author: KEY, C.' J.

text:
    FLETCHER v. A. W. KOCH CO.
    (No. 5676.)
    (Court of Civil Appeals of Texas. Austin.
    Nov. 1, 1916.)
    1. Infants <&wkey;57(l) — Contract of Infant-Ratification.
    A contract made by a minor, except for necessaries, is not binding upon him, unless made so by such conduct as will create an estoppel, or by a ratification after the disability of minority has ceased to exist, such contracts not being absolutely void, as they may be ratified after majority.
    [Ed. Note. — For other cases, see Infants, Cent. Dig. §§ 136-143, 145-148, 151; Dec. Dig. <&wkey;57(l).] ,,
    2. Infants <@=>57(2) — Failure to Disaffirm Contract — Presumption of Ratification.
    Where a minor contracted to buy a lot and pay in installments, but title remained in the seller, and it was not made to appear that the minor’s failure to repudiate the contract sooner than 8 months after he reached majority resulted in any injury to the seller, the minor’s failure to disaffirm sooner created no presumption of ratification. ,
    [Ed. Note. — For other cases, see Infants, Cent. Dig. § 144; Dec. Dig. &wkey;57(2).]
    3. Infants <&wkey;57(l) — Ratification of CoNtract — Express Promise.
    If a minor, after reaching majority, with full knowledge of the fact that his previously made contract is not binding on him, declares to the other party that he adopts it or intends to abide by it, such conduct is a ratification without a specific promise to perform.
    [Ed. Note. — For other cases, see Infants, Cent. Dig. §§ 136-143, 145-148, 151; Dec. Dig. &wkey; 57(1).]
    4. Infants &wkey;>57(l) — Contracts of Minors— “Ratification.”
    As applied to the contracts of minors, “ratification” means that the late minor, knowing his contract is not binding on account of his minority when he made it, determines in his own mind to waive that defect and adopt the contract, and signifies his intention by such spoken or written words, or other conduct, as will render it manifest.
    [Ed. Note. — For other cases, see Infants, Cent. Dig. §§ 136-143, 145-148, 151; Dec. Dig. &wkey;
    For other definitions, see Words and Phrases, First and Second Series, Ratification.]
    5. Infants <&wkey;57(l) — Ratification of Contract — Proof.
    Unless a minor’s words or acts after reaching majority make it dearly and distinctly appear that he intends to ratify his previously made contract, they are not sufficient proof of ratification.
    [Ed. Note. — For other teases, see Infants, Cent. Dig. §§ 136-143, 145-148, 151; Dee. Dig. &wkey;57(l).]
    6. Words and Phrases — “Ratification.”
    To constitute a “ratification” or confirmation of something previously done, it must appear that the party charged with having ratified or confirmed the transaction, at the time he committed the acts tending to show such confirmation, knew that the former transaction was not binding upon him.
    7. Infants <&wkey;98 — Ratification of Contract-Knowledge of Voidable Character-Proof.
    The fact that a minor, who is claimed to have ratified his previously made contract after attaining majority, had knowledge that it was not binding upon him, may be shown by circumstantial evidence.
    [Ed. Note. — For other cases, see Infants, Cent. Dig. § 293; Dec. Dig. &wkey;98.]
    8. Infants <&wkey;57(2) — Ratification of Contract — Knowledge of Voidable Character — Lapse of Time.
    The mere fact that 4 months elapsed between the time a minor attained his majority and when he wrote a letter claimed to constitute a ratification of his previously made contract did not justify a finding that he knew that the contract was not binding on him when he wrote the letter.
    [Ed. Note. — For other cases, see Infants, Cent. Dig. § 144; Dec. Dig. &wkey;57(2)J
    9. Infants <&wkey;57(l) — Contract to But Land —Ratification.
    Where an infant, who contracted to buy a lot and to pay in installments, 2% months after he reached majority wrote to the seller, stating that it appeared from the contract of purchase that he had agreed to pay taxes after a certain date, and requested die seller to notify him promptly as to the amount due on the property for die year, and to advise him whether he should remit the money to pay such taxes to the tax collector or to the seller, such letter was not a ratification of his contract to buy.
    [Ed. Note. — For other cases, see Infants, Cent. Dig. §§ 136-143, 145-148, 151; Dec. Dig. &wkey; 57(1).]
    Appeal from District Court, McLennan County; E. J. Clark, Judge.
    Suit by B. J. Fletcher against the A. W. Koch Company. From a judgment for defendant, plaintiff appeals1.
    Reversed and remanded.
    Boggess & Ñaman, of Waco, for appellánt. Stribling & Stribling, of Waco, for appellee.
   KEY, C.' J.

Appellant brought this suit against appellee lor the rescission of a contract for the purchase by appellant of certain real estate from appellee. The ground relied on for rescission was the fact that appellant was a minor under the age of 21 years at the time the contract was made. The trial judge filed the following conclusions of fact and law:

“Conclusions of Fact.
“(1) On the 24th day of June, 1912, B. J. Fletcher, plaintiff, entered into a contract with A. W. Koch & Company to purchase from A. W. Koch & Company, lot 13, block No. 17, as shown on the plat of Highland Place, being an addition to the city of Waco, Texas, for the consideration of $12.50 cash, and the further sum of $12.50 on the first day of each succeeding month thereafter until the total sum of $300 has been paid, and the further consideration of two notes for $225.00 each, due June 24th, 1915 and June 24th, 1910, respectively.
“(2) That in the first clause of said contract, it is provided that A. W. Koch & Company agreed to pay all state and county taxes on said property up to and including the year 1913.
“(3) That said contract was signed by the parties on the date it bears, and the plaintiff paid a cash consideration of $12.50 and also $12.50 on the first of each succeeding month until he had paid the sum of $300 under said contract.
“(4) That plaintiff executed his two notes for $225 each, payable to A. W. Koch & Co., as provided for in the contract, and same were delivered to payee therein contemporaneously with the execution of said contract.
“(5) That the lot described in the contract was, and is now, unimproved, being vacant property.
“(6) That plaintiff, at the time of the execution by him of the notes and contract referred to, was a minor.
“(7) That the plaintiff reached his majority on November 3, 1914.
“(8) That on January 16, 1915, plaintiff, then being at Lexington, Tex., addressed the following letter to A. W. Koch & Co., Waco, Texas: ‘Gentlemen: From my purchase contract on lot No. 13 of block 17 of Highland Place addition, it appears that I am to pay state and county taxes on the lot hereafter. Please let me know promptly the amount of the state and county taxes due on this lot for the year 1914, and also advise me whether I shall remit to you or to the county tax collector.’ That this letter-was received by defendant, and on January 18, 1915, defendant wrote plaintiff the following in reply: ‘Dear Sir: Replying to your favor of the 16th inst. beg to advise that the taxes on your lot in Highland Place addition was paid by us for last year.’ Which letter was received by the plaintiff.
“(9) That the contract referred to by plaintiff in his letter of January 16, 1915, was the contract of purchase above referred to of date June 24, 1913, and that plaintiff had reference to clause 1 of the contract as provided for the payment of taxes.
“(10) That plaintiff, by said letter, expressed a willingness and intention to carry out tile contract as made by him under date June 24, 1913.
“(11) That the taxes as paid by the defendant on the lot referred to were paid by the defendant as a matter of convenience for the plaintiff and other purchasers of lots in that, addition who had similar contracts, and for the reason that the entire property was assessed to defendant as acreage property, and not assessed to the purchasers under the several contracts, and the taxes so paid by the defendant for the plaintiff were charged to plaintiff’s account in the regular course of dealings.
“(12) That the plaintiff at no time between November 3, 1914, and about July 3, 1915, ei-1 ther by word or act, denied his liability under the contract and notes, or in any way undertook to disaffirm the same to the defendant.
. “(13) That the first of said notes became due June 24, 1915, and about that date plaintiff came to Waco from Lexington, Tex., and conferred with W. W. Ñaman, attorney at law, as to his liability on the notes and his right to recover the amount paid by him under the contract.
“(14) That on or about July 3, 1915, W. W. Ñaman notified defendant that plaintiff denied liability on the notes and contract, and would sue to recover the sum of $300 paid by him under the contract, unless same was repaid without suit, claiming that he was not bound by the contract, by reason of his minority at the time same was executed.
“(15) This was the first information or notice. defendant, had of plaintiff’s minority, and denial of liability by reason thereof, on the contract and notes.
“(16) That this suit was instituted on the 29th day of July, 1915.
“(17) That from November 3, 1914, to July 3, 1915 (the latter date being the time when plaintiff first notified defendant of his intention to disaffirm the contract), was not, under all the facts and circumstances in evidence, a reasonable time to disaffirm the contract, but plaintiff delayed an unreasonable time before disaf-firming the contract. E. J. Clark.
“Conclusions of Law.
“From the foregoing facts the court concludes as a matter of law:
“1. That there was an expressed ratification and affirmance of the contract entered into by the plaintiff and A. W. Koch & Co., after plaintiff reached his majority.
“2. That having expressly ratified and affirmed the contract as of date January 16, 1915, as shown by plaintiff’s letter set forth in the statement of facts, the plaintiff was estopped from thereafter disaffirming the same.
“3. That under all the facts and circumstances in evidence, as shown by the findings of fact, the plaintiff did not disaffirm the contract within a reasonable time after he reached his majority.
“4. That the plaintiff is not entitled to recover the amount paid by him under the contract, and is not entitled to have the notes, executed by him under the contract, canceled and delivered up, as prayed for.
“5. That judgment should be rendered for the defendant.” #

Opinion.

By his brief, and by oral argument of his counsel when the case was submitted in this court, appellant challenges the correctness of the trial court’s conclusions of law, and asks a reversal of the case on account of such alleged error. We have reached the conclusion that, in the main, the contentions urged on behalf of appellant are sound, and require a reversal of the judgment That a contract made by a minor, except for necessaries, is not binding upon him unless made so by such conduct as will create an estoppel, or by a ratification after the disability of minority had ceased to exist is a proposition of law too well established to require citation of authorities. It is true that such contracts are not absolutely void and they may be ratified by the minor after his minority ceases. It is also true that some authorities seem to teach the doctrine that the minor’s failure to disaffirm or repudiate the contract within a reasonable time after reaching his majority will render the same binding upon him. Other authorities hold that the doctrine referred to should be limited to executed contracts and that it has no application to those where the contract is executory such as the one involved in this case. Whether or not the mere failure to disaffirm or repudiate within a reasonable time will render an executed contract binding is not involved in this case, and we express no opinion upon that subject. The contract here involved is executory, The title to the property, which was the subject-matter of the contract, is still in the appellee, and it was not made to appear that appellant’s failure to sooner repudiate the contract has resulted in any injury to appellee, and therefore we hold that appellant's failure to sooner disaffirm and demand for rescission created no presumption that the plaintiff intended to ratify and be bound by the contract. He disaffirmed in about 8 months after he reached his majority.

The trial court seems to have regarded the letter written by the plaintiff to the defendant, 2% months after he reached his majority, as an express ratification of the contract; and, if that conclusion is correct, the case was properly decided. In fact, ratification may be shown without proving an express promise to fulfill the obligations of the contract If the minor, after reaching the age of majority, and with full knowledge of the fact that the contract is not binding upon him, declares to the other party that he adopts it, or intends to abide by it, such conduct on his part would constitute a ratification without a specific promise to perform the several obligations of the contract. In other words, as applied to this class of contracts, ratification means that the late minor, knowing that the contract is not binding upon him on account of his minority at the time he made it, determines in his own mind to waive that defect and adopt the contract, and signifies such intention by such spoken or written words or other conduct- as will render such'intention manifest. He may do or say things that are consistent with such intention, and therefore, by implication, such conduct may tend to prove the existence of an intention to ratify. But unless such acts ■or words make it clearly and distinctly appear that such intention to ratify existed, they do not constitute sufficient proof of ratification.

Few, if any, law-writers have ever ranked higher than Mr, Parsons, and he states the rule upon the subject of confirmation of contracts made by infants in the following language:

“As the liability of an infant is defeated by the law for his protection, therefore when he is ■of full age he may ratify and confirm a contract entered into by him during infancy, and this by parol; but for this ratification a mere acknowledgment that the debt existed, or that the •contract was made, is not enough. It need not be a precise and formal promise, but it must be n direct and express confirmation, and substantially — though it need not be in form — a promise to pay the debt or fulfill the contract. It must be made with the deliberate purpose of .assuming a liability from which he knows he is discharged by law, and under no compulsion, and to the party himself or his agent.” 1 Parsons on Contracts, 270.

The rule thus stated is believed by this court to be correct. In fact, our research has failed to discover any criticism of the rule thus announced; but we have found much diversity of opinion as to what will constitute ratification or confirmation of a contract made during infancy. Some courts hold that a mere failure to disaffirm after arriving at the age of majority will not constitute a ratification, unless such failure covers the period of time necessary to bar an action for rescission of the contract. Others do not go to that extent, but there is no difference of opinion upon the proposition that if the late minor is obtaining any benefit under the contract, he must, by affirmative action, disaffirm within a reasonable time after his minority ceases.

There is also divergence of opinion as to the effect to be given to payments required of the minor by the contract and made by him after his minority has ceased, the seeming weight of authority being that such' payments do not constitute sufficient proof of ratification of the contract. In Rapid Transit Land Co. v. Sanford, 24 S. W. 587, it was held by the Fifth Court of Civil Appeals: (1) That the infant who purchases land and gives his monthly installment notes for the price may, on becoming of age, rescind the contract and recover what he has paid thereon; (2) that the fact that he pays two of the notes within four months after becoming of age is not, of itself, a ratification of the contract; (3) that disaffirmance within four months after becoming of age is within a reasonable time.

The authorities also differ upon the question as to whether or not it is necessary for the proof to show that at the time the former minor committed the acts relied upon as proof of ratification he knew the fact that the contract was voidable and not binding upon him, unless he adopted or ratified it. In dealing with1 that question some courts hold that all persons not resting under a disability will be presumed to know their legal rights, and therefore it is not necessary to prove that the former minor knew that the contract was not binding upon him when he committed the acts relied on as showing ratification thereof. Both Cye. and Am. & Eng. Ency. Law approve that as the sounder rule, while the able authors of the notes to Craig v. Van Bebber, 18 Am. St. Rep. 706, and Tobey v. Wood, 25 Am. Rep. 30, express the view that the converse doctrine announced by other courts is better supported by reason.

It is well settled, both by reason and authority, that in order to constitute a ratification or confirmation of something which has been previously done, it must appear that the party charged with having ratified or confirmed the transaction, at the time he committed the acts tending to show such confirmation, knew that the former transaction was not at that time binding upon him. In other words, applying that rule to this case, appellant must have intended to adopt or ratify the contract so as to make it binding upon him; and, in order to have such intention, he must at that time have known of the defect in the contract, and that it was not binding upon him. An Intention to ratify cannot exist in the absence of knowledge of a necessity for ratification; and, this being the case, it would seem to be immaterial whether the fact, knowledge of which is essential to constitute ratification, constitutes a proposition of law, or some other fact disconnected from the law. The expression that all persons are presumed to know the law is often misleading, as is shown by. our Supreme Court in Stooksbury v. Swan, 85 Tex. 572, 22 S. W. 966, where the court, speaking through Mr. Chief Justice Stay ton, said:

“It is said that every sane person who has reached years of discretion is presumed to know the law; but it is not meant by this that an inference is to be drawn that such persons do actually know the law of the land in which they live. The expression is misleading, for there is no inference based on probabilities that any such knowledge exists; but public policy requires that all such persons shall be held to responsibility for their acts, without reference to their knowledge or want of knowledge of the law.”

We are not to be understood as holding that it is necessary in any case to produce direct testimony to show that the party alleged to have ratified his former contract had knowledge at that time of the defect in it. That fact, as well as almost any other fact, may be shown by circumstantial evidence. In this case no evidence was produced that shed any light upon that subject, unless it be the circumstance that 4 months had elapsed between the time the appellant attained his majority and when he wrote the letter relied on as constituting ratification of the contract; and we are not willing to hold that such brief lapse of time will justify a finding that appellant knew that the contract was not binding upon him. Nor can we indorse the holding of the trial court that, because about 8 months had elapsed after appellant attained his majority before he expressly disaffirmed the contract, such disaffirmance was not made within a reasonable time. It was not shown that the failure to disaffirm earlier resulted in any injury to appellee, and therefore, if it be conceded, which we do not hold, that in this class of cases the minor may become bound because of his mere failure to disaffirm within a time short of the period of limitation, still we hold in this case that appellant’s disaffirmance was within a reasonable time, and that he did not become bound by his failure to disaffirm earlier.

This leaves no fact or circumstance to support the judgment in this case, except the fact that appellant wrote the letter set out in the trial court’s finding of facts. That letter merely stated that it appeared from the contract of purchase, which he had entered into during his minority, that he had agreed to pay the taxes due on the property after a certain date, and requested the other party to the contract to notify him promptly as to the amount of taxes due on the property for the year 1914, and to advise him whether he should remit the money to pay such taxes to the tax collector or to Koch & Co., the party addressed, and from whom he had contracted to purchase the property. There is nothing in that letter to indicate that appellant was aware of the fact that the contract was not binding upon him. On the contrary, it would rather seem that he assumed that it was. It contained no" promise, either express or implied, to perform all the obligations of the contract In fact, it was limited to the obligation to pay taxes on the property, and contained no promise to pay such taxes. If he knew at that time that the contract was not binding upon him, unless he ratified it, his purpose in writing the letter may have been to ascertain the amount of taxes due on the property, in order to determine whether or not he would ratify and adopt the contract. At any rate, it was not shown that he paid the taxes, or made any other payment after he attained the age of majority; and the statements made by him in the letter tend less to prove ratification of the contract than did the two payments made in the case of Rapid Transit Land Co. v. Sanford, supra, in which it was held that ratification was not shown.

In conclusion, we deem it not amiss to say that, while some of the earlier American cases may have gone too far in protecting minors against contracts made during minority, some of the later decisions seem to have gone equally far in the opposite direction. The inability of a minor to bind himself by contract is so well established as a principle of law, and rests upon such a just foundation, as leaves no doubt as to the duty of courts to administer that rule of iaw, in order that minors may obtain the benefits to secure which that rule was established. And while the courts have properly held that such contracts are not absolutely void, and may become binding by ratification or estop-pél after the disability of minority has been removed, that rule ought not to be applied in such manner as to nullify the rule established for the protection of the minor. In this state, in so far as our research has gone, the appellate courts have gone to neither extreme; but while attempting to administer the law with reasonable fairness, have kept in mind the fact that its prime object is the protection of minors. This is illustrated by the case of Bullock v. Sprowls, 93 Tex. 188, 54 S. W. 661, 47 L. R. A. 326. 77 Am. St. Rep. 849, in which our Supreme Court declined to follow some decisions in other jurisdictions, and expressions in some of its former opinions, to tlie effect that before a minor is entitled to a judgment, canceling a deed made by him, he must offer to restore or account for the consideration received by him, even though it is made to appear that he has disposed of such consideration; and, among other things, the court said:

“If a recovery of the land is to he denied him until he shall restore an equivalent for the money -which he has thus been enabled to dissipate, the purpose of the law will he defeated, and his estate will be taken to make good the money which the person dealing with him has put it in his power to squander through his lack of discretion. The disability laid upon minors to sell their property will afford small protection if purchasers may pay them money upon it, and, after it has been lost through extravagance or indiscretion, hold the property as a security for the return of the money.4 Proper consideration for the interests of parties who thus knowingly deal with minors does not demand that the' purposes of the law in imposing the disability should be defeated. Losses which occur in such dealings are only what persons buying property from and paying money to minors should expect from their presumed incapacity to judiciously manage business affairs, and they are natural consequences of such risks which can furnish no good reason for denying to the minors the protection which it is the purpose of the law to give them. We do not think it was ever the purpose of the learned judges who wrote the opinions in the cases cited to lay down a rule so broad that, in its operation, it would conflict with the leading principle which renders minors incapable of conveying away their property; but that it was only meant to state a general principle under which all persons would be protected from loss as far as this could be done consistently with the protection designed to be given to the interests of the minor.”

In that case the consideration for the deed made by the minor had been received and disposed of by him, and yet it was held that he was entitled, without making compensation to his vendee, to recover the land.

For the reasons stated, our conclusion is that the judgment of the trial court should be reversed, and the cause remanded for another trial; and it is so ordered.

Reversed and remanded.
      <§=>For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes


source: Caselaw Access Project

author: ELY, C. J.

license: Public Domain

text:
    KOKERNOT et al. v. ROOS et al.
    (No. 5815.)
    (Court of Civil Appeals of Texas. San Antonio.
    Oct. 18, 1916.
    Rehearing Denied Nov. 22, 1916.)
    1. Corporations <&wkey;614(l), 621(1) — Insolvency — Receivership—Statute.
    Under Rev. St. 1911, art. 1203, authorizing stockholders of any insolvent corporation owning 25 per cent, of its stock to institute a suit for its dissolution, and providing that the corporation proceeded against shall have ten full days notice prior to the date set for the hearing on the application for a receiver, no notice is required to be given a corporation by such stockholder in a suit seeking its dissolution, and the appointment of a receiver by such stockholder is not authorized; the provision therefor being merely a recognition of the fact that a stockholder, under certain conditions, may couple with his suit to dissolve an application for the appointment of a receiver, and intended to prevent the appointment of a receiver without notice.
    [Ed. Note. — For other cases, see Corporations, Cent. Dig. §§ 2435, 2461-2464, 2471; Dec. Dig. &wkey;614(l), 621(1).]
    2. Corporations <&wkey;557(l) — Receivership —Statute.
    A stockholder of a corporation applying for a receiver must do so under Rev. .St. 1911, art. 2154, providing that any stockholder of a joint-stock or incorporated company may have his action against it and have a receiver appointed as in ordinary cases; and his right to a.receiver must depend on whether he brings himself within article 2128 and subdivisions, defining the circumstances under which a receiver may be appointed, in which case it would be immaterial whether the stockholder had 25 per cent, of the stock.
    [Ed. Note — For other cases, see Corporations, Cent. Dig. § 2227; Dec. Dig. <&wkey;557(l).]
    3. Corporations <&wkey;554 — Receivership — Right op Stockholder — Judgment.
    Rev. St. 1911, art. 2154, providing that any stockholder of a joint-stock or incorporated company may have his action against it and may have a receiver appointed as in ordinary eases, places such stockholder in the same class with the creditors, and hence it is not essential that he should have a judgment or express lien upon the property of the corporation, though he must have a claim or cause of action against the corporation within the jurisdiction of the court, independently of the receivership, and hence a suit by a stockholder, with the consent of the corporation, not to recover any sum against it, but merely to throw it in the hands of a receiver and delay the collection of a defendant’s first lien debt and obtain time in which to borrow money and pay off the lien, could not be maintained.
    [Ed. Note. — For other cases, see Corporations, Cent. Dig. § 2220; Dec. Dig. &wkey;554.]
    4. Receivers <&wkey;l — Definition — “Receiver.”
    A “receiver” is an indifferent person between the parties to a cause appointed by the court to receive and preserve the property or fund in litigation pendente lite.
    [Ed. Note. — For other cases, see Receivers, Cent. Dig. § 1; Dec. Dig. &wkey;>l.
    For other definitions, see Words and Phrases, First and Second Series, Receiver.]
    5. Receivers <&wkey;29(l) — Appointment—Precaution.
    The exercise of the extraordinary power of a chancellor in appointing receivers is a delicate and responsible duty to be discharged with the utmost caution and only under such special and peculiar circumstances as demand summary relief, and to prevent manifest wrong and injury.
    [Ed. Note. — For other cases, see Receivers, Cent. Dig. §§ 38-41; Dec. Dig. &wkey;>29(l).]
    6. Receivers <&wkey;3 — Appointment—Pendency oe Action.
    A prayer for a receiver is merely ancillary to a cause of action pending between parties in which a judgment by one may be obtained against the other, and a receiver should not be appointed for a corporation where no cause of action is pending upon which a judgment could be predicated.
    [Ed. Note. — For other cases, see Receivers, Cent. Dig. §§ 5-17; Dec. Dig. &wkey;>3.]
    Appeal from District Court, Bexar County; W, S. Anderson, Judge.
    Suit by Edward Roos against tbe Summit Place Company, H. L. Kokernot and others, and R. E. Weber, receiver of the Continental Trust Company, for. dissolution .of the Summit Place Company, alleged to be insolvent, for the appointment of a receiver, and for an injunction to restrain its sale of lots. Receiver appointed, and temporary writ of injunction issued, and H. L. Kokernot and others appeal.
    Order appointing the receiver and issuing the injunction set aside, and cause remanded.
    Templeton, Brooks, Napier & Ogden, of San Antonio, and Q. U. Watson, of Houston, for appellants. Lew'right & Douglas, of San Antonio, for appellees.
   ELY, C. J.

This is an appeal from an order appointing a receiver and granting a temporary injunction against R. L. Ball, the trustee in a deed of trust given by the Summit Place Company to secure H. D. Kokernot in the sum of $30,000, and Lee C. Ayers, trustee for a second mortgage, to restrain them from selling certain lots in Summit place, in the city of San Antonio. The suit was instituted by Edward Roos, claiming to be a creditor and the owner of 25 per cent, of the corporate stock of the Summit Place Company, against that company, Frederick Terrell, R. C. Roos, H. L. Kokernot, R. L. Ball, Lee C. Ayers, and R. E. Weber, receiver of the Continental Trust Company, to dissolve the Summit Place Company, alleged to be an insolvent corporation which had forfeited its right to do business by a failure to pay the franchise tax, to have a receiver for the corporation appointed, and for injunctions to restrain the sale of the lots of the corporation under and by virtue of the deeds of trust given by it. The petition was filed on September 4, 1916, notice was waived and service accepted by Frederick Terrell as vice president of the Summit Place Company, and R. C. Roos accepted service for himself, and on September 5, 1916, without hearing any evidence, the court appointed a receiver and issued temporary writs of injunction against Ball, Ayers, Kokernot, and Weber restraining sale of the lots. No notice was given them of any application for the appointment of a receiver or injunction. A bond of $5,000 was required of Edward Roos before issuing the injunction, but the record fails to disclose that such bond was ever given.

Article 1203 authorizes stockholders of any insolvent corporation who own 25 per cent, of the stock to institute and prosecute a suit for the dissolution of the corporation. The article closes as follows:

“It is further provided that any such corporation proceeded against shall have ten full days notice prior to the day set for the hearing, on an application for the appointment of a receiver.”

We think the proper construction of article 1203, Rev. Stats., is that no notice is required to be given a corporation by a stockholder or stockholders owning 25 per cent, of the stock who may seek to dissolve it, and that the provision “that any such corpora-. tion proceeded against shall have ten days’ full notice prior to the day set for hearing on an application for the appointment of a receiver” does not authorize the appointment of a receiver by such stockholders. This provision is merely a recognition of the fact that a stockholder, under certain conditions, might couple with his suit to dissolve a corporation an application for the appointment of a receiver, and, should he do so, he must give the corporation ten days’ notice. It was an effort to prevent the appointment of a receiver, under the circumstances, without the notice. There is no authority given a stockholder in article 1203, to apply for a receiver, but to obtain this authority he must go to article 2154 Revised Statutes, where it is provided that:

“Any stockholder or stockholders of such joint-stock or incorporated company may have his or their action against such company, and may have a receiver appointed as in ordinary cases.”

The article places the stockholder in the same class with a creditor or other individual, and his right to a receiver must then depend on’ his ability to bring himself within the purview of one of the subdivisions of article 2128, which define the circumstances under which a receiver may be appointed. It would not matter whether the stockholder had 25 or 1 per cent, of the stock of the company; if he could show that he was entitled to a receivership the law would accord it to him.

In this case a stockholder sued the corporation and sought its dissolution, joining with it an application for the appointment of a receiver. Process was waived and service accepted by the corporation, the only one to whom notice was necessary, under the statute. In connection with the allegation that the plaintiff was a stockholder and that the corporation was insolvent and had forfeited its corporate rights, it was alleged that it was indebted to him in the sum of $4,000.

Article 2154 having placed the stockholder in the same category of any other creditor, the same rules will apply to both, and in the case of Railway v. Davis, 30 S. W. 693, this court held that it was not essential that the claim of a creditor “should have become a judgment, or that he should have an express lien upon the property of the corporation.” He must, however, have a claim.

Again, in the case of People’s Inv. Co. v. Crawford, 45 S. W. 738, it was held by this court, in passing upon the application by stockholders for the appointment of a receiver, that:

“A stockholder seeking the appointment of a receiver for a corporation on the ground of insolvency, or imminent danger thereof, must show, to entitle himself to such appointment, that he has a cause of action against the corporation, independently of the receivership, that the corporation is insolvent, or in imminent danger thereof, and that his interest as such stockholder requires the appointment to be made.”

The only allegation as to the indebtedness of the corporation is:

“That said Summit Place Company is indebted to this plaintiff in the sum of $4,000.”

Other indebtedness is also alleged to other parties. There is no prayer for a judgment against the corporation for the indebtedness, and it is evident the object of the suit was not to recover any sum against the corporation, but merely to throw it into the hands of a receiver and delay the collection of a first lien debt due to H. L. Kokernot. As said in Style v. Lantrip, 171 S. W. 786, speaking of the appointment of a receiver:

“The exercise of such appointing power is purely auxiliary, depending upon the pendency of a suit, seeking some other and ultimate relief, which is within the jurisdiction of the court.” Webb v. Allen, 15 Tex. Civ. App. 605, 40 S. W. 342; Hermann v. Thomas, 143 S. W. 195; Railway v. Gay, 86 Tex. 582, 26 S. W. 599, 25 L. R. A. 52; High on Rec. § 17.
“It is not only essential that the petition should state grounds calling for the appointment of the receiver to take charge of the property involved in the litigation, but it should also sho'w upon its face an independent cause of action within the jurisdiction of the court.”

That case was approved by this court in Toomey v. Mortgage Co., 177 S. W. 540.

In the case of Houston lee & Brewing Co. v. Clint, 159 S. W. 409, speaking of the appointment of a receiver at the instance of a second lienholder, this court held:

“In this case the applicant for the receivership had no interest in the property except in so far as there might be a surplus after paying off the first lien, and he had no right, and could not be endowed with the right by the court, to needlessly sacrifice the property of the first lien-holder. Under the allegations of the petition for the receivership, the court should not have entertained the suit, which could result in nothing but an impairment or sacrifice of the mortgaged property.”

In this case the petition seeks a receivership in a case wherein it is alleged that there are liens against the property amounting probably to $60,000. There is no allegation that the property is worth more than that sum, the only allegation as to value being that:

The property “is of the reasonable market value of $150.000 or more in normal times, but the real estate market in the state of Texas is much depressed at the present time, and, by reason thereof, said property would not sell for anything approximating said amount.”

From an inspection of the act of 1907, of which article 1203 is a part, it appears that the object of the act, as expressed in the caption, was to prohibit insolvent corporations from doing business in this state, and to provide means by which charters could be forfeited. The appointment of receiver is not mentioned in the caption. There is nothing in the act indicating that there was any intention or desire on the part of the Legislature to repeal or in any manner interfere with the provisions of the act of 1887, a part of which is article 2154, which provides the grounds upon which a receiver may be appointed at the instance of a stockholder. Now in section 2 of the act of 1907 (Acts 30th Leg. c. 183) it is provided that, when the dissolution of a corporation is sought at the instance of the Attorney General, the court may in its discretion appoint a receiver to administer the affairs of the corporation, but no such provision is found in the section relating to a dissolution obtained at the hands of a stockholder, and we are of the opinion that a stockholder, in order to obtain the appointment of a receiver, must comply with the requirements exacted from any other person.

If a petition setting up the facts authorizing the dissolution of a corporation under the provisions of article 1203 would be sufficient ordinarily to obtain the appointment of a receiver, which is not deemed a correct proposition by this court, still in this case, in view of the fact that the circumstances indicate a design upon the part of the stockholders, directors, and officers, which usually compose ia corporation, to obtain a receiver simply to prevent the collection of a debt, the receiver should not have been appointed. The suit to all intents and purposes was one upon the part of the corporation to destroy itself and have its affairs administered by a receiver, in direct violation of article 2154. Everything connected with the suit indicates that the suit was fully concurred in by every one interested in the corporation. Under the circumstances it is impossible to imagine the corporation as not seeking the dissolution and appointment of a receiver when all the stockholders, all the directors, and all the officers were undoubtedly aiding and abetting the suit.

We recognize the fact that a corporation is a legal entity, separate and distinct from its membership, but it can only act through its lawfully authorized agents, and when its officers, stockholders, and entire membership concur in a certain action, it must and will usually bind the corporation, because without these officers, members, stockholders, the corporation is a myth, utterly incapable of power or action. The corporation is a creature of the law, but whenever it is entirely separated from its members, officers, and directors it is only a dream, and exists only in its potentiality of being revived by a new membership and reorganization. If a corporation can be bound by its agents it must be bound within the limitations of the law creating it, by the united actions of all of its officers, directors, and stockholders. It is drafting too heavily on the human mind to imagine a corporation not acting when every one interested in or connected with it has acted for it.

The petition in this case clearly indicates that time in which to borrow money to pay off the two liens was the sole object of the suit and to attain that object a receivership was applied for. That application was not ancillary to any other demand, but was the sole purpose to be gained’ by tbe suit; It was a suit to which ready acquiescence was made by the three stockholders who were the only directors, and one of them accepted service for the corporation, and the other for himself. Whether the corporation could fail to agree to the suit and stand sponsor for it when all the stockholders and all the directors were aiding and abetting it is not quite apparent. The whole affair has the appearance of an agreement of the corporation through its stockholders and directors to obtain a receivership to gain time on a debt that was due and the validity of which is not disputed.

If the receivership was hastily and irnprov-idently granted, it is no justification to say that the parties owning the prior liens on the property have not been injured, and the receivership will not prejudice their rights. H. L. Kokernot has a first lien on the property to secure a debt whose validity is not attacked, and it is an injury to him to have his sale of the property prevented and the collection of his debt indefinitely postponed in order that the market in real estate in Texas may .readjust itself and land become more valuable. Stripped of all superfluities, that is the sum and substance of the action. The lienholders are to be put to the inconveniences and annoyances connected with a receivership merely that the corporation or rather its stockholders can obtain time to sell the property on a higher market. As said in Brenton v. Peek, 39 Tex. Civ. App. 224, 87 S. W. 898:

“The purpose to delay a sale until things yet to come may enhance the improvement company’s holdings is practically admitted, and the powers of a court of equity are invoked, not upon a reasonably satisfactory showing that the plaintiff will otherwise lose his debt, but-in order that the defendant Improvement Company may not have its property subjected to the danger of sacrifice at public sale when it prefers to hold for higher prices. Under the evidence adduced, it is not surprising that the defendant company submits with such complacency to a proceeding which is usually termed harsh and drastic, and which is generally denied, except upon a clear showing of necessity.’’

A “receiver” is defined as an indifferent person between the parties to a cause, appointed by the court to receive and preserve the property or fund in litigation pendente lite.

“The exercise of the extraordinary power of a chancellor in appointing receivers is an exceedingly delicate and responsible duty to be discharged by the court with the utmost caution, and only under such special or peculiar circumstances as demand .summary relief. * * * And, since it is a serious interference with the rights of the citizen, without the verdict of a jury and before a regular hearing, it should be granted only for the prevention of manifest wrong and injury.” High on Bee. § 3.

In this case no caution seems to have been exercised but upon the petition of a stockholder, and with the acquiescence of the other stockholders, the directors, and consequently the corporation, with no facts but the allegations of the plaintiff’s petition, and those allegations candidly averring that the receivership was sought to gain time until the real estate market became more active and lands advanced in value, with a complacent corporation waiving process and accepting service and without a hearing, land was placed in the hands of a receiver, and lienholders prevented from collecting their debts, except by going into a court.

It is stated by Beach on Bee. § 51, that it is the rule that, except in cases of infants and lunatics, a receiver will not be appointed, unless a suit or action is pending. In other words, as hereinbefore stated, the prayer for a receiver is merely ancillary to a cause of action pending between parties in which a judgment by one may be obtained against the other. A receivership is a mere incident to a pending action, and rarely can a case be found where a receiver can be appointed where no cause of action is pending, but, on the other hand, the only cause pending is the appointment of a receiver around which revolves all the incidents of the case. Take the receivership out of this case, and what cause of action is pending between Edward Boos and the Summit Place Company? Nothing upon which a judgment could be predicated. Was the indebtedness shown by an account, a note, or any other written instrument. There is no prayer for the debt, the only prayer being for an injunction, a receiver, for a dissolution of the corporation and a forfeiture of its charter, and that the assets after payment of indebtedness be distributed among the stockholders. He was not suing for a debt, but seeking the appointment of a receiver and an injunction to sustain him.

We deem it timely to suggest that in appointing receivers too great haste should not be indulged in, and time should be taken to allow parties affected by it to be heard. A restraining order for a few days until the facts could be heard could hurt no one, and might be the means of preventing oppression and ill-advised interference with rights of property.

The order appointing the receiver and issuing the injunction will be set aside, and the cause remanded.
      <&wkey;>Eor other eases see same topic and KEY-NUMBER, in all Key-Numbered Digests and Indexes


author: HENDRICKS, J.

text:
    ANDERSON v. FARMER et al.
    (No. 1046.)

    (Court of Civil Appeals of Texas. Amarillo.
    Oct. 25, 1916.
    Rehearing Denied Nov. 29, 1916.)
    1. Vendor and Purchaser <&wkey;231(4) — Bona Eh>e Purchaser — Notice.
    ( A purchaser need not examine the records foiVprevious conveyances executed by his grantor prior to the time the title held by such grantor originated, nor is he charged with notice of prior deeds or mortgages gives, by tbe grantor previous to tbe origin of title, y

    [Ed. Note.—For other cases, see Vendor and Purchaser, Cent. Dig. § 516; Dec. Dig. <&wkey;> 231(4).] , ,
    2. Public Lands &wkey;178(2)—Rights of Pub-chaser—Liens.
    A purchaser of school lands, who gave vendor’s lien notes in payment, cannot, by permitting a forfeiture for failure to pay the interest and then securing a reaward of the lands, defeat the rights of his vendor.
    [Ed. Note.—For other cases, see Public Lands, Cent. Dig. § 580; Dec. Dig. &wkey;>178(2).]
    3. Mortgages <&wkey;186(3), 536—Notice—Bub-den of Proof.
    A vendor, asserting that a mortgagee of the purchaser as well as the one who bought on foreclosure sale was charged with notice of his vendor’s lien notes, has the burden of proving notice.
    [Ed. Note.—For other cases, see Mortgages, Cent. Dig. §§ 454, 1557; Dec. Dig. &wkey;186(3), 536.]
    4. Mortgages c&wkey;536—Bona Fide Purchaser—Notice—Implied Notice.
    The owner of school lands sold them, receiving vendor’s lien notes for the purchase price. The purchaser allowed the lands to be forfeited for nonpayment of interest, etc., and after securing a reaward mortgaged them to his father. On foreclosure sale the lands were bought in by the purchaser’s mother. ,She and the father had been notified by the purchaser that he had exchanged other land for the school lands. The deed to the purchasers recited the reservation of vendor’s lien notes. Held that, though the purchaser by allowing the land to be forfeited and then securing a reaward could not defeat the vendor’s lien notes, nevertheless his mother and father were not charged with notice of the vendor’s lien notes by reason of their knowledge of the purchase or exchange, and so the title acquired by purchaser’s mother at foreclosure sale was' superior to the lien of the notes.
    [Ed. Note.—For other cases, see Mortgages, Cent. Dig. § 1557; Dee. Dig. &wkey;536J
    Appeal from District Court, Hale County; R. C. Joiner, Judge.
    Action by A. L. Anderson against P. H. Farmer and others. From a judgment for defendants, plaintiff appeals.
    Affirmed.
    Y. W. Holmes, of Plainview, for appellant. Smith & Palmer, of Comanche, for appellees.

      Application for writ of error pending in Supremo Court.

   HENDRICKS, J.

The plaintiff, A. L. Anderson, appellant in this court, as the holder of three vendor lien notes, executed by W. E. and P. H. Farmer, instituted this suit against them in the district court of Hale county,' together with their mother, to foreclose on three sections of school land, situated in Yoakum county. Anderson alleged that Martha M. Farmer, the mother, was setting up a claim for the land ás a purchaser under an order of sale, issued in a foreclosure suit, by virtue of a certain deed of trust, executed by W. E. and P. H. Farmer, to their father, now deceased, alleging that both the father and mother, when the deed of trust was given and when the foreclosure sale under same was made, possessed both actual and constructive notice of plaintiff’s lien. One Akers, who had purchased the particular school land from the state, in March, 1909, conveyed said land to P. H. Farmer on Feb-' ruary 15, 1911, the consideration for same being the ex'change by Farmer of other land situated in another portion of the state and the additional consideration of the three vendor lien notes for $250 each, afterward acquired by plaintiff, Anderson. The commissioner of the General Land Office forfeited the land for nonoccupancy, on April 8, 1911, but .awarded the same to Farmer on April 28, 1911. Thereafter it was again forfeited for .nonpayment of interest on July 12, 1913, and reawarded to Farmer December 16, 1913. After the first forfeiture, but prior to the second forfeiture, Farmer executed the deed of trust to his father, which was in some manner acquired by Mrs. Farmer, the mother, and by her foreclosed, and the property purchased by her at foreclosure sale. The legal question upon the facts is one of superiority between this lien, and the previous lien exhibited in the deed from Farmer to Akers, which set out the notes, executed before the first forfeiture on account of nonoceupancy.

fit is ,the settled law that a purchaser of lancKis not required to examine the rec-. ords for previous conveyances executed by his grantor prior to the time the title, held by such grantor, originated; nor is he charged ” with notice by tne record of such prior deed or mortgage given by such grantor previous to the origin of the title. Breen v. Morehead, 104 Tex. 257, 136 S. W. 1047, Ann. Cas. 1914A, 1285; Devlin on Deeds (3d Ed.) vol. 2, § 725, and cases ^fited in footnotes Nos. 7 and 8 on page 1331. Jit is, however, held in Gunnels et al. v. Cartfedge et al. that a purchaser could not permit a forfeiture of his school land for failure to pay the interest and the'n, after forfeiture, plead such fact as a failure of consideration in defense against certain notes given for deferred payments arising in a prior purchase of said school land. 26 Tex. Civ. App. 623, 64 S. W. 806 (writ of error denied by Supreme Court).

The trial court, found against Anderson, the holder of the previous vendor lien notes, and decided in favor of Mrs. Farmer, claiming the title under the foreclosure of the deed of trust executed subsequent to the forfeiture.

As stated, the facts show that Farmer traded certain land in another county to Akers, for the three sections of school land, with the additional consideration of the execution and delivery of the three notes.

Mrs. Farmer testified:

“That she heard of tbe boys, W. E. and P. H. Farmer, making a trade with a man named Akers, for some land in Yoakum county, Tex. * ■ * * The deceased husband also hear about it., * * * Known nothing of the details of the trade. * * * The boys wrote home about it. * * * My husband and I learned about it at the same time; all we knew was through letters from the boys. * * * We understood they were trading a piece of land at Stacy for the Yoakum county land.”

She also testified that they knew of the forfeiture, but as to any information to them of the cause of the forfeiture, the record is silent.

Appellant’s position is that Earmer, who purchased the land from Akers, on account of his neglect, was the cause of the forfeiture by the Commissioner of the Land Office; that, being culpable in that respect, his repurchase of the land subsequent to the forfeiture would continue the previous vendor’s lien as between him, Earmer and Akers, as a matter of equity; that J. N. Farmer, who acquired the subsequent deed of trust, after the forfeiture, was not an innocent mortgagee, for the reason that he knew that a trade had been made between Akers and his son, and consequently knew that Akers had deeded the land, and on account of this knowledge, by virtue of the duty of inquiry, he was also charged with the contents of the deed, containing the recitations reserving the lien, as well as a description of the vendor lien notes; that Mrs. Farmer, who afterwards acquired the mortgage, had the same information, and hence is charged with knowledge of the same facts as her husband. 1

The logic of the decision of Breen v. More-head, supra, by our Supreme Court, would, at least, require actual notice, or that knowledge imperatively charged by the duty of inquiry from suggestive facts; and the question in this record is, Do the facts invoke the application of the' principle arising from the doctrine of imperative inquiry? The Farmers, the husband and) wife, had the right to assume, of course, that Akers conveyed whatever title he had to their son. And it might probably be that they would be charged with knowledge that a deed or written conveyance was executed for that purpose.

Appellant argues that the contents of this deed they are also charged with. What the rule would be upon the conditions assumed by appellant it is not necessary to decide. Clearly, the burden of proof was upon appellant to prove notice.

Mrs. Farmer testified that she knew nothing of the details of the trade; that the information obtained by her and her husband was through a letter written by the boys while the latter were, residing at Stacy. “My husband and I understood the boys were trading a piece.of land near Stacy for the Yoakum county lands.” If this were the only knowledge conveyed in the letter — and evidently the trial court so considered it — the information merely of an exchange of lands might preclude a suggestion of any additional consideration to Akers, different from the case of knowledge of the fact of a mere purchase of land, without knowledge of the details of the consideration. Because it might be considered that one who had knowledge that another had merely purchased land, without knowledge of details, would be put upon inquiry of the consideration and the contents of a deed including a lien, which we do not decide, does not necessarily argue that knowledge of a mere exchange of lands would put upon inquiry one subsequently acquiring rights in said property whether the vendor making previous exchange of other land for such land reserved a lien upon the land received in such exchange for an additional consideration of which he knew nothing. If the Akers deed to Farmer, the son, were in the chain of title, which the mortgagee would have to regard in the line of title back to the sovereignty, our conclusion would be different; but this case involves the doctrine of notice in pais, and whether disclosed facts are sufficiently suggestive of other facts to be arbitrarily imputed to one dealing with the subject, upon the doctrine of inquiry.

The trial court having decided the question against the appellant, we are not disposed, on the facts, to disturb his conclusion and judgment. Affirmed.
      <§=>Eor other oases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

      <&=»Eor other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes


author: WALTHALL, J.

text:
    CARR v. GRAND LODGE, UNITED BROTHERS OF FRIENDSHIP OF TEXAS, et al.
    (No. 614.)
    (Court of Civil Appeals of Texas. El Paso.
    Nov. 9, 1916.
    Rehearing Denied Nov. 28, 1916.)
    1. Pleading &wkey;>360(2) — Motion to Strike— Time.
    A motion to strike supplemental answers of named defendant on the ground that in their preparation the named defendant acted in collusion with plaintiff’s attorneys to the prejudice of defendant making the motion, filed after all parties had announced ready for trial, after all exceptions and objections to the pleadings had been argued and overruled, the jury had been selected, impaneled, and sworn, and plaintiffs had rested their case on the pleadings, came too late.
    [Ed. Note. — For other cases, see Pleading, Cent. Dig. § 1130; Dec. Dig. &wkey;360(2).]
    2. Evidence <&wkey;208(6), 263(4) — Admission — SuPEBSEDED PLEADINGS — ADMISSIBILITY.
    In an action for fraternal insurance, defendant’s original answer, containing admissions of relevant issues, was admissible, but open to explanation or contradiction like other admissions.
    [Ed. Note. — For other cases, see Evidence, Cent. Dig. §§ 118/719, 1026, 1027; Dec. Dig. &wkey;208(6), 263(4).]
    3. Insubance <&wkey;819(l) — Fraternal Insurance— Sufficiency of Evidence.
    In an action for fraternal benefit insurance, where it was undisputed that no certificate had been issued as provided by the constitution and by-laws, naming plaintiff beneficiary, and an admission that plaintiff had been so named in a defendant’s original answer being satisfactorily explained, evidence held insufficient to support a finding that plaintiff was named as beneficiary in the obligation when deceased joined the lodge.
    [Ed. Note. — For other eases, see Insurance, Cerit. Dig. § 2006; Dec. Dig. &wkey;819(l).]
    4. Insurance &wkey;>777 — Fraternal Insurance —Designation of Beneficiary.
    Where the constitution and by-laws of defendant fraternal insurance association provide for the appointment of beneficiaries by issuance of certificate, oral statements and declarations of the insured as to who would receive the benefit on her death are immaterial and irrelevant, and do not constitute a legal designation.
    [Ed. Note. — Eor other cases, see Insurance, Cent. Dig. § 1944; Dec. Dig. &wkey;777.]
    5. Insueance <&wkey;778 — Fraternal Insurance —Beneficiary—Statute.
    Under Rev. St. 1911, art. 4832, providing that the payment of death benefits shall be confined to wife, husband, relative by blood to fourth degree ascending or descending, or to a person dependent upon the member, that each member shall have right to change beneficiary, and that no beneficiary shall obtain a vested interest until payable on death of member, etc., and constitution and by-laws of defendant providing that order of beneficiaries shall be the wife, the husband, etc., or if unmarried and has named some other person, may, on becoming married, change the beneficiary to wife or husband, where no benefit certificate has ever been issued to a member, the payment of death benefits should be made to her husband, and a relative whom she had intended to make a beneficiary had no claim.
    [Ed. Note. — For other cases, see Insurance, Cent. Dig. § 1945; Dec. Dig. <&wkey;77S.]
    Appeal from Anderson County Court; E. -V. Swift, Judge. •
    4-Ction by Irene Browning and another against the Grand Lodge, United Brothers .of Friendship of Texas, and another. From a judgment for the plaintiffs against the named defendant, and against the defendant C. F. Carr on his cross-action, the defendant C. F. Carr appeals.
    Reversed and rendered for O. F. Carr on the cross-action.
    Kay & Seagler, of Palestine, for appellant. Funderburk & Strickland and E. T. McCain, all of Palestine, for appellees.
   WALTHALL, J.

Appellees, Irene Browning and husband, Thomas Browning, brought this suit in the county court at law of Anderson county against appellees, Grand Lodge, United Brothers of Friendship of Texas, and C. F. Carr, to recover of the Grand Lodge the sum of $400, alleged to be due appellees on a contract of insurance of Freddie L. Gardner, afterwards Freddie Gardner Carr, and to preclude said C. F. Carr in his claim for said insurance money.

The Grand Lodge answered, not denying the 'indebtedness, expressed a willingness to pay the sum claimed to the person or persons entitled to receive same, but that, by reason of the facts pleaded, was unable to decide as between Irene Browning and C. F. C’arr until their respective claims had been decided so as to protect the lodge from further liability. Appellant Carr answered urging general and special exceptions, and, by cross-action, asserted claim to the said sum of money. The opposing claims are substantially as follows;

Under the constitution and by-laws of the said Grand Lodge, constituting a part of the-contract of insurance, a designated beneficiary. i. e., one holding a benefit certificate, was an essential element; that the obligation in the insurance contract to pay the insurance money was contingent upon there being a designated beneficiary; when Freddie L. Gardner became a member of the subordinate lodge, it is the claim of the Brownings that she had issued to her a benefit certificate with Irene Browning named as beneficiary written therein; that if such benefit certificate with the name of Irene Browning as beneficiary was not in fact issued, the Grand Lodge recognized the existence and validity of the insurance contract by keeping accounts with the insured for dues and assessments paid, receipting for same and retaining said dues and assessments, and is estopped to deny the existence of such benefit certificate or that it was never in fact issued; that the laws of the Grand Lodge make provision that a member Being unmarried at the date of her membership and who, in her benefit certificate, may have named some person other than her husband, and who shall thereafter become married, may have her benefit certificate so changed as to designate her husband as her beneficiary, but unless such change shall be made during her lifetime, the amount due on her de&th shall be paid to the beneficiary named. Ap-pellees Browning claimed that no change was made in the benefit certificate of Freddie Gardner during her lifetime.

Appellant Carr alleges his marriage with Freddie L. Gardner and her subsequent death; denies that a benefit certificate was ever issued to her; denies that she ever designated any one as the beneficiary of her insurance; alleges that the constitution and by-laws of the Grand Lodge provide that the beneficiary under the insurance provision shall be her husband; that should it be found that Freddie Gardner did designate some one other than her husband, C. F. Carr as the Beneficiary of her insurance, then he alleges that before .her death, she went before the subordinate league of which she was a member, and in open session made the statement to the lodge that she wanted her insurance arranged so that it would be made payable to and go to her husband as her beneficiary, and that by so doing she designated her husband as her beneficiary; that from some cause not due to her negligence, she ’ did not get a benefit certificate, and died without ever having received one.

On special issues, the jury found: First. Irene Browning was named as beneficiary in the insurance obligation when Freddie Gardner (afterwards Freddie Carr) joined the lodge. Second. Upon her marriage to Carr, Freddie Gardner Carr did not change the beneficiary in the insurance obligation to Carr. Third. Freddie Gardner Carr complied, as near as possible, with the constitution and by-laws of the lodge in making Irene Browning beneficiary. Fourth. Freddie Gardner did not comply, as near as possible, witli the' constitution and by-laws of the lodge in changing the beneficiary from Irene Browning to O. E. Oarr.

Upon the above findings, the trial court entered judgment in favor of appellees Browning, and against the Grand Lodge, and against appellant on his cross-action. Erom the judgment, appellant Oarr alone prosecutes this appeal.

Appellant presents four assignments of error. The first ground of error is to the action of the court in overruling his motion to strike out the first three supplemental answers of the Grand Lodge, on the ground that in the preparation of said supplemental answers the lodge acted in collusion with the attorneys for the Brownings, and to his prejudice.

The bill of exceptions taken to the order of the court overruling his motion recites that the motion was filed “after all parties plaintiffs and defendants had announced ready for trial, and after all exceptions and objections to the pleadings had been argued and overruled by the court, and after a jury had been duly selected, impaneled, and sworn, and after the plaintiffs had rested their case on the pleadings.” We think the motion came too late. No reason is shown why the motion was not presented earlier. We do not pass upon the merits of the motion. Erwin v. City of Austin, 1 White & W. Civ. Cas. Ct. App. § 1037. The assignment is overruled.

Appellant’s second ground of error is directed to permitting the appellees Browning to introduce paragraph 4 of appellant’s original answer, reading: “Said defendant admits the facts as set out in paragraph No. 4 of plaintiff’s petition.” The paragraph alleged in substance that Ereddie L. Gardner contracted with the Grand Lodge that upon her death the lodge “would pay to Irene Browning the sum provided in the said constitution and laws of sáid order, subject to amendment of same, said plaintiff having been named as the beneficiary in said contract of insurance.” In this we think there was no error. The abandoned or superseded pleading is admissible, but open to explanation or contradiction like other admissions. As said by the Supreme Court in H. E. & W. T. Ry. Co. v. DeWalt, 96 Tex. 121, 70 S. W. 531, 97 Am. St. Rep. 877:

“It is sometimes the fact that allegations are made by the attorney drawing pleadings upon a misunderstanding of the facts and not by authority of the party, and this' of course may be shown. * * * We think that pleadings which have been filed in court in behalf of a party should be, prima facie at least, regarded as authorized by him, and admissible against him, where they admit facts relevant to the issue.”

Two relevant issues are referred to and admitted in the paragraph, viz. that a benefit certificate had been issued, and that Irene Browning was therein designated as beneficiary. Had there been no amended pleading, the court could not, properly, have heard evidence contradicting the admitted facts, and, but for the further fact pleaded, that Ered-die Gardner Carr had changed the beneficiary named, should have entered judgment without evidence in favor of appellees Browning. The assignment is overruled.

Appellant’s third ground of error we copy:

“The court erred in overruling the defendant C. F. Carr’s motion for a new trial, because the verdict and finding of the jury to special issue No. 1 of the court’s charge reading: ‘Was Irene Browning named as beneficiary in the insurance obligation when Freddie Gardner (afterwards Freddie Carr) joined the lodge?’ to which the jury answered ‘Yes,’ is not supported by the evidence, and is contrary to the evidence because the evidence is undisputed that there was no benefit certificate issued to said Ereddie L. Gardner naming the said Irene Browning as the beneficiary of her insurance; that the said Ereddie L. Gardner never did make application to the defendant company or one of its local lodges or temples for a benefit certificate, in favor of Irene Browning, but merely made some verbal declarations outside of the lodge meetings, and not in connection with the lodge work, that she wanted the said Irene Browning to have her insurance money in case of her death, and that these declarations were made before the said Ereddie L. Gardner married the said C..F. Carr; that the provisions of the constitution and by-laws of the defendant company which require the. insured to sign the insurance contract in the presence of the lodge or temple, and that the name of the beneficiary must be written in every benefit certificate issued, and that the insured must pay the sum of 50 cents in order to get the benefit certificate, were not complied with by the said Ereddie L. Gardner in attempting to name the said Irene Browning as her beneficiary.”

The fourth error assigned is:

“The court erred in rendering and entering judgment for the plaintiffs in this cause upon the answers of the jury to the special issues submitted to them by the court, for the reason that said judgment is not supported by the evidence and contrary to the law and the evidence herein, because the law of this state regulating fraternal insurance fixes the order of payment of benefits in the absence of a legal designation by the insured, and the husband is by law named first, and before cousin, in order in the designation by the statute; and the evidence in this ease is undisputed and shows the following: That the said defendant O. E. Oarr was the lawful husband of the said Freddie Gardner Carr at the time of her death; that the said Irene Browning was a cousin of the said Ereddie Gardner Carr; that the said Freddie Gardner Carr never did make application to the officers of the lodge or local temple for a benefit certificate naming Irene Browning as the beneficiary; that the said Ereddie Gardner Carr did, after her marriage to the said C. E. Carr, make application to the officers of the temple of which she was a member for a benefit certificate, naming her husband, the said C. F. Carr, as her beneficiary, and tendered the 50 cents fee for same; that there was not at any time a benefit certificate issued by said lodge to the said Ereddie Gardner Carr, naming any one as the beneficiary of her insurance; that the constitution and bylaws of the defendant company provide that the insurance money on the death of a member shall be paid to the person or persons named in the benefit certificate of the deceased member, or to such persons as in the constitution and by-laws of said order are designated beneficiaries and in the order named; that the husband is named first and before the cousin in order in the designation by the constitution and by-laws of defendant company of the ■order of beneficiaries; that the constitution and by-laws of defendant company provide that the contract of insurance of a member shall be signed by the insured in the presence of the lodge or temple before it shall be valid, and in force, and that the insured shall pay the lodge 50 cents for a benefit certificate before the same issues, and that said certificate shall be signed by the master and secretary of a lodge and the princess and secretary of a temple, and shall be forwarded to the Grand Secretary to be copied in bis book; that the last-named provision of the said constitution and by-laws were not complied with by the said Freddie Gardner Carr in her attempt to name the said Irene Browning the beneficiary of her insurance; that none of the other provisions of the constitution and by-laws of the defendant company were complied with by the said Freddie Gardner Carr in her attempt to name the said Irene Browning as her beneficiary. Under the above-•facts, the defendant C. F. Carr says that the plaintiffs were not entitled to recover herein as a matter of law.”

The third assignment challenges the sufficiency of the evidence to justify the submission to the jury of special issue No. -1 above set out. Article 1, § 2, of the constitution and by-laws of the Grand Lodge of the U. B. F. and S. M. T., in which order Freddie L. Gardner held her membership, provides:

“The object of this department shall be to create a fund for which * * * there shall be paid to the person or persons named in the member’s certificate of membership (which is here termed benefit certificate) as beneficiary or beneficiaries such sum or sums of money as may be ascertained by the board of managers under the provisions of article 3, § 2, of these' laws. The beneficiary or beneficiaries (except as stated in sections 3 to 8, inclusive, of this article) shall be the wife, the husband, etc. [naming' the order of beneficiaries].”

Continuing, the article and section provides:

“The name or names .of the beneficiary or beneficiaries shall be written in every benefit certificate issued.”

Article 2, § 1, provides:

“All members of the U. B. F. and S. M. T. in good standing in Texas jurisdiction shall be and are hereby made holders of certificates of membership in the Texas Mutual Aid Department of the U. B. F. and S. M. T. But no member can be considered in good standing until the sinking fund of fifty cents has been paid, and no policy will be issued until it is paid.”

Section 3 of the above article has reference to certificate stipulations, and provides:

“The following conditions shall be made a part _ of. every beneficiary, certificate and shall be binding on members, beneficiary or beneficiaries of this order: * * *
“Fifth. This certificate must be signed in the presence of- the lodge or temple by the insured before it shall be valid and in force.
“Sixth. Each member who joins after September 1, 1907, shall pay fifty cents ($.50) for policy or benefit.”

Article 3, § 4, provides:

“A member in good standing, being unmarried at the date of his or her membership, or at the date of his or her certificate, and who, in his, or her benefit certificate may have named, or designated some person or persons (other than the husband or the wife) as in section 2, art. 1, provided, and who thereafter shall become married, he or she may have his or her .benefit certificate so changed as to name and designate his wife or her husband as the beneficiary of his or her choice, and unless such change shall be made during the lifetime of the member, the amount so promised by this order shall be paid to the beneficiary or beneficiaries named, or to those entitled to the same by inheritance, as in these laws prescribed and. provided.”

The same section, continuing, prescribes that to effect the change the benefit certificate must be returned to the Grand Secretary with the desired change indorsed thereon and pay 25 cents, whereupon the old certificate would be canceled and a new one naming the new beneficiary inserted. We think we need not quote more of the constitution and by-laws of the order to show the view we entertain. It is quite clear that the Grand Lodge constitution and by-laws contemplate that a benefit certificate should be issued to the insured in which the beneficiary’s name should be inserted, and that if no certificate is issued, the amount of insurance due on the death of the insured would be paid as provided in article 2, § 1, above quoted, that, is to the wife, the husband, etc., in the order named. The jury found that Irene Browning was named as beneficiary in the obligation when Freddie Gardner joined the lodge. We find no evidence to support this finding. The issue as to whether any benefit certificate was ever issued to her at any time was not submitted to the jury. But assuming that the issue submitted necessarily included the finding that one was issued and that she was named as the beneficiary, what evidence supports the finding?

Julia McClelland had been princess of the local temple for ten years, including the time when Freddie Gardner joined the order and held her membership. She states, among other things, that:

“There never was a certificate issued to Freddie Gardner. So far as I know she never called for a certificate before she married C. F. Carr. Yes, we bad plenty of certificates at the time she joined.”

. Witness talked with her both before and after her marriage as to who would be her beneficiary. Before her marriage her intention was to make Irene Browning the beneficiary, and after marriage she expressed her wish in the open session of the lodge to make her husband her beneficiary. At that time the lodge had no blank certificates, and never had "any previous to her death.

Estella Neely, the recording secretary of the local temple, was a member when Freddie Gardner joined and during her membership. She said:

“Freddie Gardner never did have a benefit certificate issued to her. * * * I never did hear her say whom she wanted as her beneficiary until after she married. The first time I heard her say anything about her beneficiary was on the 20th day of July, 1914, when she came before the lodge and stated that she wanted her husband, C. F. Carr, to be her beneficiary. The reason we did not make out a certificate then was because we did not have any blank certificates at that time; they had not come. The next time she mentioned her beneficiary to me was some time after that, I think the next lodge day; she came to me at the foot of the stairs which lead up to the lodge room and handed me 50 cents, and told me to get her a certificate and fix it up with her husband as beneficiary. We had no lodge meeting that night, and I handed her back the 50 cents. I told her that as soon as the certificates came I would let her know. Freddie Gardner died November 9, 1914, and at the time of her death she had no certificate; I never spoke to her again about it after she offered me the 50 cents because the blank certificates never came, and we have never yet received them.”

Irene Browning testified:

“I knew Freddie L. Gardner during her lifetime. She was my cousin. * * * Yes, Freddie told me before she joined the order that she was going to make me her beneficiary. She also told me after she joined that she had made me her beneficiary. She often told me that I would get her insurance money in case she should die. No, she never did have a benefit certificate. * * * No, I am not a member of that lodge. No, Freddie did not have a certificate in which I was named as beneficiary.”

Thomas Browning testified:

“I heard Freddie Gardner say several times that she had made Irene her beneficiary.”

Paragraph 4 of plaintiff’s original answer, quoted and discussed under a former assignment, was offered as an admission or declaration of the fact there stated. The evidence in explanation of the admission, we think quite sufficient to destroy the probative force of the admission. From the evidence quoted above, and that was all the evidence offered on the issue as to whether a benefit certificate was ever issued to Freddie L. Gardner Carr before and after her marriage, we necessarily conclude that a benefit certificate was never issued to Freddie Gardner in which Irene Browning was named as beneficiary. If it could be said that a parol declaration of a member of a fraternal beneficiary association indicating the name of the desired beneficiary is sufficient, it would also be true that the name of that beneficiary could, in like manner, be changed and another be substituted, and by such methods the constitution and bylaws of the organization would be set at naught, and the association could never know to whom it would owe the insurance benefit. Unless the matter is controlled by the statute of this state hereinafter referred to, it might be', as said by the Appellate Court of Illinois, in Royal League v. Kolin, 169 Ill. App. 646, it was within the power of Freddie Gardner to have named Irene Browning as beneficiary, and to have made a new designation as her benefic-iary if she had chosen to do so. But this she neglected and failed to do. The statements which she is shown to have made as to who would receive the benefit upon her death were immaterial and irrelevant, and cannot be considered in determining the beneficiary. Such parol declarations do not constitute a legal designation of the fund, made in the manner provided therefor in the laws of the order. Grand Lodge, A. O. U. W., v. Edwards et al., 111 Me. 359, 89 Atl. 147.

It is our opinion that in the absence of any benefit certificate, the payment of the death benefits should be made to appellant, as provided by the laws of the order above quoted and article 4832, Revised Civil Statutes of this state, 1911. That article provides:

“The payment of death benefits shall be confined to wife, husband, relative by blood to the fourth degree ascending or descending, * * * or a person or persons dependent upon the member: Provided, that, if after the issuance of the original certificate the member shall become dependent upon the charity of an individual or of an institution, he shall have the privilege with the consent of the association, to make such individual or institution his beneficiary. Within the above restrictions, each member shall have the right to designate his beneficiary, and, from time to time, have the same changed in accordance with the laws, rules or regulations of the association; and no beneficiary shall have or obtain any vested interest in the said benefit until the same has become due and payable upon the death of * * * said member: Provided, that any association may, by its laws, limit the scope of beneficiaries within the above classes.” Grand Lodge, etc., v. Mackey, 104 S. W. 907.

The assignments 3 and 4 are sustained, and the case is reversed and here rendered for appellant on his cross-action.
      <&wkey;For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

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


author: McMEANS, J.

text:
    OVERTON v. FIRST TEXAS STATE INS. CO.
    (No. 7236.)

    (Court of Civil Appeals of Texas. Galveston.
    Oct. 31, 1916.
    Rehearing Denied Nov. 23, 1916.)
    1. Principa!, and Agent <&wkey;124(3) — Liabilities to Third Persons — Action—Direction of Verdict.
    In an action by a subscriber for stock of an insurance company to recover the amount paid for the stock with interest, pursuant to a contract alleged by the plaintiff to have been made by the stockbroker who sold the stock, where there was no proof of -the broker’s authority to make a contract for the return of the price, except the introduction in evidence of the answer, alleging that the agent was not the agent of defendant authorized to make such an agreement, and that the agent sold the stock in question to plaintiff, and plaintiff signed the written agreement of purchase, and this contract was submitted to defendant and accepted by it, and filed by it, a verdict was properly directed for defendant.
    [Ed. Note. — For other cases, see Principal and Agent, Gent. Dig. § 724; Dec. Dig. <&wkey;>124(3).]
    2. Principal and Agent <&wkey;119(l), 148(1)— Liabilities to Third Persons — Authority of Agent — Burden oe Prooe. ,

    A party, dealing with an agent, is bound at his peril to ascertain, not only the fact of the agency, but the extent of the agent’s powers, and in case either is controverted, the burden is upon him to establish it.
    [Ed. Note. — For other cases, see Principal and Agent, Gent. Dig. §§ 391, 393, 398, 399, 401, 534, 552; Dec. Dig. &wkey;119(l), 148(1).]
    3. Principal and Agent <&wkey;101(l) — Liability of Third Persons — Authority of Agent — Apparent Authority.
    In the absence of facts or circumstances known to a party dealing with an agent on which he relied and- which tended to show that the agent was clothed with the apparent authority to make the contract in question, the doctrine of apparent authority to make the contract does not apply.
    [Ed. Note. — For other cases, see Principal and Agent, Cent. Dig. §§ 255, 330, 346; Dec. Dig. <&wkey;101(l).]
    Appeal from District Court, Harris County; J. W. Woods, Special Judge.
    Action by T. V. Overton against the First Texas State Insurance Company. From a judgment for defendant, plaintiff appeals.
    Affirmed.
    Atkinson, Graham & Atkinson, of Houston, for appellant. Baker, Botts, Parker & Gar-wood and J. C. Townes, Jr., all of Houston, for appellee.

      Application for writ of error pending in Supreme Court.

   McMEANS, J.

On June 21, 1011, appellant, Overton, subscribed for five shares of the capital stock of the appellee First Texas State Insurance Company, and paid $250 in cash, and agreed to make five additional payments of $150 each, making a total of $1,000. The subscription contract was in writing, and was obtained by a stockbroker named Christian, who was authorized by appellee to sell its stock. The subscription contract was forwarded to the appellee and accepted» by it on June 30, 1911. Thereafter appellant made the additional payments as agreed, and became the owner of the stock. Thereafter appellant filed this suit against the Insurance company, alleging in effect that Christian, who sold him the stock, agreed that if he, the appellant, became dissatisfied with his-purchase, the company would repay to him the amount he had paid therefor at any time after one year from the date of the contract, with interest thereon at the rate of 10 per cent, per annum. He further alleged that after one year from the date of the contract he had become dissatisfied with his purchase, and had tendered the stock to the company, and demanded of it the sum he had paid therefor, and interest, and that this demand had been refused. He further alleged, in substance, that he relied on the statements made by Christian, and believed them to be true, and believed that the insurance company would repurchase the stock in the contingency mentioned, and that had he not so believed, he would not have purchased the stock, and would not have paid therefor. He further alleged that when the insurance company, through Christian, made such representations to him, it had no intention of carrying them -out, hut made the representations with the fraudulent purpose of obtaining the appellant’s money. He tendered the stock to appellee, and prayed for a recovery against appellee for $1,000 and 10 per cent, per an-num interest thereon. Appellee answered, denying that it or any person authorized to act for it had made any contract with the appellant to repurchase the stock in question as alleged by appellant, and denying that the contract sued on was made by it or its duly authorized agent. It further denied that it, or any agent authorized to represent it, was guilty of any fraud or improper conduct in dealing with the appellant. Pleading its defense affirmatively appellee alleged:

“In 1911 a majority of the stockholders of this insurance company authorized an increase of the capital stock of the company. That the plaintiff, T. V. Overton, subscribed for five shares of the new or increased capital stock of the company at the rate of $200 per share, or a total of $1,000. Said subscription and agreement to purchase said five shares of stock were embraced in a written contract dated June 21, 1911, the original of which contract will be introduced upon a trial of this case. That the entire agreements between the parties to this suit were embraced in said written -contract. Hr. Christian (whom the plaintiff claims was an agent of the defendant company) was not the agent of the defendant, duly authorized to make any promise or statement such as the plaintiff contends for and had no authority whatever from the defendant to make any agreement with the plaintiff, by the terms, of which the defendant should repurchase the stock with interest. That said Christian was a stockbroker, and was not authorized by the defendant to sell this or any stock upon the terms and conditions that the plaintiff has alleged. That said Christian sold the stock in question to the plaintiff, and the plaintiff signed the written agreement or contract with reference to the stock hereinabove mentioned, and' this contract was submitted to the defendant and accepted by it and signed by it. Said written contract contains none of the agreements and stipulations now contended for by plaintiff, and this defendant had no knowledge and no notice of any such promises or agreements, if they were made (which is not admitted, but 'denied), and this defendant issued the stock to the plaintiff, relying upon said written contract.”

After appellant had introduced all Ms evidence and rested his case, the appellee moved the court to strike out and exclude all the .testimony offered by him, which was grantéd, whereupon the court peremptorily instructed the jury, selected to try the case, to return a verdict for the appellee, wMch was done, and thereupon a .judgment was accordingly entered for appellee, from which the appellant, Overton, has appealed.

' All of appellant’s assignments, of error complain of the action of the court in excluding the evidence offered by him and in instructing a verdict for the appellee. The evidence excluded was the testimony of appellant and that of his witness, Ned Jame-son. Appellant testified:

“When Christian offered the stock to me, I told him I knew nothing about such stuff as that, such as investing in insurance companies, and he said that stock, it was not going to be reissued, would not be reissued, and that if I was dissatisfied with the stock after I had paid for it, then one year afterwards that he would— that the company would — return the money paid in and take up the stock, with 10 per cent, interest.”

He further testified:

“When Christian made the promise to me that I have detailed about getting my money back, I believed it. I would not have taken that stock and paid that money.”

The witness Ned Jameson testified that he was- present and heard the conversation between Overton and Christian, and .heard Christian tell Overton that if he was not satisfied, with the company in 12 months, he could draw his money out and get 8 per cent, interest thereon, and, further, that Christian made the same proposition to witness on the same day he made it to Overton.

As showing the authority of Christian to make the contract sued on, the appellant introduced in evidence a part of the answer of appellee. The portion of the answer relating to the authority of Christian is as follows:

“Mr. Christian (whom the plaintiff claims was an agent of the defendant company) was not the agent of the defendant, duly authorized to make any promise or statement such as the plaintiff contends for, and had no authority whatever from the defendant to make any agreement with the plaintiff, by the terms of which the defendant should repurchase the stock with interest; that said Christian was a stockbroker, and was not authorized by the defendant to sell this pr any stock upon the terms and conditions that the plaintiff has alleged; that said Christian sold the stock in question to the plaintiff, and the plaintiff signed the written agreement or contract with reference to the stock hereinabove mentioned, and this contract was submitted to the defendant and accepted by it and signed by it.”

No effort was made by appellant to prove that Christian had authority from the appellee to make a contract binding it to repay to the appellant the amount he had paid for the stock, and interest, other than by the recitals in the answer above copied, and no proof was adduced to show that the appellee at the time it received the payments for, and issued, the stock, had any notice or knowledge that Christian had made representations in the regard alleged by appellant.

In view of the state of the proof we think the court properly instructed a verdict in favor of the appellee, and if an error was otherwise committed in excluding the testimony referred to, it was, we think, wholly immaterial.

A party dealing with an agent is bound, at his peril, to ascertain, not only the fact of the agency, but the extent of the agent’s powers, and in case either is controverted, the burden of proof is upon him to establish it. Baker v. Machinery Co., 84 S. W. 661; Morton v. Morris, 27 Tex. Civ. App. 262, 66 S. W. 97; Story, Ag. 210, 211; Connor v. Bank, 166 S. W. 1092. The authority of the agent, Christian, to make a contract with Overton, binding the company to repurchase the stock was denied by the appellee, and the only proof of such agency offered by appellant was that part of the appellee’s answer which showed that Christian had no such authority. Again, there was no proof to authorize the application of the doctrine of apparent authority of Christian to make the contract, which doctrine is founded on the law of estoppel, because there was no proof of facts or circumstances known by Overton, and upon which he relied, that tended to show that Christian was clothed with the apparent authority to make the contract in question. As said in Cleveland v. Houston Sporting Goods Store, 166 S. W. 912:

“The doctrine in relation to agency by estop-pel does not apply unless the person dealing with the pretended agent and invoking the doctrine relied upon was misled by his apparent authority, or, in other words, unless he -was misled by the representation or conduct of the alleged principal. He must have been actually misled and induced to act to his prejudice by reason of the principal’s conduct; he having on his part exercised due diligence to ascertain the truth. Clark & Skyles, Agency, p. 149.”

In consideration of the foregoing we have concluded that the court did not err in giving the peremptory instruction complained of, and the judgment of the court below ia therefore affirmed.

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