author: SWEARINGEN, J.

text:
    RICHARDSON et al. v. BECKHAM NAT. BANK.
    (No. 5989.)
    (Court of Civil Appeals of Texas. San Antonio.
    March 13, 1918.)
    Venue <$=¿>14 — Place oe Accbuai^Fraud— Plea of Privilege.
    In an action to recover money paid, wherein defendant set up a plea of privilege based on its residence, and plaintiffs filed a controverting plea, stating payment made to defendant of certain notes procured from them by the fraudulent representation that, unless they gave such notes, plaintiffs’ kinsman would be criminally prosecuted, which representations were made in a county other than that of defendant’s- residence, the plea of privilege was erroneously granted, since venue should have been laid in the latter county, within Vernon’s Sayles’ Ann. Civ. St. 1914, art. 1830, exception -7, providing that, in cases of fraud, suit may be instituted in the colinty in which the fraud was committed, and exception 28, providing that foreign, private, or public corporations may be sued ip the county where the cause of action accrued.
    Appeal from District Court, Real County; R. H. Burney, Judge.
    Action' by I. L. Richardson and others against the Beckham National Bank. Prom a judgment sustaining defendant’s plea of privilege, plaintiffs appeal.
    Reversed and remanded.
    E. P. Vanderbilt, of Leakey, and L. Old and T. P. Hull, of Uvalde, for appellants. Arnold & Arnold, of Graham, for appellee.
   SWEARINGEN, J.

I. L. Richardson and G. I. Richardson brought suit in Real county, Tex., where they resided, against the Beckham National Bank, to recover $2,000 paid on notes procured by the bank from the Richardsons by threats to imprison a relative unless executed. The original petition alleged that the Richardsons resided in Real county, and that the bank was a corporation with its domicile in Young county. The bank filed a sworn written plea of privilege to be sued in Young county, the county of its residence, alleging the facts required by the law. Gen. Laws Tex. 35 Leg. (1917) p. 388. The Richardsons filed a controverting plea under oath, setting out that the payment of the $2,000 by them was coerced by the fraud and deceit of the bank, and that the fraud or deceit was committed in Real county, Tex., or that a part of the fraudulent acts were committed in Real county. The allegations of the controverting plea are as follows:

“First. That heretofore, to wit, on or about the 23d day of July, 1911, E. A. Richardson was indebted to said defendant bank, and the said E. A. Richardson was then and there and now is the son of the plaintiff I. L. Richardson, and the brother of the plaintiff G. I. Richardson, which said indebtedness amounted approximately to $3,000 due the said bank by said E. A. Richardson, and at that time there was no liability whatever on the part of these plaintiffs, or either of them, to the said defendant bank on said indebtedness, it being the exclusive personal obligation of the said E. A. Richardson alone.
“Second. That on or about the said 23d day of July, 1911, the said bank, becoming dissatisfied with the standing of the obligation, conceived the idea of compelling these plaintiffs to fix their own personal liability in reference to the said debt, and that on or about said time said bank, for the purpose of causing said plaintiffs to assume responsibility of said debt, appointed one R. F. Arnold, then and there an attorney at law in the town of Graham, Tex., and of the firm of Arnold & Arnold, a firm composed of R. F. Arnold and Fred Arnold, as their agent and attorney for the purpose of representing them, the said bank, in said transaction, and for the purpose of procuring said plaintiffs to fix their personal liability to said bank on said debt.
“Third. That, acting in pursuance of said design, the said bank sent said R: F. Arnold to Edwards county, Tex., to the ranch of these plaintiffs, which was at that time in Edwards county, but now in Real county by reason of the fact that that part of Edwards county which includes the ranch and home of these plaintiffs was after-wards created into Real county, and he, the said R. F. Arnold, being sent for the express purpose on the part of defendant bank to have an interview with these plaintiffs, and to induce them to fix their liability in the said debt to said bank, or to cause them to pay off same by the payment of the money, or the execution of properly secured notes, sufficient to satisfy said bank in the payment of said debt.
“Fourth. That in pursuance of said design the said R. F. Arnold acting for and on behalf of the said defendant bank, and as their agent and attorney, came to the said plaintiffs at their ranch as aforesaid, without any invitation or without plaintiffs having any advice or information or notice of such a visit, and had an interview with the plaintiffs, and the said R. F. Arnold, as such agent and attorney of said defendant bank, did then and there falsely and fraudulently represent to these said plaintiffs and each of them that the said E. A. Richardson, son of plaintiff I. L. Richardson and brother of plaintiff G. I. Richardson, had obtained a large sum of money from the bank, to wit, about the sum of $3,000, by executing and delivering to defendant bank, in writing, a certain deed of trust in the town of Graham, Young county, Tex., and pledging as security therefor certain cattle and steers, and that some time after the execution and delivery of said deed of trust to the defendant bank by the said E. A. Richardson the officers of said bank were advised, and later upon investigation discovered, that the said E. A. Richardson did not have in his possession said cattle and steers pledged by him to defendant bank as security for said deed of trust, and represent to the said plaintiffs that he, the said E. A. Richardson, obtained said sum of money from said bank by reason of such representations, and that h,e, the said E. A. Richardson, had disposed of said property since the execution and delivery of the said deed of trust to said defendant bank,'or that he did not possess said property at the time of said execution and delivery of said deed of trust to said bank; and said Arnold, acting as aforesaid, in the capacity as agent and attorney for said bank, did then and there falsely and fraudulently in that part of Edwards county, Tex., which is now Real county, Tex., stated, represented, and said unto these plaintiffs the facts and circumstances of said transaction that he, the-said E. A. Richardson, had committed a felony and was guilty of a felony by reason of the fact that he had procured said money by fraudulent representations, and by virtue of the fact that he did not have the property described in said mortgage and deed of trust, and then and there falsely and fraudulently told and stated to these plaintiffs that the said E. A. Richardson was subject to criminal prosecution for felony, to wit, for the offense of swindling over $50, and then and there stated falsely and fraudulently that the said bank could cause the said E. A. Richardson to be sent to the penitentiary for a number of years by reason of his having practiced a fraud upon the said bank and procured the said money, and then and there threatened that unless said matter was satisfactorily settled, that they, the defendant bank, would cause the said E. A. Richardson to be prosecuted for such offense, and would further cause him to be convicted and sent to the penitentiary; and the said Arnold further falsely and fraudulently represented, as such agent and attorney of said bankj that in his knowledge as an attorney at law the said plaintiff was guilty under the facts, and would be convicted for the offense of swindling over $50.
“Fifth. And the said Arnold, as such representative, agent, and attorney of said bank, further represented to these plaintiffs in Real county, Tex., that it was in the power of said bank to cause said prosecution, or to cause it to be dropped and abandoned by the state of Texas, and then and there, for the said county and state, falsely stated to the said plaintiffs and each of them that if they would pay said debt, or execute their notes in payment thereof, that the defendant bank would then cause the prosecution which it had already instituted against the said E. A. Richhrdson to be abandoned and dropped, and, further, that the said bank would not only not prosecute the said E. A. Richardson, hut would procure hail for him. and cause him to be released from the county jail where he was confined by reason of complaint having been made against him by S. R. Crawford, president of said bank; and further falsely and fraudulently stated and represented to these plaintiffs that, in addition to that, when the next grand jury of Young county convened that they would see that the state of Texas did not cause the said grand jury to return a bill of indictment against the said E. A. Richardson, but stated positively that the said grand jury would not return such bill in case that these plaintiffs secured payment of said debt.
“Sixth. These plaintiffs say that they and each of them were ignorant of the law, having no knowledge whatever thereof, and never having been charged with criminal process, and further knew that the said Arnold was in fact an attorney at law and well versed in the knowledge of the law, and they further say that at that time there were no lawyers in reach from whom they could obtain legal advice, and were compelled and did rely upon the representations and statements made by said Arnold, as a representative of the hank and as an attorney alone, and reposed very confidentially therein, and relied upon the honesty and integrity of said Arnold and upon his knowledge and statements of the law, and upon the honesty and integrity of the bank and officers thereof, and they believed that unless they did pay oil said debt or execute said note for the payment thereof immediately that the said E. A. Richardson would be convicted of a felony and sent to the penitentiary for a term of years, and that thereby the said father and brother of said E. A. Richardson, the plaintiffs in this case, would be greatly humiliated and distressed, and that the said E. A. Richardson, their kinsman as aforesaid, would be subject to conviction and confined to the penitentiary and disgrace, and that the whole family would be brought into this disgrace ; and relying upon representations as aforesaid, made by said Arnold, they did on the 24th day of July, 1911, make, execute, and deliver to the said bank, by delivering to its said agent, Arnold, at the Delaney Hotel, in the town of Leakey, Tex., in what was then Edwards county, but now Real, their four certain promissory notes, dated July 24, 1911, and payable to the order of defendant bank as follows: The first of said notes being for the principal sum of $608.45, due July 24, 1912; the second of said notes for the sum of $654, due July 24, 1913; the third note for $709.10, due July 24, 1914; and the fourth note for the sum of $763.53, due July 24, 1915 — each of said notes bearing interest at the rate of 10 per cent, per annum from maturity thereof, and signed by these plaintiffs and each of them, and payable to the defendant bank at Graham, Tex.
“Seventh. And these plaintiffs further say that at the time of the execution of said notes that they were not indebted to said defendant bank in any way, nor was there any liability whatever on their part to said bank by reason of said E. A. Richardson owing said bank, and they further say that they did not receive any of the sum of money as stated in said notes, but that the said notes went solely and exclusively to said bank for the liquidation and payment of said debt of said B. A. Richardson due said bank, and those plaintiffs never received any pecuniary benefit, or any other benefit whatever, from the execution and delivery of said notes, but, according to the said representations of said Arnold, the said notes were executed by the said plaintiffs to save the said' E. A. Richardson punishment in the alleged swindling transaction.
“Eighth. These plaintiffs say that all of said representations were falsely and fraudulently made by the said Arnold, acting as the attorney and agent of said defendant bank, in that the said E. A. Richardson never procured possession of this money from said bank by reason of said execution of said deed of trust, and was further false and fraudulent in that under the true facts the said E. A. Richardson was not guilty of any cxüminal offense of any character whatever, and the true facts were and are that at the time of the creating of this indebtedness by said E. A. Richardson to said bank, which was long prior to the time of the execution of said deed of trust by said E. A. Richardson to the said bank, he, the said E. A. Richardson, did not execute any deed of trust whatsoever, and did not give any mortgage or security for the said $3,000, and did not obtain said money by reason of any representations made in any deed of trust that he owned the property which he afterwards gave the deed of trust on, and further represented the facts to be that the said deed of trust was executed long after the said E. A. Richardson had procured said loan from said bank, and without securing any additional loan or money, and that the said bank did not part with any money by reason of the execution of said mortgage, and that therefore the said E. A. Richardson was not guilty in fact or in law of crime, in that he did not procure possession of any personal property of said bank by reason of the execution of said mortgage on property which he - did not own, and that all of said representations so made were false and fraud which he, the said Arnold, at the time that he made them for said bank well knew that they were false and fraud, and which said bank itself well knew were false and fraudulent, and said Arnold and said bank well knew that the said false representations were made for the purpose of securing the payment of the said E. A. Richardson’s indebtedness to the bank, or to secure same by these plaintiffs.
“Ninth. That these plaintiffs, being ignorant of the law and ignorant of the true facts, remained so, and continued to rely upon the representations of the defendant bank, and continued to believe that the said notes were binding and valid instruments, and that by the execution thereof, according to the false and fraudulent representations of said Arnold, that they had escaped disgrace, humiliation, and that the said E. A. Richardson had escaped conviction and confinement, and that on the day said notes became due, which was the first one for $608.46, dated July 24, 1911, due July 24, 1912, and thereafter the interest having become due, these plaintiffs paid and caused to be paid on said notes the following sums of money, to wit: On November 7, 1912, $100; July 18, 1913, $356; at another date not remembered by plaintiffs, $140; October 29, 1913, $100; November 28, 1913, $50; December 15, 1913, $44; January 12, 1914, $55 — a total sum paid by these plaintiffs and caused to be paid by them on said notes of $939; and that on the second note, the note for $654, due July 24, 1913, these plaintiffs paid and caused to be paid the principal thereof in full, to wit, $654, with interest thereon at the rate of 10 per cent, from July 24, 1913, to January 1, 1915, amounting in all to the sum of about $2,000, which said money belonged to plaintiffs, and was converted and appropriated by defendant in Real county, Tex., under said facts, which make defendant guilty of a crime, trespass, and offense in Real county, Tex.
“Tenth. That the said plaintiffs and each of them were continually called upon by the defendant bank to pay said notes, and continually did the said bank at each and all of said dates falsely and fraudulently represent to these plaintiffs in Real county, Tex., that the said notes were valid and binding, both in law and in fact, and continued to make said representations from the time that the first note became due continuously until along about December, 1915; and these plaintiffs being ignorant of the law, and gulled into securing the indebtedness of E. A. Richardson by said bank, believing said notes and all of them to be valid and binding obligations, and believed that they were in duty bound to pay same under tho law and in fact, and relied solely upon said representations of said bank, and believed that in the payment and discharge of said two notes that they had discharged a valid and binding obligation, and which said payment at all times up until December, 1915, as represented by said bank in Real county, Tex., was so, and they did not find out such representations were false and fraudulent until December, 1915, or thereabouts, and after said defendant filed suit on said note, still representing them to be valid and binding obligations, and then for the first time these plaintiffs discovered that the said notes were not binding obligations, and that all representations to procure their execution were false and fraudulent, and for the first time found out that the payment of said notes had been brought about by false and fraudulent representations, and for the first time found out that said notes were invalid and had not secured all said sums of money which they had paid.
“Eleventh. Wherefore these plaintiffs say that not only was the execution of said notes procured by false and fraudulent representations, but say they were absolutely void, and that, in addition to the said bank having fraudulently and falsely obtained the execution and delivery thereof, they had falsely and fraudulently obtained possession of the money paid on said notes, and have taken and appropriated the money of these plaintiffs to their own use and benefit, and have caused these plaintiffs to pay out to the said bank, and said bank had received, by reason of all the false and fraudulent representations, statements, and promises, contracts, and acts of said bank, the- full sum of $2,000.
“Twelfth. Plaintiffs say, in the alternative, that in case it be found that the said R. E. Arnold was not the duly authorized agent of said bank, as aforesaid, at the time he made the false and fraudulent representations and statements to these plaintiffs, in Real county, Tex., then they say that the said bank participated in the said false and fraudulent representation so made by the said Arnold, in Real county, Tex., to the said plaintiffs, that they accepted the said notes and accepted the payment thereof, and thereby ratified and confirmed said act, statements, and representations, and the said bank did so ratify all of said statements, and representations, and reaped the benefits thereunder, they cannot now deny that the said Arnold was not their agent and attorney and did so act within the apparent scope of his authority.
‘ Thirteenth. And plaintiffs further say that the accepting, receiving, and appropriation of said money was not a separate and distinct transaction, but was the reaping of and gathering together of and appropriating the fruits of the fraud, and a part and parcel of said fraud and culmination thereof.”

The court sustained a general demurrer to the controverting plea, and rendered judgment sustaining the plea of privilege, and ordered the cause transferred to the district court of Young county, Tex.

This appeal is from the order sustaining the plea of privilege.

If the Richardsons alleged any right to recover the $2,000, it was expressed in the allegations that the execution of the notes was procured by fraud and the payment of the money was induced by fraud. The fraud was the act of the bank through its agent, and a part of the fraudulent acts were committed in Real county. This alleged fraud being a material allegation of the cause of action, we think the facts of this case bring it within exceptions 7 and 28 of article 1830, Vernon’s Sayles’ Texas Statutes, and we are of the opinion that the court erred in the order sustaining the general demurrer to the controverting plea, and erred in its judgment sustaining the plea of privilege, and in its order transferring the cause to the district court of Young county. The plea of .privilege should have been overruled. American Warehouse Co. v. Ray, 150 S. W. 765, § 2; Commercial Nat. Bank v. Bank, 77 S. W. 239, § 3; Martin v. Frank, 125 S. W. 958; Hunt County Oil Co. v. Scott, 28 Tex. Civ. App. 213, 67 S. W. 451; Townsite Co. v. Sawmill Co., 133 S. W. 714.

It is doubtless not necessary to add that we are considering only the plea of privilege and controverting plea; but because the law permitting appeals from orders sustaining a plea of privilege, like other appeals from interlocutory orders, became effective about June 21, 1917, it may be well to call attention to the fact that our ruling herein has no reference to or bearing upon the sufficiency of the original petition nor the merits of the cause.

The judgment is reversed, and the cause remanded' for trial in the district court in Real county, Tex.
      other cases see same topic and KEY-NUMBER in all Key-Numbered’Digests and Indexes


source: Caselaw Access Project

author: HUFF, C. J.

license: Public Domain

text:
    PLANTERS’ OIL CO. et al. v. GRESHAM.
    (No. 1295.)
    (Court of Civil Appeals of Texas. Amarillo,
    Feb. 27, 1918.
    Rehearing Denied March 20, 1918.)
    1. Corporations @==>378 — Joint Liability-Validity.
    Two corporations separately organized were not in law identical because of the fact that they had a common president, or in certain transactions acted one for the other, since a custom, however acted upon or known to the corporations, could not make them identical, and corporations may not form a partnership unless permitted to do so by their charters.
    2. Customs and Usases @=>17 — Construction oe Contract.
    Custom cannot be allowed to vary or contradict a plain or unambiguous contract either expressly or by implication, and incidents sought to be imported into a contract by custom must not be inconsistent with its express terms or any necessary implication therefrom.
    3. Customs and Usages @=>17 — Actual Delivery — Washing-Out Process.
    Where a corporation bought cotton oil for actual delivery, and sold a like amount to another corporation, the first sale being subject to rules of an association which required actual delivery, and did not provide for a washing-out process by delivery to the ultimate purchaser instead of the first purchaser, the custom of washing out such sales could not be set up to vary the actual contract.
    4. Contracts @=>143 — Construction.
    The courts will enforce contracts and give relief for their breach according to the rules of law, and not by the custom of any association.
    5. Bankruptcy @=>154 — Suits by Trustee— Set-Oee.
    Where corporation bought cotton oil and sold like quantities to another corporation, the seller, having failed to deliver, could not, in an action for damages by the trustee in bankruptcy of the purchaser have a set-off by the washing-out process, on the theory that the oil war really to be delivered to the second purchaser, in view of Bankr. Act July -1, 1898, c. 541, § 68, 30 Stat. 565 (U. S. Comp. St. 1916, § 9652), as to set-off and counterclaim.
    6. Election oe Remedies @=>7(1) — Whai Constitutes.
    Where corporation bought cotton oil subject to rules of an association which required notice of date when to ship to be given by the purchaser, and, on failure to deliver authorized the purchase through a broker of like quantities, and the trustee in bankruptcy of the purchaser authorized a broker to buy like quantities, but the broker failed to do so, the employment oi the broker was not an election of remedies, but the trustee could establish damages in spite thereof.
    7. Sales <@=>152 — Construction.
    Under contract for sale and purchase of cotton oil, giving the seller ten days before expiration to wire for shipping instructions,-and requiring ten days’ notice (Sundays and holidays not included) that he would buy through a broker, the parenthetical clause did not limit the ten-day clause, since it would make a November contract impossible of performance by the buyer, one Sunday and one holiday falling within the period when the seller could act, leaving but eight days for the buyer to act.
    8.' Contracts <@=>147(2) — Construction. ■
    If a contract is susceptible of two constructions, one of which would render it illegal and the other legal, that construction which will conform it to the evident purpose of the parties must be adopted.
    9. Sales <@=3418(2) — Breach of Contract-Measure of Damages.
    Where a corporation contracted to buy oil, which the seller failed to deliver, the trustee in bankruptcy of the buyer having notified the seller that he would purchase oil on the market, could recover his actual damages based on the continued breach to the end of the time of performance, though he elected to declare the breach more than five days before expiration of the contract, which required the damages for breach to be ascertained on a. basis of the market price within five days from such declaration.
    10. Sales <@=>418(3) — Breach of Contract— Measure of Damages.
    Compensation for breach of a contract to sell goods as a general rule is fixed at the difference between the contract price and the market value at the time and place of delivery.
    11. Sales <@=>127 — Breach of Contract — Declaration of Breach.
    Where defendant sold oil to a corporation for future delivery, and the trustee in bankruptcy of such corporation demanded, ten days before expiration of the contract, notice of shipping instructions, notifying the defendant that otherwise he would purchase on the market, such notice was not a -declaration of breach, where he further allowed defendant until two days before expiration to deliver the oil through a broker.
    12. Sales <@=>417 — Breach of Contract — Measure of Damages — Evidence.
    In action for damages by breach of contract to deliver cotton oil, evidence held to show that the price paid by the trustee in bankruptcy of the buyer for oil on the market was the market value.
    13. Sales <@=>420 — Breach of Contract — Questions for Jury.
    In action for damages for breach of contract to. deliver oil, where the facts were undisputed, peremptory instruction was proper.
    14. Bankruptcy <@=>280 — Voluntary Bankruptcy-Effect upon Contracts.
    Since under section 70 of the Bankruptcy Act (U. S. Comp. St. 1916, § 9654) title and possession of contracts and rights thereunder vested in the receiver and trustee upon adjudication of bankruptcy, a trustee appointed for a buyer of oil could accept and enforce previous contracts -cum onere, and the voluntary character of the bankruptcy was not an anticipatory breach by the buyer.
    15. Bankruptcy <@=>280 — Voluntary Bankruptcy-Effect.
    One who agreed to deliver oil at a future ■date to a corporation, which later went into voluntary bankruptcy, could not defeat the trustee’s action for damages for the breach on the theory that the trustee failed to elect within a reasonable time whether to accept the contract, since, had he not so elected, the bankrupt itself could have enforced the contract.
    16. Bankruptcy <@=>254^-Voluntary Bankruptcy-Effect.
    Where a corporation purchased oil for future delivery, and later went into voluntary bankruptcy, the mere fact that the trustee waited until he could ascertain whether there was a profit in the'contract before accepting it would not be dilatory, since it was his duty to do so.
    17. Bankruptcy <@=>280 —Voluntary Bankruptcy-Effect.
    Although under Bankr. Act, § 63 (U. S. Comp. St. 1916, § 9647), voluntary bankruptcy is an anticipatory breach of a contract so far as concerns the establishment of a provable claim against the bankrupt, it is not such a breach as concerns the trustee’s right to enforce the contract.
    18. Sales <@=>418(14) — Breach of Contract-Measure of Damages.
    Where corporation made contract to purchase oil for future delivery, and was later declared bankrupt, and the trustee, learning that the seller would not deliver, ordered a broker to purchase on the market, and when the broker ascertained the market price pretended to sell such oil to the broker for the bankrupt, so as to establish his damages, he was not entitled to the allowance of the broker’s commission on the sale, since in fact there was not a sale.
    19. Appeal and Error <@=>1052(5) — Harmless Error.
    If evidence received was inadmissible, the error, if any, became harmless, where the court took the case from the jury by instructing a verdict which would have been necessary regardless of whether such evidence was admitted.
    Appeal from District Court, Grayson County; C. T. Freeman, Judge.
    Suit by O. S. Gresham, trustee in bankruptcy of the Sherman Cotton Oil Provision Company, against the Planters’ Oil Company and others, wherein the Magnolia Cotton Oil Company intervened. Judgment for plaintiff, and defendants appeal.
    Reformed and affirmed.
    Fiset, McClendon & Shelley, of Austin, for appellants. Wood, Jones & Hassell, of Sherman, for appellee.
   HUFF, C. J.

The appellee accepts the statement of the case as made by appellants in their briefs, except to supplement the same by the statement that appellee in Ms petition not only alleged that there was a contract measure of damage, but also alleged the common-law measure of damage for the breach of the contract. The following statement so made by appellants we shall adopt, in connection with the above statement made by appellee:

“The appellee, O. S. Gresham (who will be referred to for convenience as trustee), in his capacity as trustee in bankruptcy of the Sherman Cotton Oil Provision Company (which will hereafter be referred to as the Sherman Company), a private corporation, -which had been adjudged a bankrupt in the United States District Court for the Northern District of Texas, sitting at Sherman, brought this suit against the appellant Planters’ Oil Company (which will hereafter be called the Planters’ Company), in the district court, fifteenth judicial district, of Grayson county, Tex., for alleged damages for breach of two certain contracts for the delivery of prime crude cotton seed oil. The trustee alleged the execution of two contracts, dated the 14th day of September, 1915, made through a broker, whereby under the first contract the Planters’ Company sold and agreed to. deliver to the Sherman Company five tanks (160 barrels) of prime crude cotton seed oil, at 38 cents per gallon, f. o. b. Texas common points, subject to the rules of the Texas Cotton Seed Crushers’ Association, for November shipment, 1915. The second contract was in all respects the same as the first, except that it provided for December, 1915, shipment. The trustee alleged that subsequent to the making of the contracts the Sherman Company had been adjudged a bankrupt, and the plaintiff was made trustee in bankruptcy; that the trustee had in all things complied with the rules and regulations of the Texas Cotton Seed Crushers’ Association with regard to giving notice and matters of that sort; that the Planters’ Company failed and refused to make the deliveries, and the trustee had, in compliance with the rules of said association, purchased other oil at an advance in price, and had been compelled to pay certain commissions and expenses. The amount sued for was the difference between the contract price and the price at which the trustee was alleged to have purchased the oil, plus interest, commissions, and expenses.
“The Planters’ Company answered by general demurrer and general denial, and by special answer, setting up: (a) Waiver on the part of the receiver and trustee of the Sherman Company of any rights under the contracts by reason of failure on their part to elect within a reasonable time to affirm the same, (b) A denial of the right to recover commissions and expenses on the ground that no oil was actually bought by the trustee as alleged, (c) That the Magnolia Cotton Oil Company (which will hereafter be called the Magnolia Company) had purchased under two like contracts the same amount and character of oil for delivery in the same territory and during the same months at 37% cents per gallon, said contracts being made subject to the rules of the Interstate Cotton Seed Crushers’ Association, which were in all respects substantially the same as those of the Texas Association; that the Sherman Company, the Planters’ Company, and the Magnolia Company were nil members of both associations; that, under the customs existing among members of said associations and dealers in said product, generally throughout the state, the Magnolia Company and the Planters’ Company had always been regarded and treated as one concern, having the same president and practically the same stockholders, and that, under said customs and usages, wherever purchases and sales had been made in such a way as not to require actual delivery of the product in order to carry out the terms of the contracts, no delivery was made, under a system of what was called ‘washing out,’ or ‘matching out’; that these customs were a part of said contracts, and thereunder ihe right existed to offset the Magnolia purchase from the Sherman Company against the Sherman Company’s purchase from the Planters’ Company. The Planters’ Company also asked leave to make the Magnolia Company a party defendant, and to have the said contracts offset one against the other. The Magnolia Company voluntarily appeared, asked leave to intervene as a party defendant, and adopted that portion of the Planters’ Company’s answer claiming said right of set-offs. The trustee excepted to that portion of the answer of the Planters’ Company claiming the right of offset and praying to have the Magnolia Company impleaded, and objected to the Magnolia Company being allowed to make itself a party to the suit. The court granted leave to the Magnolia Company to file said answer and plea of intervention, and it was thereupon agreed in open court by all the parties that the exceptions addressed to the answer of the Planters’ Company, asserting the right of set-off and the right to have the Magnolia Company impleaded, should be also considered as addressed to the answer and plea of intervention of the Magnolia Company. Upon hearing said exceptions, the court sustained same, both as to said pleading of the Planters’ Company and that of the Magnolia Company, and the Magnolia Company was thereupon dismissed out of the suit, having declined to amend. This action was excepted to by both the Planters’ and Magnolia Companies.
“The cause thereupon proceeded to trial before a jury, and, after all the evidence was introduced, the court peremptorily instructed the jury to return a verdict in favor of the plaintiff for the amount of the difference between the contract price and the price for which the trustee had purchased other oil, with interest thereon, and for brokerage charges, and the jury under said instructions returned a verdict for $14,046.46. Judgment was accordingly entered by the court for the amount of said verdict, with interest thereon from the 31st day of January, 1917, at the rate of 6 per cent., and for all costs of suit. Both the Planters’ and Magnolia Companies seasonably moved for a new trial, and, with leave of the court, filed an amended motion for new trial. This motion was overruled on the 26th day of March, 1917, to which action both the Planters’ and Magnolia Companies excepted, and gave notice of appeal, and seasonably perfected said appeal.”

Assignments from 1 to 11, inclusive, are based on the action of the court in sustaining exception C, presented 'by the appellee, to subdivision C, paragraph 3, of the Planters’ Oil Company’s - answer, and in also sustaining exception D to paragraph 4, impleading the Magnolia Cotton Oil Company, and in rendering judgment sustaining the exception and striking out that portion of the Planters’ answer, and dismissing the intervention of the Magnolia Cotton Oil Company.

By the fourth paragraph of the answer the defendant impleaded the Magnolia Company, and for cross-action against said company referred to subdivision O of paragraph 3 of the answer of appellant Planters’ Company. It was agreed in the court below that the exception contained in the supplemental petition of the Sherman Company should be considered as addressed to the plea of intervention by the Magnolia Company. Exception C was to the effect that subdivision O in paragraph 3 of the answer constituted no defense to plaintiff’s cause of action, in that the custom or agreement of “washing out” is not alleged to have been part of the contract or that the plaintiff had agreed to such method; that the Planters’ and Magnolia Companies were alleged and shown to be separate corporations, and, under the statute governing bankruptcy, there could be no set-off made as a defense to the cause of action on account of indebtedness to the Magnolia Company; that such answer shows that they were not mutual debts and credits and not in the same right, and were forbidden by the law to be set off, one against the other; that defendant can urge no defense against the bankrupt estate by alleging that it is indebted, to another corporation. Exception D was urged against paragraph 4 of the answer, wherein it was sought to implead the Magnolia Company, for the reason that the allegations do not show that the Magnolia Company had any interest in the subject-matter of the suit, or that the defendant had any claim against the Magnolia Company by reason of the suit. The two contracts sued on are set out in the petition and are identical' in form and terms except one is for delivery in November and the other for December, and are to the tenor and effect following:

“I-Iouston, Texas, Sept. 14, 1915.
“Contract No. S-30-a.
“Planters’ Oil Company, Hearne, Texas — Dear Sirs: Referring to telephone and wire messages exchanged to-day, we have sold for your account to Sherman Cotton Oil Provision Company, Sherman, Texas, five tanks (160 barrels) prime, crude cotton seed oil, at 38c per gallon, f. o. b. Texas common points.
“Loose in buyer’s tanks (to be loaded to capacity) f. o. b. your station; seller guaranteeing weights and quality at destination.
“Terms: Demand draft on the buyer with bill of lading attached, full amount of invoice, seller paying commissions 10c per bbl. of 50 gallons.
“Subject to the rules of the Texas C. S. Crushers’ Ass’n.
“Copy. Internal revenue stamp affixed on file in this office.
“Shipment: November, 1915.
“This memorandum of sale is made in triplicate, the original being duly stamped and sent to the seller, one copy sent to the buyer, and one copy retained in this office as record.
“Yours very truly, J. G. Leavell Co.,
“Per H. Leavell, as Broker Only.”

The propositions under the assignments assert that the right of set-off existed under the customs alleged and the universal custom of treating the Planters’ and Magnolia Companies as a single entity, which were known to the association of oil dealers, and particularly to the Sherman Company, in which it participated, and for that reason were parts of the contract; that the pleadings establish the right of set-off of said contracts under the bankruptcy law as well as under the general law. .

The allegations in the answer stricken out on exception show that the Magnolia Company and the Planters’ Company were separate corporations. They each had their existence by virtue of the law authorizing their incorporation, and as such under the Law were separate entities and liable alone for their separate contracts and acts. The fact that they had a common president, or in certain transactions acted one for the other, did not in law make them one and the same. We do not understand that corporations can, by agreement, custom, or otherwise, form a partnership, unless by some provision of their charter. To have formed such a partnership would have been illegal. They could only act as given power by their charter or the law authorizing their creation. There is no allegation of such charter powers or any lawful right alleged so to act. Southern, etc., Co. v. Mexia, etc., Co., 186 S. W. 446; Sabine Tram Co. v. Bancroft, 16 Tex. Civ. App. 170, 40 S. W. 837; White v. Pecos Land & Water Co., 18 Tex. Civ. App. 634, 45 S. W. 207; Murray Ginning System Co. v. Exchange National Bank, 61 S. W. 508.

A custom, however, acted upon, or known as to these two corporations, could not make them one corporation when the law created them two, and as distinct and separate parties, with the right to contract, sue, and be sued by their respective names. It is fundamental that a custom cannot countervene a rule of law or a plain statute. It is plain, under the law, that a contract by the Planters’ Company to deliver oil to the Sherman Company did not obligate the Magnolia Company; neither did the contract by the Sherman Company to deliver oil to the Magnolia Company inure to the benefit of the Planters’ Company.

The custom pleaded in this case was repugnant to the plain obligation of the two contracts alleged. Custom should not be allowed to vary or contradict a plain and unambiguous contract, either- expressly or by implication. Incidents sought to be imported into a contract by custom must not be inconsistent with its express terms or any necessary implication from those terms.

The contract, as set out ih the petition, and practically admitted in the answer, stipulated for the specific delivery of oil in a given way and place. The sale was made through a broker, who notified the appellant that the contract was subject to the rules of the Texas Cotton Seed Crushers’ Association, and an examination of those rules reveals the fact that the oil so purchased and sold was to be' actually delivered. Both appellant and appellee allege that the sale was made subject to such rules, and nowhere in the contract or rules is it shown that the sale was subject to the custom of “washing out” or “matching out.” The custom sought to be incorporated into the contract would make a different contract and one not requiring delivery. In other words, the custom would render the contract one in which delivery was not contemplated — a mere speculating arrangement between the members of the association and in effect a gambling contract. The custom alleged would further make members of the association parties to the contract, thereby contradicting the terms of its obligation, and .requiring the court in its enforcement to resort to “washing out” or “matching out.”

The courts will enforce contracts and give relief for their breach according to the rules of law, and not by the custom of any association. R. R. Co. v. Fagan, 72 Tex. 127, 9 S. W. 749, 2 L. R. A. 75, 13 Am. St. Rep. 776; American Warehouse Co. v. Bay, 150 S. W. 763; Josey v. Beaumont Waterworks Co. 183 S. W. 26; Henry v. Green Insurance Co., 103 S. W. 836; Moore v. Kennedy, 81 Tex. 144, 16 S. W. 740; Barnard v. Kellogg, 10 Wall. 383, 19 L. Ed. 987; Grace v. American Insurance Co., 109 U. S. 278, 3 Sup. Ct. 207, 27 L. Ed. 932.

It follows, therefore, that there were no such mutual debts or credits, or in the same right, shown by the answer which could be set off against the claim sued on by the trustee in bankruptcy, under section 68a and b of the Bankruptcy Act. In re Howe Mfg. Co. (D. C.) 193 Fed. 524; In re Lesher (D. C.) 176 Fed. 650; Sawyer v. Hoag, 17 Wall. 610, 21 L. Ed. 731; Cumberland Glass Mfg. Co. v. De Witt, 237 U. S. 447, 35 Sup. Ct. 636, 59 L. Ed. 1042. We therefore believe the trial court ruled correctly in sustaining the exceptions and in dismissing the Magnolia Company’s plea of intervention.

The appellants present a number of assignments based on the action of the court in peremptorily instructing a verdict for the appellee, and in refusing to instruct a verdict for the Planters’ Oil, and on certain exceptions filed to the charge of the court.

The Sherman Company contracted to purchase the oil alleged through a broker acting for the Planters’ Company. The terms of the contracts are set out heretofore in our consideration of assignments 1 to 11, inclusive. The two contracts are dated September 14, 1915, and call for delivery, respectively, November and December following. After entering into the contracts, the Sherman Company was declared a bankrupt on the petition of certain creditors of the Siherman Company, filed November 19, 1915. On the same day the petitioning creditors in the bankruptcy court made an application for the appointment of a receiver of the estate of the bankrupt, wherein it was stated that the bankrupt had entered into a great number of contracts for the purchase and sale of crude and refined oil; that among the profitable contracts are several which call for delivery in November, 1915, and unless completed in November the estate of the bankrupt will lose the profits in same, and also contracts for future delivery upon which there might be losses to the estate, etc.; .that to delay action upon those contracts which ought to be affirmed and those which ought to be abandoned by the estate- until a trustee in bankruptcy is selected will lose the opportunity which the estate now has of completing the advantageous contracts, and of declaring abandon^ ment of the disadvantageous contracts, in advance of further loss therein. The Sherman Company waived time, notice, and service of process, and entered its appearance, and made no objection to an adjudication in bankruptcy being made immediately, nor to the appointment of. a receiver. The day previous to filing the petition and the entry of the orders, to wit, on November 18, 1915, the Sherman Company admitted, in an instrument duly executed, its inability to pay its debts and its willingness to be adjudged bankrupt. On the day of the filing of the petition for adjudication in bankruptcy, November 19, 1915, an order was entered adjudicating the company a bankrupt, and further ordering that its matters be referred to 1-Ion. Charles Batsell, the referee of said court, and at the) same time the court entered an order appointing O. S. Gresham receiver of the bankrupt estate, with power to take possession of the assets and property of the bankrupt, and was therein further directed and empowered immediately to'examine into the purchase and sale contracts made by the bankrupt respecting deliveries of cotton oil, and report to the court such contracts as should be accepted and executed by him on behalf of the estate, and such of such reports as ought to be disaffirmed and abandoned by him in behalf of the estate, to the end that the court may make such orders in the premises as may seem to the best interest of the estate. On said 19th day of November, 1915, O. S. Gresham, as receiver, duly qualified as such, of the estate, giving the required bond, which was duly approved. On November 20, 1915, the receiver filed in court his report, stating that he had examined into purchase and sale contracts, and expressed the opinion that certain contracts named should be adopted and executed by him on behalf of the estate; and the contract with the Planters’ Company, dated September 14, 1915, for November delivery, at 38 cents per gallon, one of the contracts sued on herein, was among the number. In connection with the above report on the contract mentioned and others, he stated that all matured in the month of November, and that it was essential that said contracts be taken actively in' charge by the receiver, and that he be empowered to do those things necessary to carry the contracts into effect. He further represented that there were other executory contracts, but he had not had time or opportunity to complete his examination, and that he did not recommend said contracts to be adopted or rejected; that he would complete his investigation, and report further to the court. On November 20, 1915, the court entered in its order reciting that the preliminary report was heard, and he approved the recommendation of the receiver, and granted his prayer, and that the specifically enumerated contracts in the report should be adopted and taken over and completed for the benefit of the estate, and his power and authority theretofore granted should be enlarged and extended so that he was thereby authorized and directed to take all such steps as may be necessary and appropriate to carry said contracts into effect. On the same day, November 20th, the referee of the court entered upon said report an order with like terms as the one entered by the judge of said court, reciting, further, that such action was acquiesced in by the petitioning creditors. On November 22d the receiver reported, as to the contracts for December delivery that were for the purchase of oil by the bankrupt, that the value of said products depended on the market for the same for such month, and its value fluctuated from day to day, and depended largely upon the question of railroad traffic; that there was a great amount of detail work, and for that reason and that first stated he was unable at that time to intelligently recommend action on such contracts, and asked for additional time. On that day the referee approved such report and the recommendation and granted further time. The receiver also filed a like report for January, February, and March, 1910,. contracts, which was substantially the same as for December contracts, and like action was had thereon. The bankrupt on November 30th, in compliance with the first order appointing a receiver, and adjudging the corporation a bankrupt, filed with the referee its schedules, setting forth a full list of all of its assets and liabilities, which also contained a full list of all November and December contracts, including the two set up in this suit. On the 9th day of December, Gresham, the appellee, was duly appointed trustee by the referee, and he duly qualified as such, executing his bond as required, which was approved on that day. On the 12th day of December, Gresham, as trustee, filed with the referee a report, which recited that in compliance with the direction of the court to select and to report to the court a list of contracts of the bankrupt, which in his judgment should be carried into execution qnd completed, that he found the contract sued on, which is for December delivery, as one which showed to be a substantial asset. The referee set down the report for hearing on December 17th, and on that day the trustee filed a supplemental report, recommending that the December contract sued on should be carried out and enforced, and also in the supplemental report recommended the rejection of certain other contracts; and on the 17th day of December the referee entered an order approving the report and the supplemental report, also approving the recommendation of the trustee as to the December contract herein sued on, together with others, and also the rejection of certain other contracts, including the Magnolia Company’s contract. On August 21, 1916, the trustee, upon his application, was granted authority to file this suit, which order was granted before the filing of the suit. November 20, 1915, the trustee wired the Planters’ Company, referring to contract of September 14, 1915, for five tanks of oil, November, asking for shipping instructions immediately for empty tanks. This wire was confirmed by letter of that date, stating also that he then awaited the company’s reply designating shipping points for tank cars, in order that tanks may be forwarded in accordance with the contract. Also on that date the trustee wired the Planters’ Company, referring to the above telegram, that he must have answer in his hand not later than 6 o’clock p. m. of that date or that he would buy oil for the Planters’ Company account. Again, on November 23, 1915, he wired: “Unless forwarding instructions received for empty tanks today, will buy oil for your account. Answer.” The Planters’ Company did not answer any of these communications. With reference to the December delivery contract, appellee wired the Planters’ Company, December 17, 1915:

“By order of the referee in bankruptcy, I am instructed to perform contract between you and bankrupt, whereby you- sold bankrupt, eight hundred barrels of crude oil for December shipment. Please wire immediately where you desire tanks forwarded to take delivery of this oil.”

■ On December 18, 1915, appellee wrote confirming the telegram, and on December 22, 1915, the appellee wired the Planters’ Company:

“Unless advised to-day that you will deliver oil on contract referred to in my wire of 17th instant, shall proceed to buy in for your account, holding you for all costs, expenses, and damages. This my official notice of my intent to so proceed.”

On the same day this wire was confirmed by letter. The contract as made recited therein that it was made “subject to the rules of the Texas C. S. Ass’n.” The briefs of the parties herein refer to section 9, rule 28, of the association, as relating to the stipulation in the contract. That rule reads:

“Sec. 9. In case of contracts for oil for specific shipments, it shall be the duty of the seller to notify buyer at least ten days previous to the expiration of the period in which tank cars might be forwarded in time to reach seller, in time to admit of shipment of the oil within contract period. In case seller does not give such instructions within the period specified, it shall be the duty of the buyer to ask by wire for such instructions, confirming by letter, and then, failing to receive them at least ten days before the last day of the contract time of shipment, may, upon wire notice, given 48 hours in advance (Sundays and legal holidays not included) through any recognized cotton seed products broker a member of this association in good standing, buy the oil contracted for, holding the seller for any loss and expense incurred in such repurchase, and accounting to him for any profits earned in it over the contract price.”

P. G. Claiborne testified he was a broker, residing in Dallas, Texas, and engaged in that business in November and December, 1915, and was at that time and since a member of the Texas Cotton Seed Crushers’ Association, and otherwise qualified himself as to experience and knowledge as to market prices; that the trustee herein instructed him on November 29, 1915, as broker, to buy, for the account of whom it may concern, five tank cars of prime .crude cotton seed oil, the Planters’ Oil Company of Texas as an interested party. In accordance with the rules of the association, he notified the Planters’ Oil Company on that day that the trustee had so instructed him, and requested it to submit its lowest offer by wire on tbe five tanks, as it was tbe interested party. On that day be bought in five tanks for account of whom it may concern, at 53% cents per gallon. In making the purchase he made request from a number of mills and cotton oil dealers for the lowest - offer of five tanks of oil, and when the lowest offer was submitted he placed that offer before the trustee, “and he sold me the oil for account of whom it may concern, at the price of 53% cents per gallon, basis Texas common points.” The broker wired the Planters’ Company of the purchase on the afternoon of November 29, 1915, and the price paid for the oil. He received no reply from the Planters’ Company to his several wires. He testified that he bought the oil on December 28, 1915, at the request of the trustee, following the same method, giving the same notices, etc., as he did in the November transaction. He purchased the oil on that day for 55 cents per gallon. The same procedure was had with reference to the December oil as that -of November. He also testified the above price was the lowest market price on that date, and that it was the market value of that class of oil on that date, basis Texas common points. It is apparently conceded by the parties hereto that the purchase above effected was by the trustee for the benefit of the estate. It was also admitted that there were no forwarding instructions given to the trustee by the Planters’ Company upon his request. After the purchase far the respective months, November and December, the trustee made out an itemized statement of the amount due the estate, which in November was the difference between 38 cents, the contract price, and 53% cents, the market price fffr that month, and for December the difference between 38 cents, the contract price, and 55 cents, the market price, together with costs of purchasing through the broker.

Assignments 12 to 31, inclusive, will be considered together, as they present or relate to the same questions from various angles. It will be impracticable to consider the various assignments and propositions thereunder seriatim. The contention is made by appellant that section 9, rule 28, gave an exclusive remedy; that the trustee elected to proceed under the rule, and all other remedies were excluded by such election; that the rule contemplated an actual purchase by the trustee, and that he merely pretended to make the purchase by purchasing from himself; that, if the trustee still retained the remedy of recovering the difference in the market value and the contract price, there was no basis in the testimony from which to estimate such damages, and he presents various other propositions corollary to the above. We shall consider the contract admitted and proved in connection with the rule relied upon. The contracts each stipulated the seller, the Planters’ Company, agreed to sell and deliver five tanks of oil, at 38 cents per gallon, f. o. b. Texas common points, loose in buyer’s tanks, f. o. b. Planters’ station, “subject to the rules of the Texas C. S. Crushers’ Association.” It will be seen by the rule heretofore quoted that, in case of contracts of oil for specific shipment, that it stipulates “it shall be the duty” of the seller, at least 10 days before the period and time to admit of shipment wdthin the contract period, to give notice for shipping instructions.

This we regard was an absolute obligation on the seller. If he did not so notify within the period specified, ‘.‘it shall be the duty” of the buyer to ask by wire for such instructions, and, failing to receive the same, he “may,” “upon wire notice, given forty-eight hours in advance (Sundays and legal holidays not included),” through a broker, buy oil, holding the seller for any loss. We think it is evident, from the rule, the seller’s duty under the contract was to notify or request shipping instructions. If he did not do so, it was the duty of the buyer to ask for them. If the seller did not give them he was in default, and the right was in the buyer to establish his damages. The rules gave him the privilege of fixing such by purchasing through a broker. He was not absolutely obligated to do so. This was not a dependent promise by the buyer to fix an obligation on the part of the seller to pay the loss for the breach. Buying through the broker was only permissive under the rule. The language of the rule is the seller must, either with or without a request, give shipping -instructions for the tanks, and if he fail the buyer “may” purchase. It was optional with him whether he did so or not. The renunciation of the contract by the Planters’ Oompany occurred when it failed to give the notice for shipping instructions. The fact that the trustee attempted, but failed, to comply with the rule with reference to purchasing through a broker, would not release the oil company from the damages occasioned by the breach, for the reason that the purchase of oil was not a condition necessary to fix the sellers’ liability for the breach, and was not made so either by the contract or rule. We do not think an effort or attempt to purchase oil under the rule would be-such an election as to defeat a recovery for damages under the rule for the measure of damages given by law. Brodkey v. Lesser, 157 S. W. 457; Stone v. Boone, 73 Tex. 548, 11 S. W. 544; Bull v. Bearden, 159 S. W. 1177. In fact, the remedies are not inconsistent; the law and the rule give practically the same measure to ascertain the loss occasioned by the breach. Sullivan v. Ramsey, 155 S. W. 580 (subs. 10 and 11). It is insisted by appellant that the trustee did not purchase the oil for the reason he was both seller and buyer, and in this we are inclined to agree with appellant. He hence did not buy from some outside party, and the rule did not give him the right to buy from himself, but, as we think, required an actual purchase. We hold that he did not waive his right to recover his damages upon the breach of the contract by giving ■ notice to appellant, and employing a broker to purchase who in fact did not Sullivan v. Ramsey, supra.

A proposition is presented to the effect that in wiring for instructions for shipment after the seller had failed, under the rule the buyer must do so at least 10 days before the last day of the contract time, legal holidays and Sundays not included; and, as Sunday and Thanksgiving fell within the 10 days for the November contract, that the wire on the 20th day of November by the trustee was too late. We do not think the parenthetical clause,' including Sundays and legal holidays, limited the 10-day clause. If so, it would make the contract impossible of enforcement by the broker. The seller had until 10 days before the expiration of the contract time to wire for shipping instructions, and until he failed the buyer was not authorized to call for instructions. This would render the contracts for delivery during the month nonenforceable.

If a contract is suspectible of two constructions, one of which would render it illegal and the other legal, that construction which will conform it to the evident purpose of the parties must be adopted. As an illustration, in this case the seller had not wired for instructions on the 20th. On that day the buyer, the trustee in this case, wired for instructions. Excluding the day upon which the wire was sent, there were only 10 days left in November. It is our construction of the rule that the first clause, down to the period, referred to the duty of the seller as to the 10 days’ notice before the expiration of the' contract period, which it will be observed does not refer to legal holidays, etc. The next clause refers to the duty of the buyer, and if his wire is not answered he “may, upon wire notice, given forty-eight hours in advance (Sundays and legal holidays not included),” purchase the oil through a broker. Sundays and legal holidays are not to be included in the 48 hours for notice that he would purchase through a broker. The construction contended for by appellant would render the contract impossible of performance if the seller so willed it. If the appellee, under his pleadings for damages, stated to be the difference between-the contract price and the market value, has shown by evidence such damage, he is entitled to recover.

It is asserted by various propositions that the measure of damages was the market price the day the trustee elected to consider the contract breached, and that there is no evidence of such value on that date; that the , market price should not extend beyond the five-day period provided for by the rules prior to the expiration of the last day for shipment. Without setting out the rules with reference to what was meant by “immediate,” “at once,” etc., with reference to shipments, we simply hold that they will not apply in this case in our judgment. In this case there was an anticipatory breach of the contract by the seller. It is now established, we think, that the buyer was entitled to compensation, based as far as possible on the ascertainment of what he would have suffered by the continued breach to the time of performance under the contract.'

Compensation, as a general rule, is fixed at the difference between the contract price and the market value at the time and place of delivery. Greenwall v. Markowitz, 97 Tex. 479, 79 S. W. 1069, 65 L. R. A. 302; Roehm v. Horst, 178 U. S. 1, 20 Sup. Ct. 780, 44 L. Ed. 953; San Angelo Cotton Oil Co. v. Houston, etc., 185 S. W. 887; Bost v. McCrea, 172 S. W. 561. In this case the deliveries were to be made in November and December. The market was established within the contract time for delivery. If there was any other market value or reason for not allowing evidence or recovery on the market on the 29th and 28th of the respective months, it seems to us the appellant ought to have shown that fact.

However, we do not believe the wires of the trustee to the Planters’ Company, November 23d and December 22d, an acceptance of the breach. The notice was shipping instructions must be had that day, or he would buy oil for the company’s account through a broker. On the 29th of November and December 28th the broker was instructed to so purchase the oil, and appellant Planters’ Company was duly notified thereof and of the purchase made and the price paid. The appellant was given until the dates above mentioned to deliver the oil. It could have sold to the broker that amount of oil at the contract price and discharged its obligation. The market price was fixed on those days, and we believe should control. The buyer had the right to treat the contract as in full force, and have his damages determined with reference to the conditions at the time fixed in the contract. It appears to us this is what the trustee did in this case. 1-Ie fixed the damages within the contract period on a specified day, after due notice and warning of the seller. Mechem on Sales, vol. 2, §§ 1750, 1707, 1088, 1089; Waples et al. v. Overaker, 77 Tex. 7, 13 S. W. 527, 19 Am. St. Rep. 727; Palestine Ice, etc., v. Walter Connally Co., 148 S. W. 1109; Texas Seed Co. v. Chicago, etc., 187 S. W. 747, 752. It is suggested in the brief of appellants, we think, that under the contract the trustee should have gone on the market and have actually purchased the quantity and quality of oil named in the contract. It would not have been.to the advantage of the seller if be bad done so, for, if be bad bought at the market value, the result to the seller would have been the same as if the buyer simply proved the market value. Saxe v. Penokee Lumber Co., 159 N. Y. 371, 54 N. E. 14. If we are correct in bolding the rule with reference to purchase through a broker requires an actual purchase, and that the purchase made by the trustee did not comply therewith, we yet believe the trustee was not precluded from recovering his damages for breach of the contract given and the rules of law. We believe also that the trustee, the purchaser through the broker, in all particulars substantially complied with the rule with reference to notice, etc., and, if the purchase as made had been an actual purchase, he should recover the difference between the contract price and the price paid by the broker, together with the costs of making it.

A proposition is also presented to the effect that there was no evidence that 53% cents per gallon and 55 cents per gallon was the market value on November 29th and December 28th, respectively. As to December 28th, it was shown beyond cavil that 55 cents was the market value by the broker, who was shown to have known the market value on that day; as to November 29th, 53% cents was the best for which oil could be purchased from dealers on that day on the market. This was shown by the broker who the evidence establishes knew the market at that time, and we think tested it thoroughly in order to buy as cheaply as he could.' We believe this was sufficient evidence of its market value. San Angelo Cotton Oil Co. v. Houston, etc., 185 S. W. 887.

It is also urged by various propositions that the above various issues raised issues of fact which should have been submitted to a jury for their findings. We think the facts were undisputed on the various points, and the court properly instructed peremptorily as to them.

A proposition is also presented to the effect that the bankrupt proceedings in this case, being in effect voluntary, amounted to an anticipatory breach of the contract by the bankrupt, and the trustee, without the consent of the Planters’ Company, could not enforce the contracts. Under section 70 of the Bankrupt Act, title and possession of the contracts and the rights thereunder vested in the receiver and trustee upon the ad-judicátion of bankruptcy. If the trustee accepted the contracts, he took them cum onere, but could enforce the bankrupt’s right thereunder. We do not understand from the act that the obligee was thereby released until he assented to be bound to the estate. The discretion was not with the Planters’ Company, but with the trustee. The trustee, having accepted these claims under the order of the court, could enforce them. We think this is recognized by the Supreme Court in the case of Central Trust Co. v. Chicago, etc., 240 U. S. 581, 36 Sup. Ct. 412, 60 L. Ed. 811, L. R. A. 1917B, 580; citing therein Sparhawks v. Yerkes, 142 U. S. 1, 12 Sup. Ct. 104, 35 L. Ed. 915; Sunflower Oil Co. v. Wilson, 142 U. S. 313, 12 Sup. Ct. 235, 35 L. Ed. 1025. See, also, In re Gay (D. C.) 182 Fed. 260; Moline Plow Co. v. Blackburn, 74 Neb. 246, 104 N. W. 178; Hansen, etc., v. Wyman, etc., 105 Minn. 491, 117 N. W. 926, 21 L. R. A. (N. S.) 727; Burton v. Lockert, 9 Ark. 411.

Under assignments 32 to 37, inclusive, the appellants present the proposition in various forms that it was the duty of the receiver and trustee to use all diligence to determine whether or not it was to the advantage of the estate to accept the contract for December delivery, and within a reasonable time to elect whether he would adopt same as an asset of the estate; that, under the facts and circumstances of the case, it affirmatively appears the trustee failed within a reasonable time to make such election, and he therefore waived and forfeited the claim; that at least it was a question of fact for the jury.

As we understand the bankrupt act, interpreted in the light of the decisions, if the trustee had found the contract a burden to the estate, he could have refused to take title to or possession of it. If he had done so, this would not have left the contract without an owner or one in whom there was no title or right. The title and right of possession would have remained in the bankrupt, and it could have enforced the rights under the contract in precisely the same way as before bankruptcy. In re Frazin, 183 Fed. 28, 105 C. C. A. 320, 33 L. R. A. (N. S.) 745; Dushane v. Beall, 161 U. S. 513, 16 Sup. Ct. 637, 40 L. Ed. 791; Briggs v. Avary, 47 Tex. Civ. App. 488, 106 S. W. 904. Usually the question of the reasonableness of an election arises between the trustee and bankrupt or some one claiming an intervening right. We cannot conceive very well how one obligated on a contract can assert that he is not liable for a breach, either to the trustee or the bankrupt, or some one holding in privity or through an intervening right, simply because the trustee has not elected within a reasonable time to accept it. This question, and the manner in which it may arise, is illustrated in Sparhawks v. Yerkes, 142 U. S. 1, 12 Sup. Ct. 104, 35 L. Ed. 915; Sessions v. Romadka, 145 U. S. 29, 12 Sup. Ct. 799, 36 L. Ed. 609. The question, as shown by the record, could only be material as between the bankrupt and the trustee, and as between them the action of the court on the report and request made by the trustee concludes the matter. It is therefore not a question in which the Planters’ Company has any interest. It is not contended that there was any intervening right, nor is there any pretense that the trustee surrendered the contract to the seller in settlement of a claim against' -the bankrupt.

We thought it to he unnecessary to set out the evidence on the question of the reasonableness of the tiipe in which the election was made, hut, if that question was necessary to decide, we would hold that the election was made in a reasonable time. It was made before the time to give the necessary notices and while the obligation of appellant was still in force. The appellant was within that time officially notified of such election and approval by the court. The mere fact, if it was a fact, that the trustee waited until he could ascertain whether there was a profit in the contract to the estate, would not be dilatory, but it was his duty to so ascertain before he accepted the claim. In re Zehner (D. C.) 193 Fed. 787; Collier on Bankruptcy (9th Ed.) 1027 (2).

It is asserted by appellant that bankruptcy constitutes an anticipatory breach of executory contracts held by the bankrupt at the time of bankruptcy. This, as we understand, is true, and is announced by the courts in considering section 63 of the act with reference to establishing provable claims against the estate on executory contracts, the performance of which is in the future and after an adjudication in bankruptcy. The courts, as we understand, treat the adjudication as an anticipatory breach, giving to the claimant an immediate action against the estate on the contract under the rule established by the Supreme Court in Roehm v. Horst, 178 U. S. 1, 20 Sup. Ct. 780, 44 L. Ed. 953, In re Stern, 116 Fed. 604, 54 C. C. A. 60, and many other cases. We do not understand because, for the purposes of showing a provable claim, that bankruptcy is regarded as an anticipatory breach, that all claims accepted by the trustee are so breached in the sense that the trustee or bankrupt may not enforce an executory contract, on the ground that they have themselves breached the contract and that such anticipatory breach defeats their right. It is usually said the bankrupt is disabled from performing the future acts which he has obligated himself to perform, and the party injured thereby has the right to prove his claim for damages, established as of the date of the bankruptcy. But as we conceive it, if the trustee accepts a claim he asserts he can carry out his part of the contract and reap the benefit of the profits for the estate, and hence no breach follows. It occurs to us that because the courts treat certain claims against the estate on such contracts as being breached upon bankruptcy for the purpose of proving them up ought in no way to affect the liability of the obligatee on his liability to the estate for damages upon his breach of the covenants. The above assignments will be overruled.

Assignments' 38 to 41, inclusive, object to the court’s charge in directing the jury to find $80 on each contract as costs or commission paid to the broker in making sales November 29 and December 28, 1915, with interest. Under the conclusion reached by us, there was no such sale as contemplated by the rule of the association, and for that reason the court was in error and should not have so instructed. To that extent the judgment should be reformed, giving it credit for $80, with interest thereon at the rate of 6 per cent, per annum from December 17, 1915, and $80, with interest thereon at the rate of 6 per cent, per annum from January 10, 1916, to the date of the rendition of the judgment in the trial court. We think no error, or such an error as should reverse the case, is shown by assignment 42.

The forty-third, forty-fourth, and forty-fifth assignments are overruled for the same reason. If any of the evidence was inadmissible, and if the bill of exception was sufficient, the error, if any, became harmless, as the court took the case from the jury by instructing a verdict; and as we conceive the case, with or without the evidence objected to, there could have been no other judgment except as above pointed out. We therefore will not take further space to discuss these assignments.

The judgment of the trial court will be reformed, and as reformed affirmed, the costs of the appeal taxed against the appellee.
      @=>For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

      @=>Eor other oases see same topic ana KEY-NUMBER in all Kcy-Numberea Digests ana In3exes


author: BOYCE, J.

text:
    HIGHSAW et al. v. HEAD et al.
    (No. 1306.)
    (Court of Civil Appeals of Texas. Amarillo.
    March 20, 1918.
    Rehearing Denied April 3, 1918.)
    1. Trusts <@=354 — Sale oe Land — Following Texjst Fund.
    Where a father, -who sold land, the title to ■which was in him, later purchased other land, paying therefore the cash payment received for the land sold with the intention of paying the deferred payments out of the proceeds of the notes received for the balance of the purchase price of the land sold, which intention was carried out, the land purchased became impressed with the same trust as attached to the land sold.
    2. Trusts @3=203 — Sale oe Land Subject to Equity — Rights.
    Where the father, in whose name legal title was taken to land purchased with funds of sons, sold the land, the sale would include the equity of the sons, and it is presumed that the purchaser took the land free 'from the equity.
    3. Trusts <@=354 — Following Trust Funds.
    Where land purchased with money of sons was sold by the father, in whose name the legal title was standing, the sons could rightfully claim the proceeds or follow them into any other property in which they were shown to have been invested.
    Appeal from District Court, Hunt County; Wm. Pierson, Judge.
    Suit between Willie Highsaw and others and Joe Head and others. From judgment rendered, the former appeal.
    Affirmed.
    Sherrill & Starnes and C. W. Tate, all of Greenville, for appellants. Neyland & Ney-land and Sam D. Stinson, all of Greenville, for appellees.
   BOYCE, J.

This suit is over the title to certain land in Blunt county. The parties to the suit are the children of George W. Head, Sr., by two marriages. The land was acquired during the second marriage, and the issues are as.to what part of the land belonged to the community estate of the said George W. Head and his second wife; what part, if any, belonged to the separate estate of the said George W. Head; and whether George W. Head, Jr., and Joe C. Head, children of the first marriage, had any equitable interest in the land by reason of the same being paid for in part with funds belonging to' them. Both George W. Head and his second wife are dead, and the answers to the issues stated are determinative of the interest in the land inherited and held by the parties to the suit. The land was bought, as stated, by George W. Head, Sr., during the second marriage, the deed being taken in his name, and the consideration therefor was paid out of the proceeds of the sale of 248 acres of land in Houston county, Tex., under circumstances stated later. Of this 248 acres of land it is agreed that 108 acres were the separate property of George W. Head, Sr.; 40 acres belonged to the community estate of the said George W. Head, Sr., and his second wife, and 100 acres thereof were purchased with funds belonging to George W. Head, Jr., and Joe C. Head, children of the first marriage. The title to all of the land was in the name of George W. Head, Sr., who sold it altogether for about $900, $50 in cash and vendor’s lien notes for the balance. Prior to the sale the Head family had lived on the Houston county land, and thereafter they moved to9 Hunt county and Geo. W. Head, Sr., bought the land in controversy, paying therefor $50 in cash and executing notes for the balance of the consideration, a vendor’s lien being retained in the deed conveying the land to him, said notes being in such amounts and falling due at such dates as they might be paid with the moneys received in payment of the notes on the Houston county land, it being intended and understood, as the court below found, that the proceeds of the Houston county land should go into and pay for the land in controversy. The deferred payments on the Hunt county land were paid out of the money collected on the Houston county land notes, but at the time of the date of maturity of the last $150 note on the Hunt county land, remittance had not been received of the Houston county land note falling due at a corresponding time, and on this account the said George W. Head, Sr., borrowed $120, and with this and some money he had on hand paid the said $150 note, and soon thereafter repaid said borrowed money with the money collected on the Houston county land note. The case was tried without a jury, and the court, after finding the facts substantially as stated above, concluded as a matter of law that an interest in the land, amounting to 10S/24s belonged to the separate estate of the said George W. Head, Sr., an interest of <u>/248 to the community estate of the said George W. Head and his second wife, and an equity of 100/248 thereof belonged to George W. Head, Jr., and Joe O. Head, and the judgment entered adjusted the rights of the parties accordingly.

The proposition presented under the first assignment is that the execution of the notes by G. W. Head, Sr., on purchase of the Hunt county property was a payment pro tanto by the community, and vested the property in such proportion in the community, and the subsequent payment of these notes out of tie Houston county land notes could not date back and affect the status as fixed at the time of the delivery of the deed and the execution of these notes. The title to the property did not actually pass until the payment of the last vendor’s lien note, so that in one sense at least the payments, except- the last, were actually made with funds from the sale of the Houston county lands, and some of the cases seem to intimate that this fact might have some effect on the proper decision of this matter. Carter v. Bolin, 30 S. W. 1084; Pearce v. Dyess, 45 Tex. Civ. App. 406, 101 S. W. 549; Allen v. Allen, 101 Tex. 362, 107 S. W. 528; Scranton v. Campbell, 45 Tex. Civ. App. 388, 101 S. W. 285. But, if it be conceded that the status of the title is to be considered as fixed at the time of the taking of the deed, though the contract then remained executory, yet we think it can be truly said that the property was purchased with the proceeds of the sale of the Houston county land. To hold otherwise would, it seems to us, be to disregard the substance of the transaction for the form. If me Houston county land had been exchanged for the land in controversy, or the Houston county land notes transferred to the vendor of the Hunt county land in payment therefor there could be no doubt as to the result. The execution by George W. Head, Sr., of his own notes, under the findings of the court, which are not challenged, and the borrowing of the $120 with which to make the last payment, with the expectation and intention that these notes were to be paid by collections from the Houston county land notes, were but incidents in the accomplishment of the real purpose of investing the proceeds of the sale of the Houston county land in the purchase of the Hunt county land. The payment of the $50 cash, received from the sale of the Houston county land, with the intention of paying the deferred payments out of the proceeds of the Houston county land notes, we think is sufficient to impress upon this land the same trusts and interests as attached to the Houston county land. Hornbeck v. Barker, 192 S. W. 276 (writ of error denied); Amend v. Jahns, 184 S. W. 729; McClintic v. Midland Grocery Co., 106 Tex. 32, 154 S. W. 1157; Levy v. Mitchell, 52 Tex. Civ. App. 189, 114 S. W. 174; Gilmore v. Brown, 150 S. W. 964; Kingman-Texas Implement Co. v. Herring National Bank, 153 S. W. 397; Perry on Trusts, § 133. The appellant cites, in support of his proposition, Oury v. Saunders, 77 Tex. 278, 13 S. W. 1030; Strnad v. Strnad, 29 Tex. Civ. App. 124, 68 S. W. 69; Lacey v. Clements, 36 Tex. 661; Allen v. Allen, 101 Tex. 362, 107 S. W. 528. In none of these cases, and many others that might be referred to in the same line, does it appear that the deferred obligations were executed and met under any such circumstances as appear in this ease. In Oury v. Saunders Case prominence is given in the opinion to the fact that Saunders, at the time of the purchase of the property upon which a trust was sought to be impressed, “could not have contemplated the use of his children’s property in paying for it.”- In Strnad v. Strnad the opinion refers to the fact that “there was no evidence tending to show that the purchase was intended for” the wife. There are many cases that hold that, where property is purchased, partly on time, the initial payment being made out of the wife’s separate property, and with the understanding that the deferred payments will also be made out of her property, a trust will result in the wife’s favor, although the title be taken in the husband's name and he execute notes himself for the subsequent payments. These authorities may not be exactly in point because in most of them there was some express agreement in regard to , the deferred payments. They do, however, show that the character of the transaction is not to be determined alone from the form which it assumes, but may be determined from the understanding at the time as to the source from which the deferred payments are to be made. This disposes also, we think, of appellant's third assignment, under which it is asserted that, on account of the borrowing of the $120 to pay the last note, as above stated, the community estate would at least have an interest in the property to this extent in addition to that found by the court. The temporary borrowing of this money and payment under the circumstances should not, we think, affect the real nature of the transaction.

By their second assignment, the appellants contend that if any trust attached in favor of Joe O. Head and George W. Head, Jr., to the Houston county land, their right was to proceed to assert it against the purchasers of such land, and they had no interest in the proceeds of the sale of said lands, and consequently none in the Hunt county land. It is not shown that George W. Head, Sr., was the legal guardian of these children. It appears that upon the death of their mother he had in his possession certain personal property which belonged to them, and which he traded for the 100 acres of land referred to, and which he sold while they were still minors. No actual fraud may have been intended against the children, for it appears that at least as to the Houston county land their father informed the children that it was bought with their property and belonged to them, but at least a legal fraud was perpetrated because the father had no legal right to thus dispose of the property of these children. It would appear, therefore, that, strictly speaking, a constructive trust was imposed by equity upon the 10O acres of Houston county land in favor of the children. Pomeroy’s Equity Jurisprudence, §§ 1037, 1040, 1051; Perry on Trusts (6tli Ed.) § 127, note B, pp. 190, 191. But whether the father was acting with authority or without in trading for the Houston county lands, when he took the title in his own name, equity would protect the rights of the children and grant them the beneficial interest in the land by application of its doctrine of constructive trusts. Under this doctrine the beneficiary may follow the trust property so long as it may be identified and has not been acquired by an innocent purchaser; he may hold the trustee personally liable for its convention or follow it into its- various mutations and in whatever form it is ultimately found. The trustee is not to be permitted to profit by his actions, so if he changes the' character of the trust property and the change proves advantageous, the beneficiary may take advantage of it if he so elects, and if the change proves disastrous the trustee may be held liable for the conversion. Oliver v. Piatt, 3 How. 401, 11 L. Ed. 653; Kennedy v. Baker, 59 Tex. 150, and authorities above cited. “As a necessary consequence of this doctrine, whenever property subject to a trust is wrongfully sold and transferred to a bona fide purchaser so that it is freed from the trust, the trust immediately attaches to the price or proceeds in the hands of the vendor, whether such price be a debt yet unpaid, due for the purchase or a different kind of property taken in exchange of even a sum of money paid to the vendor as long as the money can be identified and reached in his hands or under his control.’’ Pomeroy, Equity Jurisprudence, 1051; Schneider v. Sellers, 98 Tex. 380, 84 S. W. 421.

When Geo. W. Head, Sr., in whose name the title to the 100 acres of land in Houston county was taken, sold such land, the sale would include the equity of said children therein, and it is presumed that the purchasers thereof took it freed from their equity. Armstrong v. Hix, 107 Tex. 194, 175 S. W. 430; Saunders v. Isbell, 5 Tex. Civ. App. 513, 24 S. W. 307; Middleton v. Johnston, 110 S. W. 789. These facts distinguish this case from that of Arnold v. Ellis, 20 Tex. Civ. App. 262, 48 S. W. 883, relied on by appellants. In that case certain land had been conveyed to two minors, Beatrice and Bessie McKenzie. Their father executed a bond for title to said property, and invested the money received therefrom in the property involved in the suit. The children, after they attained their majority, ratified the sale of their property under the bond for title, and sought to enforce a trust against the property bought with the money received by their father on the bond. The court held that the attempted sale under the bond for title did not in the slightest degree affect their title to the land, standing in their name, and “they acquired no interest whatever in the consideration received therefor.” In other words, the minors’ land was not really sold, and they had no interest in the proceeds. The ground of this holding is emphasized by the quotation in the opinion from the case of Hadley v. Stuart, 62 Iowa, 267, 17 N. W. 500. In this case the land of Joe and George Head, Jr., was sold by their father, in whose name the legal title was standing, and they could rightfully claim the proceeds or follow them into any other property in which they were shown to have been invested. In addition to authorities cited see Armstrong v. Hix, supra; Oakes v. West, 64 S. W. 1036; Baber v. Galbraith, 186 S. W. 345.

We find no error pointed out by any of the assignments, and therefore affirm the judgment of the lower court.
      ©sjFor other oases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes