text:
    GRANT v. ALFALFA LUMBER CO. et al.

    (No. 771.)
    (Court of Civil Appeals of Texas. Amarillo.
    May 1, 1915.
    Rehearing Denied June 5, 1915.)
    1. Principal and Surety <@=^117 — Discharge of Surety — Advance Payments to Contractor.
    Where a building contract provided that the owner should make payments to the contractor as required to pay for the materials and labor, but the owner made payments in excess of the amount required for those purposes, some of which were not used for the building, the contractor’s surety is entitled to credit on the owner’s claim for loss caused by the contractor’s default for the amount of such advanced payments.
    [Ed. Note. — For other cases, see Principal and Surety, Cent. Dig. §§ 283-285; Dec. Dig. <§=> 117.]
    2. Evidence <@=>271— Admissibility — Self-Serving Declarations — Rebuttal of Recent Fabrication.
    In an action by a materialman against the owner of a building for the value of the materials furnished for the building, where the owner claimed that the allegation of promise by him to pay the debt was a recent fabrication, a letter written by the materialman before the. controversy .arose, in which he stated that the owner made such a promise, was admissible when limited by the court to the purpose of rebutting the owner’s claim of recent fabrication.
    [Ed. Note. — For other cases, see Evidence, Cent. Dig. §§ 1068-1079, 1081-1104; Dee. Dig. <@=>271.]
    3. Frauds, Statute of <@=>33 — Debt of Another — New Consideration.
    An oral promise by the owner of a building, in consideration of the materialman’s agreement not to sue for the materials furnished the contractor at a certain term of court, to pay the account makes the debt his own, so that the promise is not within the statute of frauds.
    [Ed. Note. — For other cases, see Frauds, Statute of, Cent. Dig. §§ 50-53, 56; Dec. Dig. <@=> 33.]
    4. Apfeal and Error <@=>843 — Harmless Error-Submission of Issues.
    On appeal from a judgment in favor of the materialman against the owner of a building, where the jury specially found an express promise by the owner to pay the entire account, the question of error in submitting the right of the materialman to apply payments by the contractor to other accounts is abstract.
    [Ed. Note. — For other cases, see Appeal and Error, Cent. Dig. §§ 3331-3341; Dec. Dig. <@=> 843.]
    5. Principal and Surety <@=159 — Discharge of Surety — Burden of Proof — Alterations in Principal Contract.
    The surety of a building contractor has the burden of proving, as against the owner of the building, that there have been material alterations in the contract which released its liability.
    [Ed. Note. — For other cases, see Principal and Surety, Cent. Dig. §§ 428 — 435; Dec. Dig. <@= 159.]
    Appeal from District Court, Hale County; L. S. Kinder, Judge.
    Action by the Alfalfa Lumber Company against J. W. Grant, the Fidelity & Deposit Company of Maryland, and another. Judgment for the plaintiff and for the defendant Grant as against the surety company, and the defendant Grant appeals, and the surety company assigns cross-error.
    Judgment affirmed.
    Madden, Trulove, Ryburn & Pipkin, of Amarillo, for appellant. Baker, Botts, Parker & Garwood and John C. Townes, Jr., all of Houston, and Graham & Graham, Fred C. Pearce, and Randolph & Randolph, all of Plainview, for appellees.

       Writ ol error pending in Supreme Court.

   HENDRICKS, J.

The appellant, J. TV. Grant, with another, entered into a building contract with one W. T. McRae, a building contractor, for the erection of a certain building on lots 19 and 20, block 26, situated in the town of Plainview, Hale county, Tex., owned by said Grant, said building to be constructed according to plans and specifications prepared by certain architects. The Alfalfa Lumber Company, a corporation, one of the appellees herein, furnished the said McRae, the contractor, certain material, which entered into the construction of said building, of the alleged amount of $2,408.85, and the Fidelity & Deposit Company of Maryland, the other appellee herein, became the guarantor of McRae, the contractor, for the faithful compliance of the terms and conditions of said building contract, executing a bond in the sum of $5,000 to that end. Before the completion of the building, McRae, the contractor, abandoned the work, and the owner, Grant, assumed control of the building in its unfinished condition, completing the same at an alleged cost of .$4,793.85, Grant claiming that at the time of the abandonment of the work by the contractor he had paid to the latter the sum of $4,877.59 upon the amount of $7,000, for which latter amount the contractor agreed to build and finish said building. The Alfalfa Lumber Company sued McRae, the contractor, and .Grant, the owner, also the Fidelity & Deposit Company of Maryland, the guarantor, to recover the said sum of $2,408.85, alleged to be due upon an open account, which was verified in the cause as representing the cost of the material furnished. The ap-pellee Alfalfa Lumber Company also sought judgment against Grant, the owner of the premises, for the amount of the open account, claiming an independent promise made by Grant, to the representatives of the lumber company, to pay the amount of said account, in consideration tliat the lumber company would forbear and refrain from suing said Grant at the next approaching term of the district court of Hale county, convening in February, 1914, alleging a compliance with said contract. Grant pleaded that as between him and the contractor, there was only $2,187.41 due the latter when the latter abandoned the work, and which balance was applied on the amount incurred by him in completing the building. The lumber company alleged that Grant had wrongfully paid to the contractor before the latter had ceased his work certain sums of money, in violation of the building contract, aggregating the sum of $1,303.53, and that, if at the time the owner, Grant, was served with written notice of the items of lumber and material furnished to the contractor, said owner did not have sufficient funds to pay plaintiff’s account and complete the building, the lack of funds was due to improper payments made by the owner to the contractor. The guaranty company answered in the same spirit; in effect, that under the contract the owner agreed to make payments to the contractor as required, to pay for brick, ,sand, plaster, metal lath, roofing material, and the weekly pay roll, used in the erection and completion of the building, and that the owner departed from the terms of said contract without the consent and knowledge of the bonding company, and paid certain sums of money, not specified to be paid by him by said contract, in violation of its terms. The jury, upon the submission of special issues, found against Grant and in favor of the lumber company, upon the independent promise to pay the debt, for the whole amount of the open account, but found in favor of Grant on his cross-action against the bonding company the sum of $754.85, reducing the cross-action of Grant, however, by a finding of $1,448.79, as an aggregate amount which' Grant paid Mc-Rae, in violation of the terms of the contract as to the rights of the surety.

The following is the important paragraph of the building contract germane to this controversy:

“Art. 4. It is hereby mutually agreed between the parties hereto that the sum to be paid by the owners to the contractor for said work and material shall be seven thousand ($7,000.00) dollars, subject to additions and deductions as hereinbefore provided, and that such sum shall be paid by the owners to the contractor in current funds, as follows: The owners agree to make payments to the contractor as required to pay for the brick, cement, plaster, metal lath and roofing material, also payment to cover the weekly pay roll for labor used in the erection and completion of the work included in this contract ; the sum of all payments so made, not to exceed the amount of this contract ($7,000.-00),” etc.

A special issue, submitted by the trial court, whether the owner paid the contractor, prior to the time the latter abandoned the work, “any sums of money, except for brick, cement, plaster, metal lath, roofing material, and weekly pay roll for labor used in the erection of the building,” was answered affirmatively by the jury, itemizing the amount improperly paid by Grant, and aggregating the sum of $1,448.79, as stated. The appellant says:

“One of the most important questions presented in this case * * * is the question as to whether or not * * * the owner of the building * * * advanced funds to the contractor in violation of the terms of the builder’s contract, and thereby released the surety to the extent of such payments and advancements”

—contending that:

“The language does not restrict the payments to be made by the owner to the contractor at such times as the latter is required to pay for brick, cement,” etc.

In the case of Ryan v. Morton, 65 Tex. 260, the defendant surety pleaded that the owner of the building paid to the contractor, without notice to him, the full contract price, in violation of the terms of the contract, before the completion of the building, the contract providing for an installment payable in advance, “and the balance in four equal installments as the work progressed.” Justice Stay ton said:

“There was a privity between Morton and the sureties which required him to preserve all his rights against Giraud [the contractor] unimpaired, if he intended to look to the sureties. By a fair construction of the contract, the builder was to have payment [the balance] in four equal installments, which, as to time of payment, were to be regulated by the progress of the work. * * * This was a part of the contract for the protection of the owner of the property, but it gave a guaranty to the sureties that the work would not be paid for until it was done. * * * This he did not do, but on the contrary, he paid to their principal, in violation of the contract, the full price to which he would have been entitled had he performed the entire work.”

And Justice Stayton, quoting from another authority, further said:

“A surety has the right to require that the obligee shall do his duty. * * * The owner should have advanced only what the contract bound him to advance.”

See, also, Lonergan v. San Antonio Trust Co., 101 Tex. 63, 104 S. W. 1061, 106 S. W. 876, 129 Am. St. Rep. 803.

In principle, we can see no difference between the case cited and the instant case. In this case the owner agreed to make the payments to the contractor for the weekly pay roll, and for specific material mentioned, “as required” to pay for the same, which, as to a considerable amount, the jury found that he did not do; in reality some of the payments, at least one large one of over $500 never went into the building. In the case cited, the installments were to be paid as the work progressed, which was not done, but the whole amount was paid before the completion of the building; here payments were made, not for material as required to be used in the erection of the building, as should have been done. See, also, the case of McKnight v. Lange Mfg. Co., 155 S. W. 978, involving the same facts as the Ryan-Morton Case, supra, wherein numerous authorities are cited and commented'upon.

While the jury in this case rejected the claim of the owner of the building against the bonding company only to the amount of the improper payments, and while the question is not before us as to the total release of the bonding company, however, the authorities cited, by analogy, support, at least, the judgment of the court, and we think that the appellant has- no real cause to complain.

During the progress of the trial the following letter was introduced in evidence by the plaintiff: /

“J. H. Eoresman; Mgr., Kansas City, Mo.— Dear Sir:
W. T. McRae, Grant job.-. $ 862 98
W. T. McRae, Grant & Korber job.. $3,111 45
Total . $3,974 43
“The contractor on the above job has gone to the bad, and we have accounts to the above amounts. Mr. Hancock has filed liens. I have had a couple of talks with the owners and the contractor. The bonding company had one representative out here, and they are expecting another in the next few days. The owners claim that they are going ahead and finish the building and pay all accounts in full. If we can handle this with the owners we will come out better than we will with the bonding company. Mr. Hancock is to keep us advised how he comes out.
“Yours truly, [Signed] J. W. Deal.”

Before this letter was introduced by plaintiff, the defendant. Grant had offered in evidence the plaintiff’s original petition and various amendments, for the purpose of showing that the last amendment of August 29, 1914, was the first pleading in which the independent promise to pay the debt, based upon the forbearance, was alleged; the parties then in open court agreed:

“That the suit was filed March 25, 1914, and that the petition was several times amended, * * * and that the alleged agreement by the said defendant Grant to pay the plaintiff [the amount of the open account] was not pleaded by the plaintiff until August 28, 1914.”

The defendant Grant objected to the letter on the ground that it was self-serving and hearsay, and with which he was not connected, and had no notice thereof. The trial court qualified the bill by saying that:

“The letter was offered in evidence by the plaintiff * * * only for the purpose of rebutting the defendant Grant’s theory that this alleged agreement was an aforethought; and, in passing upon the admissibility of the letter, the trial judge excluded all except the first five sentences of the letter, and instructed the jury at once, and at length, that they should not regard the letter as evidence for any purpose except of rebutting the defendant Grant’s position that this alleged agreement was an afterthought.”

The bill further shows, by the court’s qualification, that appellants attorney, in arguing the case to the jury, assumed the position that the independent agreement “was an afterthought, and a trumped-up scheme, and an entirely manufactured cause of action, and, among other expressions, said that the witness Deal (the assistant manager for the lumber company) was trying to frame up a deal on the defendant Grant” ; that the plaintiff’s attorneys “argued that the letter was a circumstance to show that the witness Deal had this agreement in mind long prior to August 28, 1914, when the pleading referred to above was filed.” The appellee lumber company vigorously attacks the assignment in the brief of appellant raising this question as ambiguous, and as compared to the bill of exceptions, the letter referred to in the assignment is not literally the same letter embodied in the bill, which is correctly copied herein. The assignment is ambiguous and uncertain, but we prefer to decide the question on its merits.

It is noted that the attack of the defendant Grant upon the testimony of Deal was a vigorous one, upon the ground of fabrication. In the case of Lewy v. Eischl, 65 Tex. 318, the latter claimed that he had been a dormant partner with the firm of Marek & Marek, that he had sold his interest to the firm for $3,000, evidenced by a note, and that the goods transferred to him were in consideration of the cancellation of this note, and other considerations. Lewy, the creditor, introduced evidence tending to show that Eischl had never been a partner and had never put any money in the business. Quoting from the case:

“The appellee [Eischl] was then permitted to show, over objection, that, long before the suit, and at a time when he claimed to have been a dormant partner of the Mareks, he stated, in the absence of plaintiffs, that he was such a partner, * * * and that Marek & Marek were his debtors in a large amount.”

Justice Robertson said that the plaintiff’s evidence raised the issue of the fiotitiousness of the debt, and that “the theory of its origin and consideration was an invention parented by the necessity of Eischl’s case.” The court further said:

“On this issue, the testimony complained of was material. It showed that appellee had the same conception of the facts before the imputed motive could exist that he had at the trial, and certainly was corroborant of his testimony,” holding that Eischl’s “declarations were therefore properly admitted.”

This court, in the case of National State Bank v. Ricketts, 152 S. W. 649, on a state of facts to some extent similar to the record here, announced the same principle.

When the alleged agreement was made, Grant had been served with notice of the itemized account, and there seems to have been no controversy whatever as to the account. The subject in dispute, as to the particular issue at the trial, is the making of the particular agreement. It cannot be said that at the time the letter was written there was a controversy in the sense the authorities use the term as to the particular matter. Jones on Evidence, says:

“ * * * If the subject in dispute at the time of the trial was not in controversy when the declarations were made, they are inadmissible [admissible] if otherwise competent. In other words, the controversy, as used in this connection, must have related to the particular subject at issue in the trial.” Section 311, vol. 2, Blue Book, p. 702.

We are inclined to think tliat the letter, though not specifically reciting the whole agreement pleaded, was admissible, with the limitations attached by the trial court.

The appellant also contends that:

“The court erred in rendering judgment for the full amount of the account sued upon, because the uncontroverted evidence shows that material to the value of $300, included in said account, did not go into the building,” etc.

It is undisputed that Grant was served with an itemized copy of the account a short time before the agreement was made, as alleged; the account served upon Grant was the account sued upon. The jury found that:

“If the plaintiff would forbear bringing suit upon its account, and not take steps to foreclose its alleged lien until the building was completed, that he would then pay the account sued upon by the plaintiff.”

The statute of frauds is not pleaded; if it had been, still the promise made the debt Grant’s debt; neither is there any denial of the account in the pleadings. Hulme v. Levis-Zuloski Mercantile Co., 149 S. W. 783; Pelican Lumber Co. v. Johnson Merc. Co., 89 S. W. 439. It seems that Grant was interested in the construction of another building by the same contractor at the same time in the same town,, and the contractor, at one time upon the trial, said that a part of the lumber in this account went into the other building, but, waiving the question of. the independent promise to pay the particular account for a consideration, a close scrutiny of the whole testimony does not disclose that the same is of an undisputed nature. As a jury question, without intending to reflect, there are too many affirmations and denials, by McRae, the contractor. The material-man’s lien was foreclosed to the extent only of $1,654, not $2,408. We see no error and overrule the assignment.

As stated, the record shows that Grant was building, or interested in the construction of, another building. Appellant complains that the court—

“erred in submitting to the jury what is designated in his charge as ‘first question,’ wherein he instructs the jury that the plaintiff’s agent, Hancock, had a right, under the law, to apply payments made by McRae to any account that he was instructed by the said McRae to apply same, and in the absence of any instruction from the said McRae, or any agreement between plaintiff’s agent and said McRae, that said agent had a right to apply any payments made by McRae to any debt owing at that time to the plaintiff by said McRae.”

If Grant, for a valuable consideration, promised to pay the account served upon him, and the one sued upon, this question becomes entirely abstract, and is overruled.

The bonding company, by cross-assignment of error, asks for a rendition of the judgment against it, for the partial amount recovered by Grant on his cross-action, claiming that the jury found certain alterations in the original specifications. The findings of the jury, quoted in the bonding company’s brief, while exhibiting an alteration, are very indefinite as exhibiting a material alteration in the specifications; and, in searching the record for the purpose of testing the materiality of the alteration, we find, upon examination of the specifications, that, as disclosed in this record, there have been no alterations. The burden is upon the bonding company in this matter, and we are unable to see, as presented, that said burden has been in any wise discharged.

The judgment of the lower court is, in all things, affirmed.
      <@^>For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes


source: Caselaw Access Project

author: FLX, C. J.

license: Public Domain

text:
    TOOMEY et al. v. FIRST MORTGAGE TRUST CO. et al.
    (No. 5524.)
    (Court of Civil Appeals of Texas. San Antonio.
    June 2, 1915.)
    1. Corporations <@=553 — Receivers — Appointment — Statutory Provisions.
    In a suit by stockholders against a corporation and certain individual defendants, the petition alleged that through mismanagement, etc., by its officers and agents, the assets of the company had been decreased from $141,905, the amount of its capital stock, to $30,000 or less; that the officers had made loans on insufficient security, and, after alleging in detail the wrongful transactions claimed to have resulted in losses, it alleged that the defendants issued false statements as to the company’s financial condition, and unlawfully declared, a dividend out of its capital, and that, having issued such false statements, they obtained proxies from stockholders, and by them use elected themselves directors that defendants had paid out for operating expenses over $28,-000, and had on hand in cash only $5.92, that the company was without' means to prosecute its business and had practically ceased to do business, and that if such officers were allowed to remain in control, its remaining' assets would be wasted. It prayed for a receiver, that the court instruct him in his duties, and that plaintiffs have judgment in behalf of the company against the other defendants, without indicating what judgment against them was desired. Held, that as the corporation had not been dissolved, and it was not alleged to be insolvent or in imminent danger of insolvency, nor to have forfeited its corporate rights within Rev. St. art. 2128, § 3, and as the suit was not brought under article 1203, which authorizes stockholders to sue for the dissolution of a corporation, provided leave is granted by the presiding judge of the court in which the proceeding is instituted, and which is the only statute empowering a stockholder or creditor to sue to wind up a going corporation, the suit could not be maintained.
    [Ed. Note. — For other cases, see Corporations, Cent. Dig. §§ 2201-2216; Dec. Dig. <@=553J
    2. Corporations <@=202 — Stockholders’ Action in Beiiale oe Corporation — Grounds.
    While individual shareholders, under proper circumstances, may institute suits for the corporation, which it refuses to institute, the allegations of circumstances justifying such authority must be clear and definite, and it must appear that the object of the suit is to recover debts for the corporation, and not to have a receiver appointed to administer its affairs.
    [Ed. Note. — For other eases, see Corporations, Cent. Dig. §§ 777-780, 822; Dec. Dig. <@=202.]
    3. Corporations <@=557 — Oeeicers—Misman-agement oe Aeeairs — Extent oe Reliee.
    Equity will not appoint a receiver of a corporation and assume control and management of its affairs at the suit of a stockholder alleging fraud, mismanagement, and collusion on the part of the corporate authorities, or ultra vires acts of the directors or of the corporation, but will limit the redress granted to the specific wrongs charged, and will go no further than to enjoin or forbid the misconduct complained of.
    [Ed. Note. — For other cases, see Corporations, Cent. Dig. §§ 2227, 2228, 2280-2236; Dec. Dig. <§=3557.]
    4. Receiver's <§=>8 — Grounds for Receivership-Discretion op Court.
    The appointment of a receiver is, under proper pleadings, within the sound discretion of the court, and it is the exercise of authority over property which should not be given except when the circumstances fully demand it.
    [Ed. Note. — For other cases, see Receivers, Cent. Dig. § 14; Dee. Dig. <^=»8.]
    Appeal from District Court, Bexar County; S. G. Tayloe, Judge.
    Suit by Ray Toomey and others against the First Mortgage Trust Company and others. From a judgment for defendants, plaintiffs appeal.
    Affirmed.
    W. W. King, of San Antonio, for appellants. John T. 'Duncan, of La Grange, for appellees.
   FLX, C. J.

This is a suit for the appointment of a receiver for appellee, instituted by Mrs. Ray Toomey, J. Pinnel, Ed Ney, Isaac Howe, J. P. Benkendorfer, and R. B. Huston in their own behalf and in behalf of the stockholders of the First Mortgage Trust Company, against that company, T. H. Bonner, Y. F. Mossop, William Sack-ville, John T. Duncan, and G. H. Porter. It was alleged: That appellee is a corporation created by a special act of the Legislature, on April 17, 1871, under the name of the Washington County Banking Insurance Company. That the charter was amended on September 17, 1911, the name being changed and the place of business moved from Bren-ham, Tex., to San Antonio, Tex. That after the charter was amended and officers elected the stock in the original company was canceled, and appellee issued and sold stock in the sum of $141,905, each share being of the par value of $100. That appellants bought 98% shares of said stock, as follows: Mrs. Toomey, 20 shares at $1,900, J. Pinnel, 5 shares at $750, Ed Ney, 5 shares at $750, Isaac I-Iowe, 1 share at $100, J. P. Benken-dorfer, 57% shares at $7,900, and R. B. Huston, 10 shares at $1,250, and that said shares were still owned by them. That through the mismanagement, negligence, carelessness, extravagance, and misappropriation on the part of the officers and agents of the company the assets of the company had been decreased from $141,905 to $30,000, or less. That said officers had made loans to different parties, taking insufficient security therefor. That they had unlawfully issued stock to R. E. Trabue and had loaned him $2,500, taking his note for $5,000, secured by shares in other companies. That Trabue became bankrupt, whereby the company lost $3,787.34. That said officers purchased from H. Mas-terson vendor’s lien notes aggregating $22,-500, on land in Louisiana, for which they paid him $7,500 in cash and issued and delivered to him 100 shares of stock in defendant company, which vendor’s lien notes at the time of their purchase were not worth 00 cents on the dollar, which was then known to said officer, and which notes are unpaid and suit is pending therefor. That the said defendants, on or about 19th day of December, 1913, made a purchase and sale of 7,126 acres of land in Cameron county, Tex., to W. F. Brice and E. S. Brodix, wherein the said defendant company paid the sum of $10,000 in cash, and assumed a prior vendor’s lien upon said land in favor of Y. Ga-vito for the sum of $35,000 and interest. That at the time of said sale and purchase the said land was worth less than the amount of the debt which said company assumed, which was then known to said officers. That the only security said company has for the payment of said money is the note of E. S. Brodix, long since due and unpaid. The said Brodix was then and is now insolvent, which was known to said officers. That the said transaction was made by the said Brodix through his influence as director and a member of the finance committee, and through me connivance of T. H. Bonner, who was then secretary, treasurer, and acting general manager of defendant company. That on or about the 29th day of November, 1913, said officers wrongfully and unlawfully issued and delivered to Edwin S. Brodix, one of its directors, 8% shares of its capital stock, and in payment therefore took the said Brodix’s unsecured note for $850, which has never been paid, and at that time said Brodix was insolvent, which was then known to said officers. That on the 15th day of January, 1914, Thos. H. Bonner, while acting as secretary and treasurer of the company, borrowed from defendant company the sum of $500, and on the 11th day of August, 1914, the sum of $125.40, and gave as security seven shares of stock in an insolvent concern which had ceased to do business. That he has failed and refused to pay said note or to give security for its payment, and notwithstanding these facts, which were known to the defendants, they, as officers, have since elected him as secretary and treasurer of said company. That said defendants wrongfully and in violation of law issued to Chas. Voltz and others, who were insolvent, a large number of shares of stock in said company, and took in payment therefor their personal notes without security, except the stock so issued. That on the 22d day of May, 1913, the said officers loaned $5,959 of the company’s money to J. A. Mel-ugin, and T. I-I. Bonner, the secretary and treasurer of said company, wrongfully and unlawfully received and retained 10 per cent, of said loan for making same, and which has never been paid to said company. That said officers issued stock to J. Armen-gol, William Sackville, and B. R. Taylor, together, 144 shares of stock in said company, for which they executed to said company their several notes, aggregating $13,250. Though said parties were solvent and able to pay the same the defendants wrongfully and unlawfully canceled said stock, and surrendered said notes to the makers in consideration of their subscribing for a like amount of stock in a new corporation known as the Pecos & Toyah Lake Irrigation Company of which these defendants were officers. That the defendants who are officers of the First Mortgage Trust Company are also officers and promoters of the Pecos & Toyah Lake Irrigation Company, a speculative, undeveloped enterprise, and have entered .into a conspiracy among themselves to absorb the assets of the defendant company. That on or about the 3d day of January, 1913, defendants wrongfully and unlawfully caused to be issued to stockholders false and incorrect statements as to the financial condition of said company wherein they represented as a part of its loans and discounts a number of personal judgments to be of the value of $26,683.90, when in truth and in fact said judgments at that time were of no value whatever. That on or about the 10th day of February, 1913, said defendants wrongfully and unlawfully caused to be declared and paid a dividend of 5 per cent, upon its capital stock as a part of its earnings, when in truth and in fact, by reason of mismanagement aforesaid, defendant company had been operated at a loss, and there were no earnings when said dividend was paid, and the same was paid out of its capital. That the defendants, after having issued to the stockholders said false and incorrect statements, as aforesaid, obtained from said stockholders their proxies authorizing said T. H. Bonner to vote their stock at all future meetings of the stockholders of said defendant company, and at a meeting called on the 3d day of November, 1914, said defendants, by use of said proxies obtained, had a majority vote of the stockholders, and at said meeting refused to allow their reports to be examined when requested by these plaintiffs, and over the protest of plaintiffs adopted the reports of said officers, including the said false and incorrect statements, and at said meeting they also elected themselves as directors of said corporation. That the defendants, since said company has been' in operation, have paid out for operating expenses the sum of $28,383.71, and now have on hand in cash only the sum of $5.92, and is without means or capital to prosecute its business of loaning money, and has practically ceased to do business. That if said officers are allowed to remain in control and management of said company, its remaining assets will be mismanaged, wasted, and consumed in salaries and Useless and unnecessary expenses. The court sustained a general demurrer and special exceptions to the petition and dismissed the cause.

It is provided in section 3 of article 2128, Revised Statutes, that a receiver may be appointed—

“in cases where a corporation has been dissolved, or is insolvent, or in imminent danger of insolvency, or has forfeited its corporate rights.”

In this case the corporation had not been dissolved, nor was it alleged to be insolvent or in imminent danger of insolvency, or that it had forfeited its corporate rights. This suit is one for the appointment of a receiver, and the fact that it is prayed that the court instruct such receiver in his duties does not tend to make the suit one for anything except the appointment of a receiver. The application for appointment of a receiver is not a cause of action in itself, but is merely ancillary to proceedings for the establishment of some right. The object of this suit is to appoint a receiver to sell all the assets of the company and distribute the same to stockholders; in fact it is the prhyer of appellants “that the assets of said defendant, when administered by said receiver, be distributed among the stockholders.” There is no statute in Texas empowering a stockholder or creditor to bring a suit to wind up a going corporation, except article 1203, under which this suit is not brought. As said by the Court of Civil Appeals of the Second District, in Land Co. v. Bindle, 5 Tex. Civ. App. 18, 23 S. W. 819:

“To appoint a receiver to sell all the assets of such corporation, and distribute the proceeds of sale among creditors and stockholders is to do indirectly what the law has not authorized to be done directly.”

This was an attempt on the part of appellants to administer the estate, of the corporation while it was an active, going concern, and that is not permitted by Texas law. It was never contemplated that a disaffected minority of shareholders should take the affairs of a corporation out of the hands of its lawful officers and place them in the hands of a receiver to be administered in the interest of the minority. As said by the court in the Bindle Case:

“That the affairs of a private corporation are liable to be managed by the majority against the wishes, and even the interests, of a minority is one of the ordinary risks of such ventures, which must be held to have been within the contemplation of each incorporator or his assigns.”

See, also, Hermann v. Thomas, 143 S. W. 195.

That this suit is not ancillary to another asking relief for appellants can, at once, be determined by removing that part of the petition asking for a receiver and analyzing what is left, and it will readily appear that with the receivership gone there is no cause of action left that appellants could enforce. There was no prayer for any definite judgment except the appointment of a receiver. The prayer, that “these plaintiffs have judgment in behalf of the defendant company against the other defendants herein” does not indicate what judgment appellants desired against the “other defendants herein.” It cannot be ascertained from the body of the petition what appellants desired judgment for except for the appointment of a receiver.

The right of individual shareholders under proper circumstances to institute suits for a corporation, which it refuses to institute, is not questioned, but the allegations of circumstances justifying such authority must be clear and definite, and it must appear that the object of the suit is to recover debts for the corporation, and not to have a receiver appointed to administer its affairs. Instead of the application for the appointment of a receiver being ancillary to some other proceeding, it is the only proceeding. “It is not only essential that the petition should state grounds calling for the appointment of a receiver to take charge of the property involved in the litigation, but it should also show upon its face an independent cause of action within the jurisdiction of the court.” Style v. Lantrip, 171 S. W. 786; Hermann v. Thomas, 143 S. W. 195. Appellants do not claim to hold any indebtedness against the corporation, nor to have a lien on any of its property, and are basing their right to sue merely on an allegation of debts due the corporation.

The allegations of the petition tend to show some poor investments and poor judgment on the part of the directors, but fail entirely to show that the board of directors refused to institute suits for debts due the corporation, nor are the facts alleged sufficient to show that a request to sue would have been refused by the directors. There is no allegation in the amended petition that the directors at that time were the same as when the acts complained of were performed, and there is no allegation to show that the present directorate would not act to protect the interests of the corporation. It appears from the allegations that new directors have been elected since the acts complained of occurred. In the case of People’s Inv. Co. v. Crawford, 45 S. W. 738, the pleadings were quite similar to the pleadings in this, the prayer being much more definite for judgment against a bank than the prayer is in this case, but this court held, through Associate Justice Neill, in that clear and forceful style for which he was distinguished:

“To wind up the affairs of the appellant corporation, and after paying its liabilities, if any, to distribute the proceeds of its assets among its stockholders, is one of the objects for which the appointment of a receiver was sought in this case. Such power, however, was not expressly bestowed upon the receiver by the order appointing him. But the authority conferred takes from the corporation all of its property and assets, and places them in the hands of the receiver; and, in effect, it deposes its officers and board of directors, and gives the management of all its affairs, and control of all of its property, to the receiver. This is done at the instance of a minority of the stockholders, contrary to the wish of a majority, and that, too, by stockholders who have no pecuniary demand against the corporation, and whose only grievance is the mismanagement by its officers and directors of its corporate affairs. Independently of their alleged grounds for a receiver they have no cause of action against appellant which entitles them to recover anything. And, as the appointment of a receiver is an ancillary remedy, they are, in the absence of a cause of action entitling them to something more than a receiver, not entitled to such appointment.”

The quotation could not have more appropriately applied to the allegations in this case, if it had been written with the allegations before the judge who wrote it. This decision! has often been approvingly cited by state and federal courts.

AiDpellants contend that their allegations of fraud, misappropriation, and mismanagement on the part of the officers, whereby the assets of the corporation have been dissipated, makes a cause of action, but, as said in the Crawford Case:

“Courts of equity, by virtue of their general equitable jurisdiction, will not appoint a receiver of a corporation, and assume control and management of its affairs, at the suit of a stockholder alleging fraud, mismanagement, and collusion on the part of the corporate authorities, or ultra vires acts of the directors or of the corporation, but in such cases will limit the redress granted to the specific wrongs charged, and will go no further than to enjoin or forbid the misconduct complained of.”

Speaking on .the same subject, this court, through Associate Justice Moursund, held:

“In this state a court of equity has no power to appoint a receiver of a corporation ancillary to a stockholder’s suit to wind up its affairs. Article 2128, Statutes of 1911, does not entitle a stockholder to the appointment of a receiver for the corporation upon the ground of insolvency, or imminent danger of insolvency, alone; but a stockholder urging such ground must, in addition thereto, show that he has a cause of action against the corporation independently of .the receivership, and that his interest as such stockholder requires the appointment to be made.” Williams v. Watt, 171 S. W. 266.

While there are some state courts that hold that a court will appoint a receiver where it is evident that continuation of business is impracticable or inequitable, still the weight of authority sustains Texas decisions in holding that a court will not appoint a receiver to administer on the estate of a corporation at the instance of dissatisfied stockholders, to whom the corporation is not indebted, in the absence of direct statutory authority for filing such suits. This suit is not instituted under the provisions of article 1203, Rev. Stats.

The appointment of a receiver is, under proper pleadings, within the sound discretion of the court, and it is the exercise of authority over property which should not be given except when the circumstances fully demand it. It is an exercise of the powers of an equity court that should not be exercised in answer to the demands of dissatisfied minority shareholders who would wreck where they cannot rule. In order to obtain the appointment of a receiver for a corporation it should appear that the plaintiff has a valid cause of action and his rights imperatively demand it, and it should not be used as a means of taking charge of affairs of a corporation when a minority has failed to secure a sufficient number of votes to run the business as they may desire. A court of equity will not lend its aid to a minority in getting the advantage of a majority of the stockholders. Continental Trust Co. v. Cowart, 173 S. W. 588.

The judgment is affirmed.

CARL, J., entered his disqualification, and did not sit in this case.
      <§=>For other oases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

      <§£»ITor other oases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes


author: HALL, J.

text:
    CHICAGO, R. I. & G. RY. CO. v. WHALEY.
    (No. 762.)
    (Court of Civil Appeals of Texas. Amarillo.
    April 3, 1915.
    On Motion for Rehearing, May 8, 1915. Motion to Certify Denied June 5, 1915.)
    1. COURTS <@=>169 — JURISDICTION — COUNTY Court — Pleading.
    Where the aggregate of the items of damage set out in the petition is less than $800, but the prayer was for judgment for the sum of $1,000, with interest thereon, the prayer does not claim an amount in excess of the jurisdiction of the court, since the interest claimed is on the judgment, not on the damages.
    [Ed. Note. — -For other cases, see Courts, Cent. Dig. §§ 413-425, 428-436, 443, 456, 458, 465; Dec. Dig. <§£=>169.1
    On Motion for Rehearing.
    2. Commerce <§=>8 — Interstate • Commerce — . Contracts — Law Governing.
    The United States statutes and the decisions of the United States courts control the interpretation of contracts for interstate shipments.
    [Ed. Note. — For other cases, see Commerce, Cent. Dig. § 5; Dec. Dig. <@=S.]
    3. Carriers <@=218 — Carriage of Live Stock — Bill of Lading — Requirements for Notice.
    A requirement in the bill of lading for an interstate shipment of live stock that the shipper shall give notice of injury or damage to an agent of the carrier within one day after arrival and before the stock are removed from the yards, or mingled with other stock, is unreasonable and not binding when no reduced rate therefore is shown, it does not appear that there was any agent of the carrier at the point of destination to whom the notice could be given, and the damage claimed is the decrease in the market during the time the shipment was delayed.
    [Ed. Note. — For other cases, see Carriers, Cent. Dig. §§ 674^696, 927, 928, 933-949; Dec. Dig. <@=3218.]
    Hendricks, J., dissenting.
    Appeal from Sherman County Court; J. W. Elliott, Judge.
    Action by G. T. Whaley against the Chicago, Rock Island & Gulf Railway Company. Judgment for the plaintiff, and defendant appeals.
    Affirmed, and motion for rehearing overruled.
    N. H. Lassiter, of Ft. Worth (Moore & Powell, of Dalhart, and Gustavus & Jackson, of Amarillo, of counsel), for appellant. Jno. H. H. Stahl, of Stratford, for appellee.
   HALL, J.

This is a stock shipping case. Two cars of the stock were shipped separately to Kansas City and one to Ft. Worth. The Chicago, Rock Island & Gulf Railway is the initial carrier, and the Ft. Worth & Denver City Railway is not made a party defendant.

Plea in abatement, alleging misjoinder of parties and causes of action, was urged in the lower court and overruled, and this is made the basis of the first assignment. The evidence showed that the initial carrier was not responsible for any of the damages to the Ft. Worth shipment, but that all the delay and injury occurred on the line of the Ft. Worth & Denver City Railway Company. Suit is brought against appellant upon the written contract of carriage for the first two shipments, and appellee sought to recover for the last shipment upon appellant’s common-law liability. The first, second, and third assignments have been abrogated by a remit-titur filed in this court of the full amount of damages recovered for the last shipment.

The fourth assignment insists upon a reversal because no written notice was given, as required by the contract, before the cattle were removed and mingled with other cattle at point of destination. This provision in the contract is the usual condition found in bills of lading precluding shippers from recovering damages for any loss or injury to or detention of stock or delay in transportation thereof unless the shipper should, as soon as he discovered said loss or injury, promptly give notice thereof in writing to some general officer, claim agent, or station agent of the receiving carrier, or to the agent at destination or to some general officer of the delivering line, before such stock is removed from the yards at destination, and before it is mingled with other stock, and further providing that such written notice should be served within one day after the delivery of the stock at destination, in order that such claims might be fully and fairly investigated.

Appellee having eliminated the intrastate question by a remittitur of the amount recovered upon the intrastate shipment, the question arises and must be determined by the rule announced by the federal courts. It is held in Clegg v. St. L. & S. F. Ry. Co., 203 Fed. 971, 122 C. C. A. 273, that a stipulation of this kind in a shipping contract for an interstate shipment is valid if made in consideration of a lower rate of freight. The rule, however, as announced in this state in so far as we have been able to learn, with reference to stipulations of this character, does not apply to damages occasioned by a depreciation in the market price due to the failure of the carrier to deliver the stock seasonably. Pecos & Northern Texas Ry. Co. v. Evans-Snyder-Buel Co., 100 Tex. 190, 97 S. W. 466; Sou. Kas. Ry. Co. v. Curtis, 44 Tex. Civ. App. 477, 99 S. W. 566. It is further held in this state that such a stipulation is unreasonable, invalid, and unenforceable if it does not state the name of an agent upon whom such notice may be served. Galveston, etc., Railroad Co. v. Short, 25 S. W. 142. See, also, 4 R. C. L., Carriers, §§ 454, 455, 457.

Appellant did not allege and prove that the shipments were made upon a reduced freight rate, nor did the contract set out the name of any agent or other party upon whom such notice might have been served. The decisions referred to above, by the courts of this. state, are not in conflict with the holding of the federal court in the construction of this clause of such contracts, and the fourth assignment is overruled.

Appellants suggest fundamental error in that appellee sues for $1,000, with interest thereon. Reference to the petition shows that the aggregate sum of the various items, as set out in the body of the pleading, is $739.44. It is true that the ad damnum clause lays the damage at $1,000. The’ prayer is:

“Wherefore, plaintiff prays judgment against defendant for the sum of $1,000, with interest thereon, as provided by law, and all costs of suit.”

This prayer is almost identical with that discussed in the case of Pecos & Northern Texas Ry. Co. v. Rayzor (Sup.) 172 S. W. 1103, in which Judge Phillips has held that it did not claim an amount above the jurisdiction of the county court, since .it prayed for interest upon the judgment and not upon the amount of the damages.

Finding no reversible error, the judgment is affirmed.

On Motion for Rehearing.

We agree that since Congress has taken possession of the subject of common ■carriers in matters of interstate shipment, the United States statutes and the decisions of the federal courts should control in regard to the interpretation of shipping contracts and application of the rules of law to ■cases arising upon interstate contracts, but we do not agree that.the tendency of the federal courts and the great weight of authority ■of other courts is in favor of the validity and reasonableness, under all circumstances, of the stipulation contained in this contract, with reference to giving notice of damages before the stock are removed from the point •of shipment, etc. In our opinion, Clegg v. St. Louis & San Francisco Ry. Co., 203 Fed. 971, 122 C. C. A. 273, and the Metropolitan Trust Co. v. Toledo, St. L. & K. C. R. Co. (C. C.) 107 Fed. 628, do not hold that such a stipulation is reasonable, under any and all circumstances, and we think it would be a dangerous precedent for the courts to establish any such doctrine. So far as we have been able to find, the Supreme Court of the United States has never passed directly upon the question here presented. The Clegg Case shows that the validity of the agreement to give the notice was sustained upon consideration of the fact that the shipper had received a lower freight rate than was usually granted shippers. No such fact was set up by the appellant in this case. It is true that the opinion declares the provision in the contract, with reference to notice, to be valid, and states that a failure to give the notice is fatal to plaintiff’s right to recover. In the case of Metropolitan Trust Co. v. Railway Co. (C. C.) 107 Fed. 628, it was simply held that the failure of the shipper to give notice of his claim for damages within the 30 day period provided in the contract was a reasonable requirement; and Pac. S. S. Co. v. Baneroft W. Co., 94 Fed. 180, 36 C. C. A. 135, holds such requirement unreasonable as a matter of law. A case could rarely ever arise where the damages sustained by the shipper could not be ascertained with reasonable certainty within 30 days from the time the shipment reached its destination; and the contracts in those cases are so different from the one now under consideration as to render the cases themselves inapplicable here. The case of Kidwell v. Oregon Short Line Ry. Co., 208 Fed. p. 1, 125 C. C. A. 313, involved the same question which we are now considering; and, while the stipulation was held to be reasonable in that case, it is dear that the federal court based the holding upon the fact that the Supreme Court of Oregon had previously announced such a rule. That the stipulation might be or become unreasonable is clearly recognized in the Kidwell Case, by this language, found in the opinion:

“There was nothing in the circumstances, as disclosed by the record in the case at bar, to render the requirement of the notice negligible or impracticable, as in the case of C. R. I. & P. Ry. Co. v. Spears, 31 Okl. 469 [122 Pac. 228].”

We must infer from this language that the validity of the notice and its binding effect might have, under favorable circumstances, been declared by the federal court to be unreasonable. In Ormsby v. Union Pacific Ry. Co. (C. C.) 4 Fed. page 170, it is said:

“As to the last clause of the answer [of the appellee], which may be taken to be an independent answer in itself, that sets up a provision in the contract that for injuries to the animals shipped over the line of the road the owner should make a demand in writing on the agent of the company before removing- them from the place of destination, or from the place of delivery. It may be that for some injuries this clause in the agreement would be effectual; but here, according to the charge of the complaint, the injury was illness of the animals, which could hardly be discovered until they should he removed from the car; and this clause in the contract would require the parties to hold them at the depot grounds, I suppose, until they could ascertain whether they were in good condition or not. That would be very unreasonable indeed. As to such matters as are charged in the complaint— an illness occurring to animals, the extent of which, could not be known until they should be removed from the car, and probably not for some little time after their arrival here — it may be said that this clause in the agreement is of no effect; that the railroad company could not make any such provision in respect to stock shipped over their line. The demurrer will be sustained to the last clause or paragraph, or whatever it may be called, of the answer, and overruled to the other.”

It seems that this is the only clear enunciation by any federal court touching the question under consideration. The state courts differ materially upon this question, but the rule is settled in Texas, by Missouri Pacific Railway Co. v. Harris, 67 Tex. 166, 2 S. W. 574, and other subsequent cases. We think, in the absence of a definite holding by the Supreme Court of the United States to the contrary, we should adhere to the rule governing such stipulations as announced by Judge Stay ton, in the Harris Case, as follows:

“The answer must present a defense to the case made by the petition. If the answer does not show that, under the facts existing, the limitation on the carrier’s liability sought to be imposed by the special contracts was reasonable in its character, then the answer was not sufficient, and the court below properly sustained the demurrer. If a carrier sets up a claim to notice of a given fact, as a condition upon which its liability to a shipper is to depend, then it is incumbent upon it, when the notice was to be given to one of its own officers or agents, to show that it had an officer or agent at or near the place where the notice is to be given, in any case in which the shipper, by the terms of the contract through which notice is claimed, is to hold the property shipped at the place of delivery * * until it can be inspected by some agent of the carrier. This would be especially true when the property to be inspected is intended for immediate sale at the place of destination, is perishable in character, likely to deteriorate in value by holding, and expensive to keep. If in such case the carrier has not an officer or agent at or near the place where the property to be inspected is delivered, so that notice may be promptly given and an inspection, if desired, speedily made, then a contract requiring notice to be given to an officer or agent of the carrier is not reasonable in its character. The contract to give notice was not the entire contract; the notice was required to be given to an officer or the nearest station agent of the carrier, and the situation of such officer or agent, with reference to the place from which the notice must necessarily come, and at which an inspection, if desired, would necessarily have to be made, would largely determine whether the contract was reasonable or not. The answer should have shown that the carrier had an officer or agent so situated that the contract to give notice to such officer or agent was reasonable. Under the averments of the petitioner, the place of delivery was beyond the line of appellant’s railway, in another state, and no presumption can arise that the carrier had an officer or station agent near the place of destination. If the contract were even valid, whether reasonable or not, the shipper would be bound by its terms; but where its validity depends upon its being reasonable, the party who asserts its validity must allege the facts which make it so. It may well be doubted if such a contract as is relied on in this case ought ever to be sustained. If a carrier seeks to make its liability depend on notice to its officer or agent of a claim for damages, it would seem that the responsibility of determining who is an officer or agent of a carrier, within the meaning of the contract, should not be cast upon the shipper, but that the person and his locality to whom the notice must be given ought to be made certain by the contract itself, and especially so when the carrier is a corporation and the property is to be delivered beyond the line of its road through another carrier. We are of the opinion that there was no error in sustaining the demurrers to the answers setting up the defenses we have noticed.”

We think the law applicable to stipulations of this character is correctly stated in 4 R. 0. L., Carriers, p. 795, § 253:

“The one essential of stipulations of this nature is that they be reasonable; that is, however, purely relative, and a stipulation perfectly reasonable under one state of facts would be quite unreasonable under another. Whether in any particular case the stipulation under consideration is valid is therefore dependent on the peculiar facts and circumstances of that case, the chief _ query being whether sufficient time has been given to enable the shipper to discover the loss and give notice thereof, this again being largely dependent on distances and the facilities of communication. From the very nature of such a requirement, it is evident that no helpful general rule can be laid down. * * * Where the damage done is not for any reason apparent or capable of being estimated within the time provided for giving notice, it seems that the provision for notice will be held unreasonable, as a carrier cannot reasonably require that the shipper shall give notice of a claim- for damages before the injury, or its extent, can be discovered by the latter in the exercise of due diligence.”

The motion is overruled.

HENDRICKS, J., dissents for the reasons stated in his opinion filed in the case of C., R. I. & G. Ry. Co. v. Dalton, 177 S. W. 556.
      <g=For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes


author: HUFF, C. J.

text:
    QUANAH, A. & P. RY. CO. et al. v. GOODWIN et al.
    (No. 786.)

    (Court of Civil Appeals of Texas. Amarillo.
    May 15, 1915.
    On Motion for Rehearing, June 12, 1915.)
    1. Raileoads &wkey;>303 — Injury at Crossing— ' Statute — Negligence.
    Under the statute granting to a railway the right to cross streets, but requiring it to keep such crossings in repair, the duty could not be shifted to an independent contractor, so that, where a railway’s negligence, concurring with that of its contractor in obstructing a crossing, resulted in injury to plaintiff, it would be liable therefor.
    [Ed. Note. — For other cases, see Railroads, Cent. Dig. §§ 959-963, 966, 967; Dec. Dig. <&wkey;> 303.]
    2. Railroads <&wkey;337 — Personal Injuries— Crossing Grossings — Liability.
    Where plaintiff was injured when his horse became frightened at steel rails which defendant railroad piled in or near a crossing, the fact that the old wagon gear into whish the horse backed had been placed there by another did not excuse the railway from liability for its own wrong.
    [Ed. Note. — For other cases, see Railroads, Dec. Dig. <&wkey;>337.]
    3. Raiijroads <&wkey;348 — Injury at Crossing-Sufficiency of Evidence — Contributory Negligence.
    In an action against a railroad and its subcontractor for injury to plaintiff when his horse became frightened by a pile of rails which they had placed in or near a crossing, evidence held to sustain a finding that plaintiff was not guilty of contributory negligence.
    [Ed. Note. — For other eases, see Railroads, Cent. Dig. §§ 1138-1150; Dee. Dig. &wkey;348.]
    4. Negligence <&wkey;66 — Contributory Negligence.
    It is not the law that, where a person is injured because of the negligence of another, he cannot recover because he knew there was some danger in the act through which he was injured.
    [Ed. Note. — For other cases, see Negligence, Cent. Dig. §§ 86-89; Dec. Dig. &wkey;66.]
    o. Contribution —Joint Tort-Feasors.
    Where a railroad and its contractor and subcontractor were negligent in obstructing a crossing, whereby plaintiff was injured, no contribution was recoverable as between the parties.
    [Ed. Note. — For other cases, see Contribution, Cent. Dig. §§ 6-9; Dec. Dig. <&wkey;5.]
    6. Master and Servant <&wkey;318 — Independent Contractor — Railroad Construction.
    A contract for railroad construction providing ithat the contractor should provide all grounds for the deposit of material when not within the limits of the railway’s land, implied that, where grounds were within the railroad lands, the selections were left to it, and a subcontractor, required by its contract to deposit its material at the place selected therefor,'was not an “independent contractor” in respect to placing the material at a point within the railway’s land, but was a servant of the railway or the contractor, so that neither it nor its surety were liable for resulting personal injury to plaintiff.
    [Ed. Note. — For other cases, see Master and Servant, Cent. Dig. §§ 1257, 1258; Dec. Dig. &wkey;318.J
    Appeal from District Court, Cottle County; Jo A. P. Dickson, Judge.
    Action by D. A. Goodwin against the Quan-ah, Acme & Pacific Railway Company and the Texas Bhilding Company, in which the Southwestern Construction Company and the Commonwealth Bonding & Casualty Insurance Company were made parties defendant. Judgment for plaintiff against the Railway Company and the Building Company, and in favor of the Railway Company against the Construction Company, and for the Construction Company against the Building Company and the Bonding Company, and the Railway Company and the Bonding Company appeal.
    Affirmed as to other parties, and judgment against the Bonding Company reversed and rendered, and the Company discharged.
    D. E. Decker, of Quanah, and F. H. Had-dix, of Ft. Worth, for appellants. Browne & Hawkins, of Paducah, for appellees.

       writ of error pending in Supreme Court.

   HUFF, C. J.

This suit was prosecuted by the appellee Goodwin against the Texas Building Company and the Quanah, Acme & Pacific Railway Company, for personal injuries alleged to have been sustained by reason of being thrown from his horse, which was frightened at a street crossing on appellant company’s railway, by the obstruction of the crossing in piling steel rails in the street, etc. The railway company answered by denials of negligence on its part, and also alleged that it had contracted with the Southwestern Construction Company to build an extension of its road 40 miles from Paducah, in a southwesterly direction, and that under the contract this' material was furnished, etc., and that the construction company had contracted with the Texas Building Company, the terms of which were set out, and that the Texas Building Company, under the contract, had executed a bond, payable to the construction company, with the Commonwealth Bonding & Casualty Insurance Company as surety thereon, and the railway company prayed that the construction company and the bonding company be made parties defendant, and prayed for judgment over against those companies, and the construction company answered, praying for judgment over against the Texas Building Company and the bonding company, on the contract and bond executed to it by said company. The case was tried before the court without a jury, and judgment rendered against the Texas Building Company and the Quanah, Acme & Pacific Railway Company for $1,100 damages jointly and severally against those two companies, and in favor of the railway company over against the defendant the Southwestern Construction Company for said sum, and in favor of the construction company against the building company and the bonding company for said amount. The Quanah, Acme & Pacific Railway Company and the Commonwealth Bonding & Casualty Insurance Company alone appealed. There is no appeal taken by the Texas Building Company and the Southwestern Construction Company.

The provisions of the contract necessary to a determination of this case, as we understand it, will be hereinafter set out.

The trial court filed his findings of fact, and found in part as follows:

“I find that the defendant the Quanah, Acme & Pacific Railway Company owned and operated a line of railway into and through the town of Paducah, Cottle county, Tex., and in and across McAdams street, a public street in said town of Paducah, Tex. I find that the defendant Texas Building Company, on or about the 11th day of -, 1912, contracted with the defendant company the Southwestern Construction immediately for the construction and erection of an extension of its line of railway from Paducah, Tex., beginning at the terminus of its old line in the limits of the city of Paducah, Tex., to Roaring Springs, in Motley county, Tex. I find that during the life of the contract of the defendant the Texas Building Company for the erection and completion of its work in the construction of the extension of the lino of railway of the defendant Quanah, Acme & Pacific Railway Company that said railway company permitted the defendant building company to use and acquiesce in the use of its old line of railway in and through Cottle county, Tex., and particularly the crossing at and upon Mc-Adams street. I find that during the month of November, 1912, and especially on the 14th day of said month, the said building company, with the permission, acquiescence, and consent of said railway company, the owner of the said railway then completed on and across McAdams street, permitted McAdams street, and particularly the public crossing thereon, to become blockaded and in a bad and unsafe condition for travel by piling and permitting to be piled in said street and upon said public crossing large piles of steel rails, and in placing and permitting to remain in said street, in and upon said public crossing, a portion of an old wagon frame, and I find that said street and said public crossing, by reason of having said steel rails piled thereon, and by reason of having said wagon frame upon the same, was in an unsafe condition on the 14th day of November, 1912. I find that said street and crossing was not in the condition on said last-named date that it was prior to the crossing on said public street by said railway, and I find that the condition of said public street before the crossing thereof of the said railway company’s line was in a good and safe condition, with no obstruction in said street or upon said crossing as aforesaid. I find that on the said 14th day of November, 1912, the plaintiff, D. A. Goodwin, was traveling from his home to the town of Paducah, Tex., and taking the nearest and most practical route which was to travel down said McAdams street and cross said railway at its intersection of the said McAdams street. I find that plaintiff was riding a gentle horse, and believed that he could cross said street without injury to himself. I find that on account of the condition of said street crossing, by reason of being out of repair, blockaded with large piles of steel rails, cars, and having an old wagon frame, consisting of wagon hounds, on said crossing, plaintiff’s horse became frightened, fell with plaintiff, becoming entangled in said wagon hounds, and being frightened at said rails, and he, not having sufficient room on said crossing, by reason of its said condition, was unable to control said horse, and was injured by falling from said horse and into said wagon frame, and in the manner alleged in his petition. I find that, had said crossing been in proper condition, or in such condition as to not unnecessarily impair its usefulness to the traveling public, the plaintiff would not have been injured.”

He then sets out the plaintiff’s injuries:

“I conclude, as a question of fact, that the defendants the Texas Building Company and the Quanah, Acme & Pacific Bailway Company were negligent in permitting said crossing and street to be in the condition it was at the time the plaintiff was injured, and I conclude that the negligence of said defendants was the direct and proximate cause of the plaintiff’s injuries. I conclude that the plaintiff was not guilty of contributory negligence in acting as he did in attempting to cross said crossing at the time he received his injuries.”

We shall not at this time set out other findings, but in discussing the several assignments will refer to the facts found by us in determining the questions presented by the assignments.

The Quanah Acme & Pacific Kailway Company’s first assignment is that the court erred in rendering judgment against it in any sum, for the reason that the parties who caused the horse to become frightened were the employes of the Texas Building Company, and wera not under the control of the railway company. The obstruction or material was placed at and in the street crossing the railway, from which the horse became frightened, and the trial court finds that the railway company permitted the building company to blockade McAdams street, and thereby placed it in a bad and unsafe condition for travel, by piling and permitting to be piled in the street and upon the crossing large piles of steel rails, and that on account of its condition at the crossing the horse of appel-lee became frightened, and that there was insufficient room caused thereby, and that ap-pellee was unable to control the horse, and was thereby thrown and injured; and he finds, if the crossing had been in proper condition, and not in such condition as to impair its usefulness to the traveling public, appellee would not have been injured. The statute grants to a railway the right to cross streets with its road, but imposes upon it the duty of keeping such crossing in repair, and not to destroy its usefulness. This duty cannot be shifted to an independent contractor. If the railway permitted, and the two construction companies acted with it in the matter, we see no reason why they should not be jointly liable. Under the contract in this record, the Southwestern Construction Company agreed to furnish all material for the proposed extension of the road. The contract between that company and the Texas Building Company is to the effect that the Southwestern Construction Company should furnish the grounds upon which to unload and load material, and the Texas Company should place it upon the grounds so selected. The hands of the Texas Company were unloading the material so furnished at the place directed, and where the railroad company had “spotted” its cars. These companies, in so placing the steel rails, were acting together under an agreement. If this was the proximate cause of the injury, as found by the court, or if it was a concurrent act of negligence producing the injury, then the railway company cannot escape its duty by imposing it upon an independent contractor, and it will be liable for the injuries resulting therefrom. Railway Co. v. Johnson, 20 Tex. Civ. App. 572, 50 S. W. 1044; Railway Co. v. Haddox, 36 Tex. Civ. App. 385, 81 S. W. 1036; Railway Co. v. Davis, 53 Tex. Civ. App. 547, 116 S. W. 423; Railway Co. v. Randall, 51 Tex. Civ. App. 249, 113 S. W. 180; Railway Co. v. Gillenwater, 146 S. W. 589.

The railway company’s second assignment is to the effect that the judgment is erroneous for the reason that the horse backed into an old wagon gear in the street or near thereto, and that appellant was not responsible for placing it there, and that the gear occasioned the fall, and was therefore the proximate cause of the injury. The horse became frightened at the steel rails being piled in the street. Although the gear may have concurred in the injury, it would not defeat a recovery from the negligence which occasioned the fright. The fact that the negligence of some stranger contributed to the injury will not excuse the railway for the wrong' done. Gonzales v. City of Galveston, 84 Tex. 3, 19 S. W. 284, 31 Am. St. Rep. 17; Shippers’ Compress, etc., v. Davidson, 35 Tex. Civ. App. 558, 80 S. W. 1032; Railway Co. v. Croskell, 6 Tex. Civ. App. 160, 25 S. W. 486.

The second proposition under this assignment, as we gather from the statement, is that because a noise was made in letting a rail fall or the sliding down of one of the rails by the employés of the Texas Building Company, an independent contractor, the railway company would not be liable therefor. This proposition and contention is answered by the authorities above cited.

The fourth and fifth assignments of error present the question of contributory negligence. It appears from the evidence there was a road around the end of the railway track, which was frequently traveled, and which was practically as near to town for the appellee as the one going over McAdams street. The appellee says he was riding an old, gentle horse, and that he usually went to town by McAdams street, crossing the railroad at that point. The employés were engaged in piling the rails at that time in the street. There was a space of about 10 feet between the pile of rails and a fence. The rails were being unloaded by sliding them in the street. When in about 15 feet of the pile of rails his horse was frightened and was snorting and was scared from the scent of the rails. He told the men they were in the street, and that there was small room to pass, but if they would be quiet probably he could pass, and when he was nearly through a rail fell, “when my old horse went out of his head,” commenced jumping, rearing, and getting against a wire fence, and that he drew the horse away from the fence, and while jumping the horse backed into an old wagon gear and sat down on his haunches, and that appellee jumped off, and as he did so something struck him, perhaps the horn of the saddle. His injuries are then described.' The contention is that he should have gone around the other road, and his failure to do so was negligence on his part, which will preclude a recovery. McAdams street was a duly dedicated street, and appellee’s usual route to town. We do not believe, as a matter of. law, the facts conclusively establish contributory negligence. We think it was a proper question to be determined by the court trying the case, from the facts. We do not feel warranted in saying it is so conclusive as to defeat a recovery. It has been stated by the courts that it is not the law where a person is injured because of the negligence of another that the injured one cannot recover because he knew there was some danger in the act through which he was injured. Railway Co. v. Shannon, 50 Tex. Civ. App. 194, 111 S. W. 1060; Railway Co. v. Randall, 51 Tex. Civ. App. 249, 113 S. W. 180. It was not obviously dangerous, and therefore negligence on the part of appellee, who was then riding a gentle horse, to travel a street and cross the railway at a point usual and customary with him, even though he may have known that the rails were being unloaded at that point We do not think he was required to follow some other route, as a matter of law, in order to avoid a possible danger from appellant’s negligence. It is not shown he knew it to be dangerous until he was in the midst of the danger. We think the court was authorized, from the facts, to hold that an ordinarily prudent man would have done as did the appellee upon the occasion in question. Railway Co. v. Smith, 49 Tex. Civ. App. 1, 107 S. W. 638; Railway Co. v. Robertson, 27 S. W. 564; Railway Co. v. Gillenwater, 146 S. W. 589; Railway Co. v. Bradford, 139 S. W. 1046; Railway Co. v. Hawkins, 49 Tex. Civ. App. 545, 108 S. W. 736; Railway Co. v. Medlenka, 17 Tex. Civ. App. 621, 43 S. W. 1028.

The Commonwealth Bonding & Casualty Insurance Company’s first, second, third, and sixth assignments of error are overruled for the reasons given in disposing of the railway company’s assignments. The bonding company’s assignments from 4 to 9, inclusive, except the sixth, present error in the judgment against it, because: (1) There is no evidence of a contract indemnifying the railway company and the two construction companies against such damages; (2) the judgment was erroneous in decreeing a recovery over against the bonding company in favor of the Texas Building Company; (3) if any injury was sustained, it was through the concurrent negligence of the railway company and the Texas Building Company, and therefore no liability was shown on the part of the binding company; (4) that it was error to render judgment against the bonding company in favor of the Southwestern Construction Company, because there was no proof that the extension was built under the contract between the construction company and the railway.

The street crossing where the injury occurred was on the railway company’s line, which had been constructed and in operation some time previous to the contracts for the extension of the road from Paducah to Roaring Springs — 40 miles. As above suggested, it was the duty imposed by the statutes upon the railway company to maintain the crossing and render it reasonably safe to the traveling public. The contract and facts show that on the 9th day of September, 1912, the Southwestern Construction Company entered into a contract with the railway company to build, construct, and place in operation the line of road to be extended. This construction company agreed to do all the grading, clearing, masonry, tracklaying, the erection of buildings, and to furnish all material and to do and supply all the other things requisite and necessary to complete the roadbed, and prepare the roadbed for receiving the superstructure and lay the track and surface same. It is provided in that contract that the work may, under circumstances, be sublet, and the contract contains the following provisions:

“Ninth. The contractors will, at their own proper costs and expense, make and keep open, and in safe condition for use, all crossings, and approaches wherever the line of railway is traversed by or is adjacent to public of private roads or farm crossings, and will change and alter said roads, approaches, and crossings whenever required by the chief engineer or company during the construction of the line.
“Tenth. Contractors shall be responsible and liable for all damages of every nature whatsoever done to persons or property during the performance of the work and occasioned by his own act or neglect, or that of their subcontractors, foremen, or other employés or agents; and company will not be responsible for any damages occasioned to any person or to the public. If, however, company shall be held responsible for any damages, either to individuals or to the public, then, in such event, contractors shall indemnify company against all such damages, including cost and expense of defense; and the contractors will, at their own cost and expense, make and maintain such temporary provisions as may be necessary by way of fences or otherwise for the protection of persons and property during the performance of said work.
“Eleventh. Should there be any unsatisfied claims for damages to persons or property at the time of the completion of the work, the chief engineer of the company shall have the right to estimate and finally determine the amount of such damages and pay the same to the proper parties, and all such sums so estimated and paid shall be deducted from what is due the contractors. Contractors shall respect, adhere to, and comply with all ordinances and laws controlling or directing in any way the actions of those engaged upon the work, or affecting the materials or transportation or disposition of them, and shall be liable for any failure to do so, as indicated in the two preceding paragraphs of this section.
“Twelfth. All roads for hauling material and ways to and from the work, together with all grounds for the deposit of material and the erection of camps or shanties, or yards for the performance of the work, not within the limits of the company’s lands, shall be provided by the contractors at their own proper cost and expense.”

On the 10th day of September, 1912, the Southwestern Construction Company entered into a contract with the Texas Building Company. The first-named company is designated throughout the contract as “Company,” and the second company is designated therein as “Contractor.” After reciting the fact that a contract had been entered into between the railway company and the Southwestern Construction Company, the following provision is inserted:

. “(1) Now, therefore, contractor hereby covenants and agrees under the penalties herein expressed, and in a bond bearing even date with these presents, and hereto affixed, at its own proper cost and expense, to furnish all teams, tools, equipment, and labor necessary for the successful prosecution and completion of all of the work called for in this contract, in strict conformity to the terms of this agreement and these specifications.
“Work to be Done.
“The work embodied in this contract is the construction of 40 miles of railroad for the Quanah, Acme & Pacific Railway Company, beginning at end of track at Paducah, Tex., and consists of the graduation, trestling, constructing culverts, tracklaying and surfacing, setting switches and road crossings, and turning over to the said party of the second part in first-' class condition for operation.”

It is stipulated further in the last contract:

“The contractor will receive f. o. b. cars at Paducah, Tex., all material furnished by the company, unload and store same in the material yards at his own expense.”
“Temporary Tracks.
“(4) The company will furnish ground for material yard, but the contractor shall build all temporary tracks for material yard purposes at his own expense, and, after completion of work, take up such track materials as may have been used in said temporary tracks and store same on right of way in vicinity at such points as may be designated by the engineer.”
“Contractor to Keep Crossing, etc., Open.
“(15) The contractor will, at his own proper cost and expense, make and keep open, and in safe condition for use, all crossings and approaches wherever the line of the railway is traversed by, or adjacent to, public or private roads or farm crossings, and will change and alter said roads, approaches, and crossings whenever required by the chief engineer or the company during the construction of the line.
“Contractor Responsible for Damages, etc.
“(16) The contractor shall be responsible and liable for any damages arising from injuries by himself, his subcontractors, foremen, mechanics, laborers, employés, or other persons, during ‘the performance of the work, by reason of accident or otherwise, and from damages sustained by depositing materials to public injury, or of any person or corporation, including costs and expenses of defense, and the company will not be responsible for any damage occasioned to any person or to the public. If, however, the Quanah, Acme & Pacific Railway Company, or the ‘Company’ shall be held responsible for any damages, either to individuals or to the public, then, in such event, the ‘Contractor’ shall indemnify the railway company, or the ‘Company’ against all such damages, including costs and expenses of defense; and the ‘Contractor’ will, at his own proper expense and cost, make and maintain such temporary provisions as may be necessary by way of fences or otherwise for the protection of persons and property during the performance of said work.
“Claims Deducted by Railway Company.
“Should there be unsatisfied claims for damages to persons or property at the time when the final estimate for the doing of the work is made and returned, the ‘Company’ shall have the right to estimate and finally determine the amount of such damages, and to pay the same to the parties injured, and all such sums so paid shall be deducted from the amount due the ‘Contractor,’ as shown by the final estimate. The contractor shall respect, adhere to, and comply with all ordinances and laws controlling or directing in any way the actions of those engaged upon the work, or affecting the materials, or the transportation or disposition of them, and shall be liable for any failure to so do.”

It is required by the contract that the Texas Building Company should give a bond in the sum of $50,000, with approved security. On the 24th day of September, 1912, the Texas Building Company, with the Commonwealth Bonding & Casualty Insurance Company as surety, executed a bond in the sum of $50,000, payable to the Southwestern Construction Company, conditioned as follows:

“Whereas, the above bounden, the Texas Building Company, has entered into a contract with the Southwestern Construction Company for the execution of the graduation, masonry, and other work on a forty (40) mile extension of the Quanak, Acme & Pacific Railway Company, in a southwesterly direction from the town of Paducah, Tex., bearing date the 10th day of September, A. D. 1912, a copy thereof being hereto attached and made a part hereof:
“Now, the condition of this obligation is such, that if the said the Texas Building Company shall well and truly keep and perform all the terms and conditions of the said contract on their part to be kept and performed, and shall indemnify and save harmless the said the Southwestern Construction Company, as therein stipulated, then this obligation shall be of no effect; but otherwise it shall remain in full force and effect.”

It will be observed that the trial court found that the two companies were acting together in obstructing the street, rendering it dangerous. Under the contract quoted, the construction company was to select the yards for unloading the material while not within the limits of the railway company’s lands. The facts also indicate that the railway company spotted the cars at the point in McAdams street, there to be unloaded. This part of the road was not included in that portion to be constructed under the contract. The railway company was in control of that portion of the road, and under the law the duty was imposed on it to maintain the crossing. We think clearly, under the law, it was a joint tort-feasor, and for the negligence so found by the court against all there was no contribution recoverable between the parties thereto under the facts of this case. Railway Oo. v. Nass, 57 S. W. 910. We do not understand from the findings of the trial court that the employes engaged in unloading the rails negligently or wrongfully made the noise by letting fall the rail. It appears that the employes who dropped the rail did so without hearing the request of Goodwin, and it is not shown that the employe so dropping the rail knew that the horse was then frightened. The proximate cause of the injury was the negligence in placing the steel rails in the street, rendering it unsafe as a crossing. By the conditions of the bond, the bonding company is not made liable for the railway company’s or the construction company’s negligence, and those companies cannot recover against the Texas Building Company for their wrong or their joint wrong committed, in connection with the Texas Building Company, in unloading the rails at the place they did. They were each guilty, and, in so far as the two companies were concerned, there was no right of contribution between them, and therefore no right of action over against the bonding company. If there, in fact, was no negligence on the part of the railway company, but it was liable only on the ground that the law imposed a duty upon the railway, and the active negligence was that of the Texas Building Company, which caused the injury, then it may be that, under the terms of the contract and bond, the bonding company could be made to respond on its indemnity contract.

By the twelfth clause heretofore quoted in the contract between the railway company and the construction company it is expressly provided that the construction company shall provide all grounds for the deposit of material when not within the limits of the railway’s land. The clear implication is that, where grounds were within the railroad’s lands, the selection was left to it. The point where the rails were being deposited was within the lands of the railway and on its then constructed road, with which neither of the contracting companies had anything to do, with reference to constructing or maintaining. The ears were taken to that point by the railway company for the purpose of unloading the material. Under the terms of the contract the Texas Building Company was not an independent contractor in placing the material at that point. It was required by its contract to deposit the material at the place selected there'for. Dublin v. Railway Company, 97 Tex. 535, 50 S. W. 120. It is said in that case:

“We think there can be no doubt that the effect of the clause above quoted was to reserve to the railroad company the power to designate the place at which road crossings, private or public, should be put in, and that as to such act Burkett & Murphy were not independent contractors.” Railway Co. v. Waymire, 89 S. W. 452.

The contract between the Southwestern Construction Company and the Texas Building Company evidenced the fact that the construction company reserved to itself the right to select the place for depositing the material, and exacted a covenant on the part of the Texas Company that it would deposit it at that point. So in this particular the Texas Company was not an independent contractor, but in placing the rails where it did it was the servant of the railway company, or of the construction company. In so depositing this material, if negligently done, it was the negligence of all acting together, for which there could be no contribution. This particular act was not covered by the bond. If the Texas Building Company had not unloaded the material where it did, it would have rendered itself liable by the terms of its contract, and would have been liable to the construction company for failure to perform its obligation. Its principal caused the injury, and the agent- would not be liable for the act in executing the bond to perform the terms of the contract. The surety thereon should not be held liable for the acts of the obligee. We do not believe the bonding company liable under the contract, bond, and the findings by the trial court for appellee’s injuries, which resulted from an act performed which had been reserved by the railway company and the construction companies as part of their duty; that is, selecting the place for depositing the material. The manner of doing the work was not the cause of the injury, but the place selected for doing it was the proximate cause thereof. In so selecting the place the statute was violated, and the traveling public endangered thereby, and this selection was made either by the railway company or the construction company, under the terms of their contract, which placed the selection of the ground for deposit under their control, and not under control of the Texas Building Company.

We believe the judgment should be affirmed in favor of Goodwin, against the Quanah, Acme & Pacific Railway Company and the Texas Building Company, and, as the building company and the construction company are not appealing, the judgment as rendered will be affirmed as to them; but, as to the Commonwealth Bonding & Casualty Insurance Company, the case will be reversed and rendered, and said company discharged, with its costs in this court, as well as in the court below, and the costs of this appeal will be taxed against the railway company.

On Motion for Rehearing.

On the motions presented we call attention to the contracts as to who of the parties thereunder should furnish the material to be used in constructing the road: The Southwestern Construction Company by contract with the railway company undertook to furnish all the material. The Texas Building Company, under its contract, only undertook to furnish the tools, teams, etc., and to do the labor and to receive the material and unload at the place designated. In receiving the material and placing it at the point designated it was performing its contract. Either the railway company or the construction company, the building company’s principal, selected the street into which the steel rails were to be unloaded, and in this matter either one or both, the railway company or the construction company, was negligent. In placing the steel rails in the street, the building company, under the contract, was but performing the direction of either one or both of said companies, and to that extent was the servant.

Both motions, the one by the railway company and by the construction company, are overruled.
      <®u=oFor other eases see same topic ana KEY-NUMBER in all Key-Numbered Digests and Indexes

      (g^>For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes