellee (railway company) was liable as a corporation, and it could not became liable by the repurchase of property which it had formerly owned. By the sale made by the receiver, it not being shown to be collusive, the title to the property, the income of which while in the hands of the receiver must have been subject to the payment of appellant’s claim, had it been established against the receiver, passed to the purchaser, freed from the claims of those persons holding claims against the receiver, and the appellee (railway company), under the facts shown in this case, took it.” A careful reading of the Crawford and the Bowles Cases, supra, sustains the same conclusion.

Unless the railway company, in some manner, has assumed this liability, which must be pleaded and proven, if the record, upon another trial, shows a purchase and payment for the property, at the judicial sale, the appellant in this case would not be liable, and, upon the same record as exhibited here, the trial court should so find or direct.

Upon the record, as presented, we do not think, without going into detailed reasons, that the statutes of limitation would operate as a bar. The cause is reversed and remanded as to appellant, and affirmed as to the Denver Company and the Mallory Steamship Company.

Reversed and remanded in part, and affirmed in part.
      @=Eor other oases see same topic and KEY-NUMBER m all Key-Numbered Digests and Indexes

      @=»For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes


source: Caselaw Access Project

author: FLY, C. J.

license: Public Domain

text:
    WHITE et al. v. PETERS.
    (No. 5647.)
    (Court of Civil Appeals of Texas. San Antonio.
    April 5, 1916.
    Rehearing Denied May 10, 1916.)
    1. Trial <§=192— Instructions — Assuming Pacts.
    It is not error for a court in its charge to assume the existence of facts as to which evidence is uncontroverted.
    [Ed. Note. — For other cases, see Trial, Cent. Dig. §§ 43ÍU434; Dec. Dig. <§=192.]
    2. Fbaud <§=11(1) — Representations—Matters oe Fact oe Opinion.
    A statement that land sold is as good as surrounding land, when in fact the maker of the statement knows a large part of it is a depression in which water stands after rains, cannot be deemed a statement of opinion, but is a statement of fact.
    [Ed. Note. — For other cases, see Fraud, Cent. D-g. § 12; Dec. Dig. <§=11(1).]
    3. Fraud <§=11(1) — Statement Knowingly False.
    When a person makes a statement in the form of an opinion and knows of facts which make the opinion a sham and a fraud, he really makes a misrepresentation of fact.
    [Ed. Note. — For other cases, see Fraud, Cent. Dig. § 12; Dee. Dig. <§=11(1).]
    4. Vendor and Purchaser <§=37(1) — -Duty to Investigate.
    Where a person has been induced to enter into a contract by false representations, it is no defense to his claim to be relieved of it that he was lacking in wariness or caution in 'believing the representations.
    [Ed. Note. — For other cases, see Vendor and Purchaser, Cent. Dig. § 54; Dec. Dig. <§=37(1).]
    5. Appeal and Error <§=1002 — Verdict on Conflicting Evidence.
    A verdict based on conflicting evidence will not be disturbed on appeal.
    [Ed. Note. — For other cases, see Appeal and Error, Cent. Dig. §§ 3935-3937; Dee. Dig. <§= 1002.]
    Appeal from District Court, Nueces County; Jas. A. Graham, Judge.
    Action by William White and others against George H. Peters. From a judgment for defendant, plaintiffs appeal.
    Affirmed.
    G. R. Scott, Boone & Pope, Claude Lawrence, and Gowan Jones, all of Corpus Ohristi, for appellants. F. J. Onzon and E. L. Coleman, both of Corpus Christi, for ap-pellee.
   FLY, C. J.

Appellants sued to recover a debt alleged to be due by appellee in the sum of $2,924.85, less a credit of $35, as evidenced by three promissory notes in the sum of $974.95 each, which were secured by a vendor’s lien on certain land, described as lots 4 and 5 in block 7, and lot 1, in block 8, out of the George H. Paul subdivision of the Driscoll ranch; the whole containing 62.27 acres of land. Appellee admitted appellants’ cause of action except in so far as it might be defeated in whole or in part by the facts alleged in the answer. In the answer it was alleged that the deed to the land was never delivered to appellee, and by way of cross-action it was alleged that the land showed to appellee by appellants was that belonging to appellants, and he was told that the land to be sold to him was as good as that shown to him, which was free from swales; that he believed the statement, and the deed was executed and placed in escrow and the notes were executed and delivered to appellants, and a cash payment of $500 was made by appellee. It was further alleged that after-wards appellee investigated the land and found a large, deep swale thereon, covering one-half of the land; that when rain falls it is held in the swale or depression and would destroy any crops planted thereon. He prayed for the recovery of $535, money paid by him, and for the cancellation of contract and promissory notes, and for $311.35, damages suffered by him on account of the land not being worth as much as surrounding lands. The cause was tried by jury, re-suiting In a verdict and judgment for ap-pellee, canceling the contract and notes and in favor of appellee for .$500, with interest at 6 per cent, from January 13, 1013, and that appellants take nothing by their suit and pay all costs. Appellee bought the land herein described upon the representation of appellants’ agent that it was as good as the surrounding land. The land was not as good as the surrounding land, and that fact must have been known to the agent. A large part of the land was a swale or depression on which water stood after rains. Appellee would not have bought the land had he known its true coridition and was induced to buy by the statements made by the agent.

The first, second, third, and fourth assignments are grouped, and each of them assails the second and third paragraphs of the charge of the court on the ground that the court assumed that the representations made by the agent of appellants to appellee were statements of facts and not the expression of an opinion. The court may have assumed that the representations as to the quality were made as statements of existing facts, though it does not appear so; but, if the charge had assumed that fact, it would be open to the attack made upon it by appellants if all the evidence had not tended to show that it was the statement of a fact. If the evidence was uncontroverted on that point, it was not error for the court to assume the existence of the fact. The only testimony as to the false representations being made was that of appellee, and his testimony shows a positive assertion on the part of the agent that the land appellee was buying was as good in every particular as the other land about it. This representation was denied by the agent, but the jury believed he made it, and the uncontroverted testimony of appellee on that point showed the statement of a fact and not merely an expression of opinion. Appellee had the right to rely upon the statement of the agent, who was presumed to know all about the land, and in whom appellee reposed implicit confidence. The agent was fully cognizant of the fact that appellee was a stranger to the land and knew that he would rely upon his representations, which were made as to a present state of things. The agent could not have had an opinion, well founded or not, that a parcel of land with a swale or depression, which would hold water, was as good as surrounding land on which there was no such depression, and he must have intended to make the statement of a fact which he must have known would mislead. If he did not know the balance of the land was as good as that he showed to appellee, it had the same effect as though he did know. It was fraud to positively state a thing to be true when the party making the representation did not know it to be true. Morrison v. Adoue, 76 Tex. 255, 13 S. W. 166.

It may be that if appellee had insisted on going upon the land he could have discovered the falsity of the statement as to its quality, but that would be no answer to his prayer to be relieved from the contract. Labbe v. Corbett, 69 Tex. 503, 6 S. W. 808. However, he relied upon the positive statement of appellants’ agent that the land, not seen by appellee, was equally as good as that part of the land shown to him. The agent could not claim that what he said was a matter of opinion, because the defect in the land was so obvious and patent that he could not have entertained such an opinion. No man could honestly give it as his opinion that a parcel of land with a depression that gathers and holds water after a rain was as good as land adjoining it upon which there was no such depression. It was a plain statement of fact, made to deceive, or made without knowledge with which he should have possessed himself before making any such statement. As said in Culbertson v. Blanchard, 79 Tex. 486, 15 S. W. 700:

“So far as they were concerned, it made no difference whether they were deceived through the fraudulent or innocent representations of the plaintiff as to any fact shown to be a material inducement influencing their action in making the contract. However innocent may have been the intention of plaintiff in making the representations, and though he may have been mistaken as to the locality of the land, yet, if such representations _ had in fact the effect of misleading or deceiving the defendants or influencing their conduct in a material matter, the result was in the eyes of the law * * * a perpetration of a fraud upon defendants, regardless of the motives of the plaintiffs.”

This was in a case in which a misrepresentation was made as to the location of a certain tract of land with reference to other tracts.

The special charge was properly refused because there was no evidence tending to show that the representation of the agent as to the quality of the land was an opinion, but if there had been the charge did not express the law as to opinions. It is not the law that the expression of an opinion will not be cause for canceling a contract made through reliance upon the opinion whether “erroneous or untrue” or not. The law is that, when a person makes a statement in the form of an opinion and knows of facts which make the opinion a sham and a fraud, he has really made a misrepresentation of fact. Bigelow on Estoppel, p. 636. In this case there was no expression of opinion, but a positive assertion which was shown to be untrue.

There is evidence which tends to show that appellee did not rely upon his own judgment in buying the land, but that he did not see all of it and accepted the representations of the agent of appellants as true. The evidence showed that the brush on the land was so thick that appellee and those with him could not drive over it, and, not caring to walk over it, appellee accepted what the agent told him as true and upon that representation bought the land. As said in a quotation copied into the opinion in Labbe v. Corbett, herein cited:

“When once it is established that there has been any fraudulent misrepresentation * ⅜ * by which a person has been induced to enter into a contract, it is no answer to his claim to be relieved from it to tell him that he might have known the truth by further inquiry. He has a right to retort upon his objector: ‘You, at least, who have stated what is untrue for the purpose of drawing' me into a contract, cannot accuse me of want of caution, because I relied implicitly upon your fairness and honesty.’ ”

That quotation is copied and approved in Buchanan v. Burnett, 102 Tex. 492, 119 S. W. 1141, 132 Am. St. Rep. 900. To the same effect are Benton v. Kuykendall, 160 S. W. 438; Hammel v. Benton, 162 S. W. 35; Taber v. Eyler, 162 S. W. 490; Barton v. Cox, 176 S. W. 793.

The evidence was sufficient to justify the verdict. There was a sharp conflict in the evidence, but that was for the jury to determine, and. their determination of the facts cannot be disturbed.

The judgment is affirmed.
      ©=For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes


author: KEY, C. J.

text:
    COLEMAN NAT. BANK v. CATHEY et al.
    (No. 5583.)
    (Court of Civil Appeals of Texas. Austin.
    March 1, 1916.
    Rehearing Denied April 26, 1916.)
    1; Chattel Mortgages <©=275 — Foreclosure —Parties.
    Plaintiff, in a suit on notes and to foreclose a chattel mortgage, may join as parties defendants those liable on the different notes, if secured by the same chattel mortgage, though the mortgage is not executed by all the defendants.
    LEd. Note. — For other eases, see Chattel Mortgages, Cent. Dig. § 562; • Dec. Dig. <©=275. ]
    2. Chattel Mortgages <©=>114 — Construction — Debts Secured.
    Parties to a chattel mortgage may agree that it shall secure a later debt, or one different from that described in the mortgage.
    [Ed. Note. — For other cases, see Chattel Mortgages, Cent. Dig. § 191; Dec. Dig. <®=114J
    3. Chattel Mortgages <©=21 — Construction — Later Debt.
    A chattel' mortgage, conditioned to be annulled by payment of a note “unless the holder of said note shall elect to hold said property to secure any other liability or liabilities of mine in the hands of the holder,” secures a note of mortgagor, although not primarily payable to mortgagee, which is owned by mortgagee at the time of payment of the first note.
    [Ed. Note. — For other cases, see Chattel Mortgages, Cent. Dig. §§ 67, 09; Dec. Dig. <©=21.]
    Appeal from District Court, Coleman County; John W. Goodwin, Judge.
    Action by the Coleman National Bank against G. C. Cathey and others. From judgment for plaintiff, plaintiff and defendant Upton Plenderson appeal.
    Affirmed on Henderson’s appeal, and on plaintiff’s appeal reversed and remanded.
    Snodgrass, 'Dibrell & Snodgrass, of Coleman, for appellants. Woodward & Baker and Critz & Woodward, all of Coleman, for appellees.
   KEY, C. J.

We copy from appellant’s brief the following statement of the nature and result of this suit:

“This suit was begun in the district court of Coloman county, Tex., July 25, 1910, by appellant Coleman National Bank, against E. B. McClain, Joe Toland, Upton Henderson, Roy Johnson, J. H. Quinn, and G. C. Cathey. Plaintiff sought to recover principal, interest, and attorney’s fees against E. E. McClain as principal, and Joe Toland and J. IT. Quinn as sureties, and Upton Henderson as indorser, on a note payable to the order of. J. W. Quinn, dated February 1, 1909, due September 1, 1909, for $415.-05, with interest on same from date at the rate of 10 per cent, per annum, and 10 per cent, additional as attorney’s fees. Plaintiff sought to recover principal, interest, and attorney’s fees against E. E. McClain as principal, and Joe Toland as surety, on a note dated October 15, 1909, due 45 days after date, payable to the order of plaintiff for $250, with interest at 10 per cent, from maturity and 10 per cent, attorney’s fees.
“Plaintiff also alleged that said notes were secured by chattel mortgage lien dated January 20, 1909, executed by defendant E. E. McClain on 95 head of cattle, and sought to establish said mortgage as a lien to secure both notes upon said property, and sought to recover against the defendants Roy Johnson and G. C. Cathey to the amount of said indebtedness for conversion of said mortgaged cattle, alleged to be of value $1,-500. On November 14, 1914, defendant Joe To-land was dismissed from the suit by the plaintiff, he being insolvent and having been discharged in bankruptcy. On April 12, 1915, defendant J. H. Quinn was dismissed from the suit by plaintiff upon proof of his being actually and notoriously insolvent. On April 4, 1911, defendant E. E. McClain filed his answer and cross-bill, admitting and adopting the allegations of plaintiff, and asking judgment against G. C. Cathey and Roy Johnson for conversion of the 95 head of cattle, which was alleged to be $1,500, asking for judgment in his own behalf for ’ application of sufficient to pay plaintiff’s claim, and for recovery of balance for himself. Defendant Upton Henderson filed original answer March 25, 1914, setting up pleas in abatement for mis-joinder of causes of action and parties, general exceptions, special exceptions, general denial, and special answers, and at the same time filed his cross-bill against Roy Johnson, alleging that the two notes sued upon by plaintiff were both secured by the 'chattel mortgage described in plaintiff’s petition, and that the property covered by said mortgage had been converted by the defendant Roy Johnson, and asking for judgment against the said Roy Johnson to the amount due on said $415.05 note sued upon by plaintiff. Defendant G. C. Cathey filed plea to the venue, and original answer November 1, 1910. Defendant Roy Johnson filed answer to plaintiff’s second amended original petition November 16, 1914, and answer to Upton Henderson’s cross-bill, November 16, 1914, and answer to E. E. McClain’s cross-bill April 12, 1915. Plaintiff, on April 20, 1914, filed its first supplemental petition in answer to the plea of Upton Henderson. At the April term, 1915, of the district court of Coleman county, the case came on for trial before a jury, and the court declined to pass upon the pleas of misjoinder of parties and causes of action until after the evidence was heard, and after hearing the evidence the court sustained the plea of misjoinder of partios and causes of action, whereupon the plaintiff, under protest, made motion to dismiss its suit on the $250 note, and then to reinstate same. The court sustained the motion to dismiss, and overruled the motion to reinstate, to which exceptions were taken. . Thereupon the court charged the jury to find' in' favor of the plaintiff against the defendants E. E. McClain, as principal, and Upton Henderson as indorser, on the $415.05 note, and the jury rendered verdict accordingly. On the 13th day of April, 1915, judgment was rendered in favor of the plaintiff against E. E. McClain as principal and Upton Henderson as indorser for $739.50, with interest at 10 per cent. Plaintiff filed motion for new trial April 14, 1915. Plaintiff’s motion for new trial was overruled by the court on April 21, 1915, and notice of appeal given. Plaintiff filed appeal bond May 10, 1915.”

The judgment did not foreclose the mortgage lien. In addition to the foregoing statement we add that Upton Henderson filed a motion for a new trial, which was overruled, and he has prosecuted a separate appeal from the judgment against him; and, while two transcripts have been brought up, both appeals have been considered together, and will be disposed of in one opinion.

Opinion.

Without referring specifically to the assignments of error, it is sufficient to say that the bank contends that the court below committed error in sustaining the pleas of misjoinder of parties and causes of action, while Upton Henderson contends that the pleas referred to were properly sustained, which left the bank its right of election to prosecute its suit upon the $250 note, which was secured by the mortgage, and dismiss its suit upon the $415.05 note, which was not so secured, and therefore not within the jurisdiction of the district court, and that when the bank elected to dismiss the suit upon the $250 note, of which the district court had jurisdiction, that court was without jurisdiction to try and render judgment as to the $415.05 note.

If both of the notes sued upon were secured by a mortgage upon the same property, though the mortgage was not executed by all of the defendants, then the bank had the right to maintain one action against all of the defendants. Parlin & Orendorff Co. v. Moore, 28 Tex. Civ. App. 243, 66 S. W. 798; Johnson v. Luling Mfg. Co., 24 S. W. 996; Brown v. Gatewood, 150 S. W. 950; Brunson v. Dawson State Bank, 175 S. W. 438; Cobb v. Barber, 92 Tex. 309, 47 S. W. 963. So it appears that the controlling question involved in both the appeals is whether or not the chattel mortgage referred to in the plaintiff’s petition, and introduced in evidence was intended by the parties to secure both of the notes sued upon; and we have reached the conclusion that it was so intended. The general rule of law upon the subject is correctly stated in 6 Cye. 1019, subd. 5, as follows:

“It is competent for the parties to a mortgage to agree that it shall stand as security for a different debt or claim than that described in the mortgage, or for a debt subsequently contracted, and when such an agreement is reduced to writing, and the good faith of the arrangement is not impeached, the mortgage will be a valid security for a new debt.”

Nor is it necessary that the liabilities sought to be secured must be specifically described in the mortgage. Brunson v. Dawson State Bank, supra. In the case at bar the mortgage was given to secure a note executed by E. E. McClain, and payable to the bank, and it contained the following stipula-. tions:

“Now if I pay or cause to be paid said indebtedness at or before its maturity, then this obligation is to be null and void, unless the holder of said note shall elect to hold said property to secure any other liability or liabilities of mine in the hands of the holder of said note. But in ease said note is not paid at maturity, or any other liability or liabilities of mine that they may elect to hold said property for, or when all or part of said property is moved from where it is now located, or when it is legally seized, then or at any time thereafter the holder thereof is hereby fully authorized to seize .and take into his possession all of said above-described property, or any part thereof, wherever the same may be found hereby, binding me to surrender up the same, and to sell, convey and deliver the said property or cause the same to be done, at either public or private sale, with or without notice, at such place and on such terms as it may deem best; and the proceeds of such sale shall be applied, after deducting all costs, expenses and attorney’s fees, to the payment of said note, the surplus, if any, shall be paid to me or at the election of the holder of said note, shall be paid on any other liability or liabilities, whether as principal or otherwise of mine in the hands of the holder of said note.”

The proof shows that the mortgage was executed January 20, 1909; that the $415.05 note, upon which I-Ienderson bound himself as indorser, was executed February 1, 1909, and was bought by the bank in May, 1909, and that the $1,000 note, to secure which the mortgage was executed, was paid in December, 1909. It is stipulated in the mortgage_that when the $1,000 note is paid, the mortgage is to be null and void—

“unless the holder of said note shall elect to hold said property to secure any other liability or liabilities of mine in the hands of the holder of said note.”

At the time the $1,000 note was paid the bank was the owner and holder of the $415.-05 note, which was a liability of the mortgagor McClain. But it is contended that, inasmuch as that note was not made payable primarily to the bank, but to J. W. Quinn, it was not intended by the parties that it should be secured by the mortgage. The language of the mortgage as quoted above is broad enough to include the claim of the bank upon the note in question, and we see no reason why it should not be given that effect.

Poulter v. Weatherford Hardware Co., 166 S. W. 364, and the other cases relied upon by counsel for Henderson, are distinguishable from the instant case. In the Poulter Case, the mortgage was executed to secure certain notes, and contained a stipulation that it was to be security—

“for all other amounts I may now be due, or hereafter become due to the Weatherford Hardware Company, or their assigns, such as book accounts, notes, or in any manner whatsoever, it being the intention of this mortgage to not only secure the debt created by me this day, but also to serve as a basis of credit with the grantees herein, or their assigns, to secure any. other amount I may now owe, or hereafter owe, as if the same was specifically described herein.”

The hardware company, subsequent to the execution of the mortgage, purchased a judgment against the mortgagor, and the court held that the judgment was not secured by the mortgage, because the latter showed upon its face that it was only intended to serve as a basis for credit to the mortgagor. But to show that the mortgage involved in this case was much broader in scope, and was intended to operate otherwise than as a basis for credit between the mortgagor and the bank, we cite that provision which reads as follows:

“The surplus, if any, shall be paid to me, or at the election of the holder of said note, shall be paid on any other liability or liabilities, whether as principal or otherwise of mine in the hands of the holder of said note.”

Thus it will be seen that the maker of the mortgage intended to confer upon the holder of the $1,000 note the right to apply the mortgage to any other liability of the mortgagor to the bank, whether such liability was as principal, surety, or indorser. Furthermore, McClain, the mortgagor, admitted in his answer that the $415.05 note was secured by the mortgage, and no one but Henderson pleaded misjoinder; and as his liability is secondary only, it is to his benefit that the mortgaged property be applied to the payment of the debt for which he stands surety. So it may be doubted if he ought to be heard to object to the mortgage being held to secure the $415.05 note, -upon which he is liable as indorser, as such construction inures to his benefit.

Hence we conclude that the $415.05 note, as- well as the one for $250, was secured by the mortgage; and in support of that conclusion we refer to the following authorities, cited in the brief of counsel for the bank, all of which deal more or less with the question: Brunson v. Dawson State Bank, 175 S. W. 438; Hallowell v. Blackstone Natl. Bank, 154 Mass. 359, 28 N. E. 281, 13 L. R. A. 315; Norfleet v. Ins. Co., 160 N. C. 329, 75 S. E. 937; Merchants’ Bank v. Demere, 92 Ga. 735, 19 S. E. 38; Martin v. Halbrooks, 55 Ark. 569, 18 S. W. 1046; Merchants’ Natl. Bank v. Hall, 83 N. X. 338, 38 Am. Rep. 434; Moore v. Terry, 66 Ark. 393, 50 S. W. 998; Davis v. Carlisle, 5 Ind. T. 83, 82 S. W. 682; Rice v. Davis, 99 Mo. App. 636, 74 S. W. 431; Bullard v. Stewart, 46 Tex. Civ. App. 49, 102 S. W. 174; Poulter v. Weatherford Hardware Co., 166 S. W. 364; 6 Cye. 1019, note 4, 27 Cyc. 1074, subd. 2. Therefore we conclude that the appeal prosecuted by Upton Henderson should be affirmed, and that the appeal prosecuted by the Coleman National Bank should be sustained, and the cause reversed and remanded for further proceedings not inconsistent with this opinion; and it is so ordered.

Affirmed in part, and in part reversed and remanded.
      <gss>For other cases see samé topic and KEY-NUMBER in all*Key-Numbered Digests and Indexes


author: SWEARINGEN, J.

text:
    WOLFE CITY MILLING CO. v. WARD.
    (No. 5646.)
    (Court of Civil Appeals of Texas. San Antonio.
    April 12, 1916.
    Rehearing Denied May 10, 1916.)
    1. Appeal and Erp,or <§=675 — Mattebs Not Shown by the Record.
    An order made in May, overruling appellant’s plea of privilege, will not be reviewed, where the only pleadings shown by the record are the first amended original petition filed in July, and those filed afterwards, and the only evidence before the court on appeal is that introduced upon the trial of the case in July.
    [Ed. Note. — For other eases, see Appeal and Error, Cent. Dig. § 2875; Dec. Dig. <§=675.]
    2. Trial <§=350(4) — Submission of Issues.
    In an action by a buyer for nondelivery, he claiming that he was not obliged to pay until after delivery, and the seller claiming that payment was to be made by demand draft before delivery, held error to refuse to submit special issues as to the terms of the contract in this respect and whether the buyer complied therewith.
    [Ed. Note. — For other eases, see Trial, Cent. Dig. § 829; Dec. Dig. §=350(4).]
    3. Appeal and Error <§=1062(2) — Harmless Error — Error Cubed by Subsequent Instruction.
    Such error is not cured by submitting an issue whether the defendant failed or refused to deliver according to the terms of the contract.
    [Ed. Note. — For other cases, see Appeal and Error, Cent. Dig. § 4213; Dec. Dig. <§= 1062(2).]
    4. Sales <§=174 — Excuse por Nondelivery-Default by Buyer.
    A seller is not bound to deliver to the buyer if the latter has himself breached his agreement by refusing to pay for the goods pn demand.
    [Ed. Note. — For other cases, see Sales, Cent. Dig. § 434; Dec. Dig. §=174.]
    Appeal from Bee County Court; T. M. Cox, Judge.
    Action by B. F, Ward against the Wolfe City Milling Company. From a judgment for plaintiff defendant appeals.
    Reversed and remanded.
    John W. Thames, of Kenedy, and Chas. Troy, of Beeville, for appellant. G. C. Robinson, H. S. Bonham, and B. D. Tarlton, Jr., all of Beeville, for appellee.
   SWEARINGEN, J.

About the 18th of December, 1914, plaintiff ordered from defendant two cars of flour, to be shipped from Wolfe City, Tex., to plaintiff, at Beeville, Tex., for which plaintiff was to pay, at Bee-ville, a draft drawn by defendant with the bill of lading attached. Cars to be sent at different times. January 7, 1915, defendant delivered to the railroad company at Wolfe Oity one car of flour consigned to shipper’s order at Beeville, with instructions to notify plaintiff. On the same day, January 7, 1915, defendant drew against plaintiff a draft for the amount of the purchase price of the car of flour. This draft, with hill of lading attached, was presented for payment to plaintiff at Beeville, January 13,1915. Plaintiff refused payment. Draft was regularly protested for nonpayment. The car of flour arrived at Beeville January 15, 1915, and remained there until January 23, 1915. After that date, the car of flour, on defendant’s order, was shipped from Beeville. The second car of flour was never shipped. The price of flour advanced about $300 a car after January 15, 1915. Defendant alleged that plaintiff was to pay the draft when demanded. Plaintiff alleged that he was to pay the draft after the car of flour arrived at Beeville; that the car had not arrived when the draft was presented to him-for payment. A jury answered all special issues submitted to it. The court thereuppn rendered judgment in favor of plaintiff against defendant for $735, together with all costs. Appellant’s motion for new trial being overruled by the court, this appeal was perfected.

Appellant’s first assignment complains of the order of the court overruling his plea of privilege. This order was made in May, 1915. The only pleadings shown by the record are the first amended original petition filed July 14, 1915, and those filed after-wards. The only evidence before this court is that introduced upon the trial of the case in July, 1915. ■ It is therefore obviously improper for this court to attempt to review that order of the trial court. The first assignment is overruled.

Appellant’s second assignment complains that the charge of the court did not submit to the jury material issues of defense raised by the'pleadings and the evidence of the defendant. Objection to the charge was duly made, and appellant, in proper time, requested, in writing, the court to submit to the jury two special issues, which are as follows:

“Did the Wolfe City Milling Company fix the terms of the order dated December 18, 1914, as follows: Demand protest draft for the contract price of the flour, with bill of lading attached? Answer Yes or No.”
“Did plaintiff, Ward, comply with the terms of his contract dated December 18, 1914, and pay said draft when same was presented to him? Answer Yes or No.”

The court refused to submit either. An important part of the purchase agreement was the condition of payment. Was plaintiff obligated to pay on demand after shipment, or on demand after arrival of the ear of flour at Beeville? This question is raised by the pleadings. In support of defendant’s plea, Thomas, the broker, who received the order for 'the .flour, testified that he told plaintiff, at the time the flour was ordered, that witness had no authority to grant terms for payment, but that defendant would make draft; that on January 5, 1915, before the flour was shipped, plaintiff told witness to notify defendant that plaintiff had the money in the bank to pay for the flour; and that defendant could make any kind of draft he wanted to. Defendant was so notified on the 5th of January, 1915, and replied that a demand protest draft would be made. Plaintiff, on the other hand, testified that the agreement was that he was to pay the draft only after the flour arrived. This issue was made by both the pleadings and the evidence. This issue was material because: If payment was to be made by plaintiff as determined by defendant, and defendant determined payment should be made by demand protest draft and plaintiff refused to pay the draft op demand, defendant was not liable for damages. If payment for the flour was to be made on demand after arrival of the flour at Beeville, and plaintiff, as he testified, did not pay for the flour after it did arrive, defendant was not liable for damages unless plaintiff pleaded and proved a sufficient legal excuse. As this special issue was raised by the pleadings, supported by evidence, and was material, the court should have submitted it after objection was made and the special issue required in writing by the defendant.

Appellee rather plausibly urges that the error, if any, was rendered harmless because the jury answered “Yes” to the third special issue, which the court did submit to them, and which is as follows:

“If you have answered the previous question in the affirmative, then answer, Dicl the Wolfe City Milling Company fail or refuse to deliver the first car of said flour 'to the said Ward according to the terms of the contract? Answer Yes or No.”

Defendant was not bound to deliver the flour to plaintiff if he himself breached his agreement by refusing to pay for the flour on demand. The answer of the jury that defendant failed to deliver the flour to plaintiff does not determine whether or not plaintiff was obligated to pay for the flour on demand, nor whether plaintiff first breached the purchase contract by refusing to pay for the flour when demanded. We suggest here that the evidence in this case strongly tends to show that defendant made all the delivery required of it when it shipped the flour to Beeville and presented the draft, with the bill of lading attached, to plaintiff.

Eor the error of the court, complained of in appellant’s second assignment, as will appear -in the foregoing discussion, we must reverse the judgment of the trial court.

Inasmuch as the case will be reversed, it is unnecessary' to discuss any of the other assignments presented by appellant, for the errors assigned are not likely to arise again.

The judgment is reversed, and the cause remanded.
      ®=Por other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes


author: MOURSUND, J.

text:
    LEARY v. INTERNATIONAL COAL & WOOD CO. et al.
    (No. 5717.)
    (Court of Civil Appeals of Texas. San Antonio.
    April 12, 1916.)
    1. Appeal and Error <§==>71(4) — Decisions Appealable — Appointment op Receiyer.
    Under Rev. St. 1911, arts. 2079, 2080, respectively providing for appeals from interlocutory orders appointing a receiver and interlocutory orders granting or dissolving temporary injunctions, no appeal will lie from an interlocutory order denying appointment of a receiver.
    [Ed. Note. — For other cases, see Appeal and Error, Cent. Dig. §§ 399-401; Dec. Dig. <§=> 71(4).]
    2. Injunction <§=>137(1) — Temporary Injunctions — Right to.
    Where a temporary injunction was prayed for as an incident to the appointment of a receiver of the corporation, but no cause of action against the corporation was alleged nor was any cause warranting its dissolution made out, a temporary injunction restraining corporate officers from carrying on the business is properly denied; the appointment of a receiver being refused.
    [Ed. Note. — For other cases, see Injunction, Cent. Dig. § 307: Dec. Dig. <§=>137(1).]
    3. Corporations <§=>309(2) — Loans—Collateral — Disposition.
    Where defendant who was made president of a corporation had advanced money to it, receiving a large number of corporate shares, and also being given notes by plaintiff and another stockholder to secure his advances, it being agreed that such advances should be paid out of the dividends, plaintiff is not, though the agreement was made on his part under a mistake of law, entitled to enjoin defendant from disposing of the collateral and collecting the dividends.
    [Ed. Note. — For other cases, see Corporations, Cent. Dig. § 1367; Dec. Dig. <§=309(2).]
    Appeal from District Court, Bexar County; R. B. Minor, Judge.
    Action by Raymond Leary against the International Coal & Wood Company and others. From an interlocutory order refusing to appoint a receiver and denying a temporary injunction, plaintiff appeals.
    Affirmed.
    Ben H. Kelly, T. G. Jackson, and E. H. Powell, all of San Antonio, for appellant. R. W. B. Terrell and William Aubrey, both of San Antonio, for appellees.
   MOURSUND, J.

This is a suit by Raymond Leary against the International Coal & Wood Company, a corporation, C. H. Florian, Sr., Id. A. Florian, and Robert W. B. Terrell.

Plaintiff' alleged that about June 19, 1915, he and E. A. Florian each contributed $350 in cash and formed a partnership for the purpose of engaging in the coal and wood business, and purchased the business and property of the International Coal & Wood Company; that in 1915 H. Florian, 'Sr., agreed to furnish such financial assistance as said partnership might need, in consideration whereof he was conveyed a one-third interest in the business and contributed $2,000, which became the property of the firm; that about October 10, 1915, the partnership acquired what was known as the Full Cord Woodyard at a cost of $2,500, of which it paid $1,000 in cash, and the partners executed 15 joint and several notes for $100 each for the remainder of the price; that afterwards a corporation was organized under the same name as the partnership with a capital stock of $10,000, and with plaintiff, C. H. Florian Sr., E. A. Florian, and Robert W. B. Terrell as the stockholders and directors thereof: that the partnership conveyed to said corporation property of the reasonable value of $10,000, and each partner was entitled to share in the corporation as per the interest so transferred, less the three per cent, of the stock issued to Terrell for legal services, and the interest of each partner was therefore $3,233.33; that upon the distribution of the stock C. H. Florian, Sr., received $4,840 worth of stock, and plaintiff and E. A. Florian each received $2,430 worth, which was a discrimination against thorn and unjust and illegal; that at the suggestion of O. H. Florian, Sr., the corporation, through its officers, passed a resolution allowing him a salary of $100 per month to be used in paying the monthly $100 notes payable to the Full Cord Woodyard, which he agreed to pay; that if, in fact, the $1,500 was the debt of the corporation then the certificates of stock were excessive to that extent; that C. H. Florian procured plaintiff and E. A. Florian to each give him a note for $1,000, secured by 100 shares of the corporate stock, but that said note was not given for any debt due said O. H. Florian, but was, as Florian stated, for the purpose of getting his money back if the corporation went broke; that said Florian still holds plaintiff’s note and refuses to surrender the same; that defendants obtained plaintiff’s signature to some kind of pretended contract to the effect that Florian, Sr., was to have a certain number of shares, and that the $2,000 furnished by him was to be returned to him out of the first dividend^, and that plaintiff and E. A. Florian were to give Mm their notes for $1,000 each, a copy of which contract was attached to the petition; that plaintiff did not understand what the legal effect of said contract was, and he was overreached and deceived by reason of such ignorance and of his confidence in defendants; that said contract “is wholly without any valuable consideration, is unilateral, and is also illegal, in that it discriminates in favor of and against persons who are on equal terms and gives one a legal advantage and property at the expense and to the injury of another partner without due process of law, and which is unconscionable, unjust, and illegal” ; that it “also attempts to substitute a contract and the rights and interests of partners thereunder by a subsequent agreement which is not based upon a valuable or other legal consideration”; that about December 3, 1915, plaintiff resigned as director and vice president of the corporation; that defendants are the directors thereof and in full charge of the same; that defendants are in collusion for the purpose of dissipating, misapplying, and appropriating to themselves the assets of the corporation; that he has reason to believe and does believe that they have paid to O. H. Elorian the $2,000 furnished by him for which he elected to receive and did receive stock; that he cannot hold said stock and at the same time receive back said sum nor hold the notes of plaintiff or others therefor; that he should he required to elect which he will take and all other claims should be canceled; that the acts and conduct of defendants in procuring the execution of said pretended contract by plaintiff constitute a fraud against the corporation and its creditors and imperil their interests; that plaintiff is the owner of more than 25 per cent, of the stock of the corporation, and is powerless to prevent the misapplication and diversion of its funds and the appropriation thereof by O. H. Florian, Sr., as provided in said contract, which he alleges defendants have done' or will do unless restrained; that plaintiff has no adequate remedy unless the court appoints a receiver and grants proper restraining orders; that the corporation should be dissolved; that from “visible appearances the stock of the corporation is not kept up to its former amount or value, and its holdings and properties have been largely reduced” ; that large sums of money are believed to have been received from the sale of such properties, and no information has been furnished plaintiff of the condition of said corporation, and he has been denied access to its books; that he believes the funds have been dissipated and appropriated to the use of defendants.

Plaintiff’s prayer is as follows:

“Wherefore plaintiff prays 'for the granting of such restraining orders as will safeguard and protect the corporation and its assets and property ; for the appointment of proper receiver to take over and handle said corporation under the orders of the court; that upon a final healing said corporation be dissolved, and that the rights and interests of each stockholder be ascertained and fixed by proper decree; that the said 15 remaining $100 notes or as many as are unpaid be decreed a liability of the corporation and ordered paid as such; that the pretended contract of the parties attached as Exhibit A be canceled and held for naught; that the said note of plaintiff for $1,000 held by O. H. Elorian, Sr., be canceled and held for naught, and the stock held as collateral be returned to plaintiff and released from said pledge; that defendant O. H. Florian, Sr., be required to return to the corporation or such receiver as the court appoints any and all sums paid to him by the corporation or by him received directly or indirectly as refund or reimbursement for said $2,-000 furnished by him, unless he elects to surrender said stock, and, if it should appear that he has received more than he had paid, with legal interest, then that such excess be recovered and that said stock be canceled; that the excess percentage of stock issued to him and now hold by him be also returned and canceled, and its value credited to the rightful owners as their respective interests may appear; that said temporary restraining orders be perpetuated; that they include the ascertainment and payment of the just and legal debts and the collection of all outstandings and claims due the corporation, and the defendants be enjoined from interfering therewith, or in transferring or in any manner misapplying said funds and assets, or in the transferring or secreting of any of its property or assets; also that the said stock held by O. H. Florian, Sr., and the note of plaintiff held by him, as well as the collateral secured thereby, be in no manner transferred or disposed of; that plaintiff for himself and as a minority stockholder in said corporation and as such in its behalf, as well as in behalf of any other stockholders or creditors who may see fit to join him herein, prays for all this relief and for such other and further relief, legal and equitable; general and special, to which he or the corporation may be entitled and shall ever pray, and for costs.”

The defendants answered, and denied all allegations charging them with any wrongful conduct. They alleged that the distribution of the stock as shown in plaintiff’s petition was in strict accordance with the amount each' had invested, that the contract was valid and supported by a good consideration, and that O. H. Florian, Sr., had received no money or property of the corporation except $100 per month, which he received as president of the corporation. While it is contended that all the material allegations are not traversed by the answers, we conclude that such isolated portions as might be found not to have been denied would not make out a case for any kind of relief. The appeal is from an interlocutory order refusing to appoint a receiver and to grant a temporary injunction. No appeal is permitted by law from that part of the order refusing to appoint a receiver; the same being an interlocutory order. Articles 2079, 2080, R. S. 1911; Gulf National Bank v. Bass, 177 S. W. 1020; Tipton v. Ry. Clerks’ Ins. Ass’n, 173 S. W. 562.

We will therefore pass to the consideration of the question whether the court erred in refusing to grant a temporary injunction. We are unable to glean from appellant’s assignments of error or the propositions thereunder what acts appellant contends should have been restrained. In fact, the main object of the suit was to procure the appointment of a receiver; hence the prayer is rather vague with regard to what relief by injunction was sought.

Construing the prayer liberally, it seems that plaintiff wants an injunction preventing defendants from interfering with the receiver in the collection of claims due the corporation and the payment of its debts, and from interfering with the receiver by transferring or in any manner misapplying the funds and assets of the corporation or secreting the same; also enjoining C. H. Florian, Si'., from transferring the stock held in his name, the note for $1,000 signed by plaintiff, and the stock pledged to secure the payment of said note. Had a receiver been appointed, the first part of the prayer would have doubtless been granted as an appropriate adjunct to the receivership, but no cause of action was alleged against the corporation nor a case warranting its dissolution under article 1203, B. S. 1911, and the receivership was refused. With its refusal the relief ashed as an adjunct thereto was necessarily dented. It would have been manifestly improper to have restrained the officers from carrying on the business of the corporation and thus leave it without any management. When we consider the petition we find various allegations of mismanagement so general and vague that a court could not properly issue an injunction restraining such acts in the terms in which they were pleaded; otherwise it would only be necessary in a suit by a stockholder to allege generally upon belief that he fears the funds will be dissipated or misapplied. It is to be noted that plaintiff does not ask for an order requiring defendants to permit him to inspect the books of the corporation, and it does not appear that he tested the good faith of defendants’ allegation to the effect that the books were subject to his inspection.

By taking steps to inspect the books he could have ascertained whether he had any ground for complaint with respect to the management of the affairs of the corporation, and, if so, could have stated such grounds. But, coming to the acts specifically alleged, we find that he complains of the payment of dividends to O. H. Florian, Sr., under the contract of which a copy is attached to his petition. He seeks to have this contract annulled, but alleges no legal ground for such action, as he only pleads a mistake of the law on his part. The contract is remarkable for its vagueness and indefiniteness. The intention apparently of the parties was that O. H. Florian, for advancing $2,000 to be used in purchasing properties for the corporation to be organized, was to receive 481 shares of stock, and still was to have his claim against the corporation for $2,000, which was to be paid out of the dividends, after which the dividends are to be paid to the stockholders. It further appears that plaintiff and E. A. Florian agreed to execute and deliver their respective notes for $1,000 to C. H. Florian, payable one day after date, and secured by pledge of stock in the corporation. No statement is made as to the purpose for which such notes were given, nor any provision made in regard to what is to become of the 484 shares issued to C. H. Florian, Sr., when he shall have received the $2,000. But, conceding that the 484 share of stock and the $1,000 note with its collateral are held by C. H. Florian to secure the payment of the $2,000 debt to him, as is contended by plaintiff, we fail to find any allegations justifying an injunction restraining him from disposing thereof. It is not alleged that he is insolvent, nor that he has threatened or attempted to dispose of all or any part of such collaterals, or that plaintiff fears he will do so. So far as enjoining the application of dividends to the satisfaction of the $2,000 indebtedness is concerned, it may be said that the contract so provides, and it does not appear that plaintiff can suffer any loss by reason thereof. It is the only way to pay the $2,000 unless plaintiff and E. A. Florian pay it and demand the delivery of all stock and notes held by O. H. Florian. We conclude that the facts alleged, taken in connection with the contract attached to the petition, are not such as to require the court to restrain any act specified in the prayer; and it was therefore unnecessary, and would have been a waste of time, to permit the introduction of evidence to substantiate such allegations.

The judgment is affirmed.
      <§=>For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes