text:
    ELDRIDGE v. CITIZENS’ RY. CO. et al.
    (No. 5337.)
    (Court of Civil Appeals of Texas. Austin.
    May 13, 1914.
    On Motion for Rehearing, June 17, 1914.)
    1. Master and Servant (§ 88) — Injury to Servant — Existence of Relation — Who are.
    One whom defendant’s vice principal requested to assist in work on defendant’s premises is not a mere licensee, and defendant owes him a higher duty than that of not merely intentionally injuring him.
    LEd. Note. — For other cases, see Master and Servant, Cent. Dig. §§ 144-151; Dec. Dig. § 88.]
    2. Trial (§ 273) — Instructions to Jury-Time for Objections.
    Under the direct provisions of Acts 33d Leg. c. 59, amending Rev. St. 1911, arts. 1954, 1970, and 1971, objections to instructions are waived when not made before the charge is read to the jury. .
    [Ed. Note. — For other cases, see Trial, Cent. Dig. §§ 680-682; Dec. Dig. § 273.]
    3. Appeal and Error (§ 232) — Presentation of Ground of Review in Court Below — Sufficiency of Objection.
    In a personal injury action, where plaintiff sought to set aside a release, an objection to the charge, on the ground that it did not sufficiently define what fraud would be necessary to justify the .jury in disregarding the release, is not, on appeal, sufficient to sustain a proposition under the assignment, complaining of the overruling of the objection, that it was not necessary that active and intentional fraud should have been perpetrated upon plaintiff before he would be entitled to avoid the release; and, the charge not being fundamentally erroneous, the assignment complaining of the overruling of the objection must be denied.
    [Ed. Note. — For other cases, see Appeal and Error, Cent. Dig. §§ 1351, 1368, 1426, 1430, 1431; Dec. Dig. § 232.]
    4. Appeal and Error (§ 233) — Presentation of Grounds of Review in Court Below — Manner.
    Objections to the giving of erroneous charges cannot be made by the medium of special requests, though if special requests are erroneously refused, error may be predicated thereon.
    [Ed. Note. — For other cases, see Appeal and Error, Cent. Dig. § 192; Dec. Dig. § 233.]
    5. Trial (§ 252) — Instructions — Applicability to Evidence.
    Where plaintiff, who though not regularly employed by defendant was employed by a subsidiary company controlled by defendant, was injured in performing a service at the request of defendant’s foreman, a charge that if plaintiff was not an employé of defendant, verdict should be for defendant was erroneous, tending to mislead the jury into believing that if plaintiff was not a regular employé of defendant, there could be no recovery, notwithstanding the fact that if defendant’s foreman was entitled to demand plaintiff’s assistance, the relation of master and servant existed, though plaintiff did not expect to receive compensation for such small assistance.
    [Ed. Note. — For other eases, see Trial, Cent. Dig. §§ 505, 596-612; Dec. Dig. § 252.]
    6. Trial (§ 252) — Instructions — Applicability to Evidence.
    In an action for personal injury to plaintiff while performing a service in the barn in which he was_ required by his immediate master to deposit his tools, etc., a charge which referred to his loitering about the barn was improper, though the barn belonged to defendant.
    [Ed. Note. — For other cases, see Trial, Cent. Dig. §§ 505, 596-612; Dec. Dig. § 252.]
    7. Master and Servant (§ 88) — Injury to Servant — Relation of Parties — Request of Master’s Agent — Authority of Agent.
    A vice principal of a corporation who was authorized to move the corporation’s tower car may request assistance, and his request to third persons renders the corporation liable for any negligence in moving the car.
    [Ed. Note. — For other cases, see Master and Servant, Cent. Dig. §§ 144-151; Dec. Dig. § 88.]
    8. Master and Servant (§§ 101, 102) — Injuries to Servant — Safe Place of Work.
    No matter how temporary an employment is, it is the duty of the master to furnish his servant with a safe place to work.
    [Ed. Note. — For other cases, see Master and Servant, Cent. Dig. §§ 135, 171, 174, 178-184, 192; Dec. Dig. §§ 101, 102.]
    9. Master and Servant (§ 153) — Injuries to Servant — Duty to Warn.
    When an inexperienced servant is required to perform a duty with machinery to which he is not accustomed, it is the duty of the master to warn him of the dangers.
    [Ed. Note. — For other cases, see Master and Servant, Cent. Dig. §§ 314-317; Dec. Dig. § 153.]

      On Rehearing.
    10. Appeal and Error (§ 768) — Bk'iefs — Failure to Controvert.
    Where statements in appellant’s brief are not controverted by appellee’s brief, the appellate court is justified, under rule’ 41 (142 S. W. xiv), in accepting appellant’s version as true.
    [Ed. Note. — For other cases, see Appeal and Error, Cent. Dig. § 3103; Dec. Dig. § 768.]
    Appeal from District Court, McLennan County; Tom L. McCullough, Judge.
    Action by C. H. Eldridge against the Citizens’ Railway Company and others. From a judgment for defendants, plaintiff appeals.
    Reversed and remanded.
    Williams & Williams, of Waco, for appellant. Spell & Sanford and W. W. Ñaman, all of Waco, for appellees.

       For other cases see same topic and section NUMBER in Dec. Dig. & Am. Dig. Key-No. Series & Rep’r Indexes

       For other cases see same topic and section NUMBER in Dec. Dig. & Am. Dig Key-No. Series & P„ep’r.Indexes

   Findings of Fact.

JENKINS, J.

Appellant was engaged in the erection of poles and electric wires as his regular employment for the Waco Gas Company. Appellee was engaged in the operation of a street railway, and also furnished electric light to the city of Waco, and to different power plants and to the Waco Gas Company. The appellee and the Waco Gas Company were owned largely by the same parties, the general manager of one being the general manager of the other, the pay rolls of each being paid at the same time and place, the office force of one being the office force of the other. Appellant kept his tools in the barn where he was injured, also his wagon and team. The washrooms, dressing rooms, and drinking water of appellee were kept in said barn. P. A. Hall was the foreman and vice principal of appellee, and requested appellant to assist in pushing a tower car, which belonged to appellee, onto a carrier car and to transport the tower car to a track in the car barn. While standing on the carrier car and holding the tower car, appellant’s foot was caught between the ends of the rails of the carrier car and the rails on the floor of the car barn, and was mashed. Appellee’s surgeon stated to appellant that the injury was not serious, and that he would be able to go to work within a couple of weeks, and thereupon appellant, in consideration of the sum of $36,' paid to him by appellee, released appellee from all claim for damages. Instead of his foot getting well within two weeks, within that time the surgeon amputated it. Appellant did not know of the danger to which he was exposed in assisting Hall in the work. Hall knew of such danger, or could have known the same by the exercise of ordinary care. Verdict and judgment went in favor of appellees, from which this appeal is taken.

Opinion.

Appellant assigns error upon that portion of the charge of the court with reference to the duty owed to a licensee; said charge being that “the defendant owed to the plaintiff, as such, licensee the duty of not intentionally injuring him.” Said charge was erroneous under the facts of this case. Appellant was requested by appellee to assist in the work in the performance of which he was injured and appellee owed a higher duty than this to appellant. Railway Co. v. Reasor, 28 Tex. Civ. App. 302, 68 S. W. 332; Railway Co. v. Morgan, 92 Tex. 103, 46 S. W. 28; Hamilton v. Railway Co., 64 Tex. 253, 53 Am. Rep. 756. But, notwithstanding that this charge was erroneous, appellant’s assignment thereon must be overruled for the reason that no objection was made thereto by appellant before the same was read to the jury, and not thereafter until he filed his motion for a new trial. General Laws 33d Leg. ch. 59, p. 113, provide:

“Article 1954. Before the beginning of the argument, the court shall read to the jury the charges and instructions, if any, under the provisions of this title relating thereto.”
“Article 1970. In all civil cases the judge shall, unless the same be expressly waived by the parties to the suit, prepare and in open court, deliver a written charge to the jury on the law of the case, or submit issues of fact to the jury if said case is submitted to the jury on special issue of fact, at the time, in the manner and subject to the restrictions hereafter provided, provided that failure of the court to give reasonable time to the parties or their attorneys for examination of the charge shall be reviewable upon repeal [appeal] upon proper exception.
“Article 1971. The charge shall be in writing and signed by the judge; after the evidence has been concluded the charge shall be submitted to the respective parties or their attorneys for inspection and a reasonable time given. them in which to examine it and present objections thereto, which objections shall in every instance be presented to the court before the charge is read to the jury, and all objections not so made and presented shall be considered as waived.”

The object of this law was to secure, if possible, a correct charge in the trial court. To this end the judge is required to submit his charge to counsel in the case, and counsel are required to present their objections, if any, to the same. Under our former procedure in this state, attorneys in a case sometimes “laid for” the judge, in that if they discovered an error in the charge they said nothing about it, but took their chances on a favorable verdict, notwithstanding the error, relying upon such error, in case they should lose, as grounds for a néw trial. The amendment to the statute above set out requires attorneys to do what in fact they ought always to do, and that is to assist the court in trying the case according to law. While it may happen that attorneys do not make objections to the charge for the reason that at the time such objections do not occur to them, which they might discover before filing a motion for a new trial, yet that is-their misfortune. We think the amendment a wise one, and that it ought to be strictly enforced.

We overrule appellant’s second assignment of error, for the reason that the objection made by appellant to the charge complained of does not sustain the proposition which he makes under his assignment. The objection filed with the court was that:

“The plaintiff excepts to section 6 of the court’s main charge, because the same does not sufficiently and properly define what fraud would be necessary to justify the jury in disregarding the release in evidence.”

The propositions submitted under the assignment are that the court should have defined the meaning of the word “fraud,” and that it is not necessary that active and intentional fraud should have been perpetrated upon appellant by appellee before he would be entitled to avoid the release. The second proposition is sound, but there was no affirmative error in the charge given by the court, and it was not objected to said charge that it prevented appellant’s recovery unless there was active and intentional fraud. The charge was erroneous in this respect (Railway Company v. Brown, 69 S. W. 651; Railway Company v. Reno, 146 S. W. 221; Railway Company v. Huyett, 89 S. W. 1118; Pendarvis v. Gray, 41 Tex. 329); but the error was not pointed out in the objections filed by appellant.

Appellant insists that the error was pointed out by special charge No. 6, requested by him. We do not think that the objections to the charge of the court under the statute can be made through the medium of special charges. If a special charge is erroneously refused, error may be assigned upon the same, as is done in this case.

Appellant assigns error upon special charge No. 9, given at the request of appellee as follows:

. “Gentlemen of the jury, you are charged that if you believe from the evidence that the plaintiff was not an employe of the Citizens’ Railway Company at the time of receiving the injury complained of, you will find for the defendants and so say by your verdict.”

This charge is erroneous if the word “employe” was understood by the jury in its ordinary sense. Eason v. Railway Co., 65 Tex. 579, 57 Am. Rep. 606; Railway Co. v. Webb, 31 Tex. Civ. App. 498, 72 S. W. 1044. We think the jury, under the facts of this case, were misled by this charge. Appellant was not regularly in the employ of ap-pellee, but was regularly employed by the gas company as a lineman. He had entered the barn where he kept his tools, and was requested by the foreman and vice principal of appellee to assist him in moving the tower car. For this service he was not paid, and was not expecting to be paid. Appellant alleged that he was regularly employed as a lineman by appellee. There was an issue of fact as to whether his permanent employment was by appellee or the gas company; and, under all the circumstances, the jury doubtless understood the court to instruct them that appellant could not recover if they should find that his regular employ-, ment was by the gas company and not by the Citizens’ Railway Company. Appellee insists that if Hall was authorized to request appellant to assist him, then the relation of master and servant existed between appellant and appellee, and that appellant was the employe of appellee in performing the particular work. This is true, and for this very reason, the charge given was misleading. We do not think that this error was cured, either by the general charge or any of the special charges that were given.

Appellant assigns error upon special charge No. 10 given at the request of appellees as follows:

“Gentlemen of the jury, you are charged that if you believe from the evidence that' the plaintiff, while loitering at defendant’s car barn in the city of Waco, on November 30, 1909, was requested by said P. A. Hall to assist in moving the said carrier ear and tower car in question; and you further believe from the evidence that at the time the said P. A. Hall was without authority to make such request of the plaintiff for the defendant Citizens’ Railway Company, or any of the defendants, and that such want of authority was known to the plaintiff, or could have been known by the use of ordinary care upon his part, you are charged that plaintiff, under such circumstances, would be a volunteer, and that the defendants owed him no duty other than to not willfully injure him; and if you believe from the evidence that said P. A. Hall was without authority to make the request of plaintiff, under the circumstances above mentioned, you are charged to find for the defendant, notwithstanding you may believe from the evidence that the plaintiff received the injuries complained of.”

There was no occasion to refer to the plaintiff as “loitering” about the barn. He was there in the line of his duty. There was error in submitting to the jury the. issue as to whether Hall had authority to request the plaintiff to assist in moving the tower car. The undisputed evidence shows that Hall was the vice principal of the Citizens’ Railway Company, and that it was within the scope of his duty to move the tower car, and therefore he had authority to request plaintiff to assist him in said work.

We also sustain appellant’s assignment of error as to special charge No. 13, given at the request of appellee, as follows:

“Gentlemen of the jury, you are further instructed that defendant did not owe plaintiff the duty to provide a safe place in which to work, except when plaintiff was engaged in doing the work required of him in the line of his employment. Therefore, if you find from the evidence that at the time plaintiff was injured, he was not engaged in doing the work required of him in the line of his employment, then the defendant was not obligated, under the law, to provide a safe place for plaintiff to work in while doing the work he was engaged in at the time he was injured.”

As above stated, the regular line of appellant’s employment was erecting poles and wires; but, it matters not how temporary his employment was, the appellee owed him the duty, if he was its employé, to furnish him a safe place in which to work.

We also sustain appellant’s assignment as to the action of’ the court in refusing to give special charge No. 6. Said charge clearly presents the law with reference to the duty of the foreman' Hail to warn appellant as to the danger of riding upon the carrier car at the time he was injured. Appellant had not theretofore been employed in this business, and the evidence indicates that he was inexperienced as to the machinery, and did not know its danger, and that Hall did know of such danger, or could have known of the same by the exercise of ordinary diligence.

For the reasons stated, the judgment of the trial court is reversed, and this cause is remanded for a new trial in accordance with this opinion,

Reversed and remanded.

On Motion for Rehearing.

Appellee in its motion for rehearing alleges that we were in error as to some of our findings of fact, and cites testimony from the record tending to support its contention in this regard. This testimony was not referred to in appellee’s brief. Our conclusions were based on statements in appellant’s brief which were not controverted in the appellee’s brief, and therefore we assumed that they were correct, as we were authorized to do under rule 41 (142 S. W. xiv) for the government of the Courts of Civil Appeals. But as we think that in any event this ease should be reversed and remanded on account of errors in the court’s charge, our findings of fact are immaterial. The case will be tried upon the testimony adduced, upon another trial, and not upon the facts established in the former trial.

The motion for rehearing is overruled.


source: Caselaw Access Project

author: RICE, J.

license: Public Domain

text:
    ROTAN GROCERY CO. et al. v. PATE.
    (No. 5360.)
    (Court of Civil Appeals of Texas. Austin.
    May 27, 1914.
    Rehearing Denied July 1, 1914.)
    Executors and Administrators (§ 154) — Necessity of Administration — Community Property — Sale by Widow — Recovery by Administratrix.
    Rev. St. 1911, art. 3235, provides that on the issue of letters testamentary or of administration, the representative shall be entitled to the possession of the estate as it existed at the death of the testator or intestate, with certain exceptions, and it shall be the representative’s duty to recover possession and hold the estate in trust to be disposed of according to law. Held, that where a husband died leaving certain community property, debts of various classes, which had been established as valid claims against his estate, and certain children with no property in their own right, the fact that his widow, as survivor of the community, was entitled to sell the community property to pay community debts, and that she made an assignment of community property in which her husband was interested at the time of his death, for the benefit of «.’editors, did not bar her right as administratrix to recover the property from the assignee and his vendee, for the purpose of administration according to law.
    [Ed. Note. — For other cases, see Executors and Administrators, Cent. Dig. §§ 263-275; Dec. Dig. § 154.]
    Appeal from District Court, McLennan County; Tom L. McCullough, Jhidge.
    Action by Mrs. Eppie Pate, as administratrix, etc., of the estate of W. W. Pate, deceased, against the Rotan Grocery Company and others. Judgment for' plaintiff, and defendants appeal.
    Affirmed.
    J. D. Williamson, of Waco, for appellants. J. N. Gallagher and Sam E. Stratton, both of Waco, for appellee.

       For other cases see same topic and section NUMBER in Dec. Dig. & Am. Dig. Key-No. Series & Rep’r Indexes

   RICE, J.

The appellee, Mrs. Eppie Pate, is the surviving widow of W. W. Pate, deceased, who died intestate in McLennan county on or about October 18, 1912, leaving surviving him his said widow and five minor children. At the time of and prior to his death he was conducting a general mercantile business at Hoehn in said county, where he resided with his family; and, though possessed of considerable property, all of which was community estate between himself and his said wife, it appears that his estate was largely indebted and in fact insolvent. Shortly after his death, on to wit, October 22,1912, his said wife, Mrs. Eppie Pate, made the following conveyance to the Rotan Grocery Company, viz.:

“The State of Texas, County of McLennan.
“Know all men by these presents: That for and in consideration of one dollar, in hand paid by the Rotan Grocery Company of Waco, Texas, the receipt of which is hereby acknowledged, and the further consideration of their agreement to take charge of the business of W. W. Pate, deceased, and wind it up as expeditiously as possible, converting everything pertaining to said estate or business into cash, for the pro rata benefit of all creditors, share and share alike, without any preference whatever, I do hereby bargain, sell and convey unto the said the Rotan Grocery Company my entire mercantile business at Hoehn, Texas; said business consisting of a stock of general merchandise, such as dry goods, groceries, hardware, notions, etc. All notes not heretofore hypothecated, all books, accounts, fixtures, etc. Also 269 bales of cotton subject to the claim of the Leroy Bank; also my equity in all notes which have been hypothecated; also 100 acres of land in Runnels county, Texas. Title to said stock of merchandise, fixtures, notes and accounts and 100 acres of land; also the 260 bales of cotton. 1 will warrant and defend against the lawful claims of all persons whomsoever claiming or to claim the same or any part thereof.
“Witness my hand this 22nd day of October, 1912. [Signed] Eppie Pate.
“Witnesses:
“C. L. Dickson.
“W. L. Dugger.
“D. T. Janes.”

After the execution of said instrument, the Rotan Grocery Company immediately took possession of said stock of goods and fixtures, which inventoried $3,695, and sold the same to its codefendant, Adolph Fricke, at 90 cents on the dollar of invoice value, aggregating $3,325, which was the reasonable market value thereof, .and which sum said Rotan Grocery Company received in cash and now has on hand. That on the 6th of January next thereafter, appe’lre was duly appointed administratrix of said estate by the county court of McLennan county, and qualified as such, and subsequently, after demand on appellants for and refusal on their part to deliver said property, brought this suit against them to reeoyer possession thereof, alleging that said property was necessary for the purposes of administration, and that said probate court had ordered her to demand possession thereof, and, in the event of refusal to bring suit therefor. That her homestead was incumbered. That there was not on hand at the time of the death of her husband all the property exempt by law to families of deceased persons. That it will be necessary to make an allowance out of the estate of the deceased in lieu of such exempt articles, and that it will be necessary for the probate court to set aside an allowance for the support and maintenance of said surviving wife and minor children. The Rotan Grocery Company, after special exception and general denial, sought to defeat recovery by reason of said conveyance of said property to it by Mrs. Pate; and Fricke, after adopting the answer of the Rotan Grocery Company, further pleaded that in the purchase of said stock of goods, wares, and merchandise by him from that company he had consulted with Mrs. Pate, had conferred with her about the rental value of the store in which the goods were situated, and she concurred in and agreed to such sale to him, and before his purchase agreed to rent him the storehouse in which the goods were situated, and thereafter did so, and that by reason thereof she was estopped from alleging a conversion of said stock of goods by him; that in the event he should be held liable for such conversion, then he prayed judgment over against his eodefendant, the Rotan Grocery Company in like amount. Appellee filed a general demurrer, which was overruled, and a number of special exceptions to defendants’ .answers, all based upon the theory that the conveyance made by her to the Ro-tan Grocery Company on October 22, 1912, for the benefit of the creditors of her deceased husband, was rendered void by her appointment and qualification as administra-trix of said estate, and that in any event she was entitled to possession of said property for administration under the orders of the probate court of McLennan county, which exceptions were sustained. A jury being waived, judgment was. rendered in favor of appellee against the Rotan Grocery Company and Adolph Fricke in the sum of $3,325, with interest thereon from February 10, 1913, at 6 per cent. It was further adjudged that the defendant Fricke have and recover of and from his codefendant the Rotan Grocery Company judgment for said sum of $3,325, from which judgment both, the Rotan Grocery Company and Fricke have appealed to this court.

It was shown that there had been duly presented to the administratrix, allowed, approved, and established by the probate court, as claims against the estate of the deceased, the following: First-class claims, amounting to $531, third-class claims, $1,250, which was a vendor’s lien note on 100 acres of land belonging to the estate, and $2,700, which was a vendor’s lien on the homestead, the reasonable value of said homestead in excess of said indebtedness being $1,800, also fourth-class claims, amounting to $600. It was further shown that no allowance had been fixed by the probate court for expenses of administration. None of said approved claims had been paid. The surviving widow was shown to have property in her own right, and was not entitled to an allowance for a year’s support, but that the minor children had no property in their own right, and there were several items of exempt property allowed to families of deceased persons not found on hand in kind among the property of the estate.

By the first assignment it is insisted that the court erred in its judgment because under the laws of this state the survivor of the community can transfer or sell community property to pay community debts, and the probate court cannot acquire jurisdiction over or right to administer such property so sold and conveyed by thereafter granting administration on the community estate of such decedent. And by the second assignment it is insisted that said judgment is erroneous because the granting of letters of administration did not set aside the voluntary conveyance by Mrs. Pate of a part of the community estate to the Rotan Grocery Company for the purpose of paying community debts prior to the application for such administration, and the granting of such administration did not entitle the said Mrs. Pate, as administratrix, or the probate court, to the possession of said property against the defendant Fricke, a purchaser thereof for full value before the granting of such letters.

The facts showed a necessity for the administration, and the court appointed appel-lee as administratrix, which fact, we think, authorized her to demand and take possession of the property of said estate. By article 3235 of the Revised Statutes of 1911, it is provided, among other things, that upon issuance of letters testamentary or of administration upon any estate, the executor or administrator shall have the right to the possession of the estate as it existed at the death of the testator or intestate, with certain exceptions; and it shall be the duty of such executor or administrator to recover possession of and liold sudd estate in trust to be disposed of in accordance with law. See, also, Latham v. Dawson, 40 Tex. Civ. App. 219, 89 S. W. 315; Blinn v. McDonald, 92 Tex. 604, 46 S. W. 787, 48 S. W. 571, 50 S. W. 931; Laas v. Seidel, 28 Tex. Civ. App. 140, 66 S. W. 871; Fisk v. Norvel, 9 Tex. 13, 58 Am. Dec. 128; Mitchell v. De Witt, 20 Tex. 294.

But it is insisted on the part of appellants that appellee in the instant case is estopped from asserting this right by reason of said conveyance, because the survivor of the community estate has the right to sell community property for the purpose of paying community debts (citing Carter v. Conner, 60 Tex. 59; Dever v. Selz, 39 Tex. Civ. App. 558, 87 S. W. 891; Dashiell v. Moody, 44 Tex. Civ. App. 87, 97 S. W. 843; Brown v. Elmendorf, 87 Tex. 57, 26 S. W. 1043; Corzine v. Williams, 85 Tex. 499, 22 S. W. 399; Wenar v. Stenzel, 48 Tex. 484, 489; Johnson v. Harrison, 48 Tex. 257; Orr V. O’Brien, 55 Tex. 149). While this is true, yet the conveyance relied upon was not a sale of such property by Mrs. Pate, but, on the contrary, was an assignment to the Rotan Grocery Company for the benefit of creditors, expressly authorizing said company to convert the property therein conveyed (which constituted the bulk of said estate) into cash for the pro rata benefit of all creditors, share and share alike, without any preference whatever. To uphold this conveyance would be to set at naught the probate laws of this state, which vest in the probate court the right to pass upon, not only the amount, but the validity, of all claims against the estate, and to classify same in accordance therewith. See articles-, R. S. 1911. Besides this our law gives to certain creditors of an estate preferences and determines the priority of such preferences. See Articles 3458, 3459, 3460, etc., R. S. 1911. And, in addition thereto, authorizes the court to make állowances and grant exemptions to the family of the deceased, all of which are preferred claims, and must be paid in their due order, as required by article 3460, supra. The conveyance under consideration expressly disregards the rights of such creditors and the heirs to allowances and exemptions, for which reason alone we think it might be held inoperative. As well said by counsel for appellee in their brief:

“To allow the surviving wife, immediately on the death of the intestate, to make a final and conclusive disposition of all or any of the assets of the estate for the payment of community debts, and thereby place such assets beyond the reach of the administrator, would lead to complications and collusion, and would probably result in defrauding creditors and minor children of their statutory rights.”

Notwithstanding appellee had the power, under the doctrine of the cases above alluded to, to sell community property and apply the proceeds to the payment of community debts of the estate, yet this did not authorize her to delegate this power to a trustee, as here attempted. Her right, we think, in this respect is personal, and the law will not permit her to thus surrender to another her privileges, duties, and responsibilities.

In Latham v. Dawson, supra, where the survivor of the'community had sold certain community property to pay community debts, and she was afterwards appointed adminis-tratrix of the estate and brought suit for such property, her right to do so was sustained, and a plea setting up such sale as a defense was stricken out upon demurrer, the court saying:

“The right of the survivor to sell community property for the purpose of paying community debts cannot be exercised in disregard pf the rights of other parties interested in said community estate. While such a conveyance would pass the title as against the adult heirs of the deceased husband, it could not affect the right of creditors of the estate to subject the property to the payment of their claims, nor the right of the minor children of the deceased to subject it to their claim for allowance. It would be contrary to the express provision of our probate laws to hold otherwise, and thus permit the survivor, if she saw fit, to appropriate all of the property of the estate to the payment of one creditor, and leave nothing for the satisfaction of others who were equally entitled to have the property of the estate subjected to the payment of their claims” (citing many cases in support thereof).

We think the above ease is authority for holding that, even if there had been a complete sale on the part of Mrs. Pate for the purpose of paying community debts, which is not the case, yet such sale would be nullified by the appointment of an administratrix, who would eo instanti become entitled to possession of such property for the purposes of administration.

As held in the case of Blinn v. McDonald, supra, the purchaser must be charged with notice of the fact that such administratrix may, within the statutory period, be appointed, and of her powers and duties, and hence could not, during such period, become a bona fide purchaser, or acquire any rights which would prevent the execution of such trust.

In the case of Matula v. Freytag, 101 Tex. 357, 107 S. W. 536, there was a contention as to whether the property was sold by the surviving widow before or after the grant of administration, and our Supreme Court, through Mr. Justice Williams, held that while the sale was after such grant, yet expressly stated that it was not to be understood that the fact that the sale was after administration had any determinative effect.

Granting, for argument’s sake that there had been a complete sale by Mrs. Pate to appellant company, still we think that the granting of the administration by the probate court had the effect to vitiate the same, and entitled the administratrix to the possession of said property. Nor did such conveyance estop her, as administratrix, from instituting this suit, because it was made in her individual capacity, while the suit is by her in lier representative capacity as adminis-tratrix.

Believing that the court below did not err in the judgment rendered, the same is in all things affirmed.*

Affirmed.


author: JENKINS, J.

text:
    WITT v. NELSON et al.
    (No. 5378.)

    (Court of Civil Appeals of Texas. Austin.
    May 26, 1914.
    Additional Findings of Facts, July 1, 1914.)
    1. Corporations (§§ 244. 544) — Rights op Creditors — Trust Fund Theory.
    The capital stock of a corporation is a trust fund for the benefit of creditors, who may enforce the payment therefor in full, as against subscribers for such stock and transferees with knowledge of nonpayment.
    [Ed. Note. — For other eases, see Corporations, Cent. Dig. §§ 960-977, 2162-2169; Dec. Dig. §§ 244, 544]
    2. Corporations (§ 232) — Stockholders — Liability op.
    Where half of the capital stock of a corporation was paid in upon organization in accordance with the law at the time of organization, and the corporation later became in need of funds to carry on its business, the sale of treasury stock at the fair market price, though for less than par, in accordance with Rev. St. 1895, art. 661, authorizing the sale of such stock, would not render the purchaser liable for any sum in addition to the price paid.
    [Ed. Note. — For other cases, see Corporations, Cent. Dig. §§ 879, 889, 883, 884, 987; Dec. Dig. § 232.]
    3. Corporations (§ 249) — Stockholders— Trust Fund Theory.
    Where the principal stockholder and manager of a corporation advanced money to the corporation with knowledge of the stockholders and other directors, he may, upon being held liable for an unpaid amount on his stock, set off his claim against that of the corporation’s creditors; the money advanced having become part of the corporate assets.
    [Ed. Note. — For other eases, see Corporations, Cent. Dig. §§ 1002-1010, 1012, 2273; Dec. Dig. § 249.]
    4. Corporations (§ 232) — Stockholders— Liability op.
    Where, upon organization of a corporation, half of its capital was paid in and stock issued therefor, and thereafter stockholders became indebted to the corporation, which took over their shares, a subsequent purchaser of such shares, who bought for a sum less than par, is not liable to the creditors of the corporation, under the trust fund theory.
    [Ed. Note. — For other cases, see Corporations, Cent. Dig. §§ 879, 880, 8S3, 884, 987; Dee. Dig. § 232.]
    Appeal from District Court, McLennan County; Tom L. McCullough, Judge.
    Action by Edgar E. Witt, trustee, against E. Nelson and another. From a judgment for defendants, plaintiff appeals.
    Affirmed.
    Davis & Cocke, of Waco, for appellant. Sleeper, Boynton & Kendall and Gallagher & Stratton, all of Waco, for appellees.

       For other cases see same topic and section NUMBER in Dec. Dig. & Am. Dig. Key-No. Series & Rep’r Indexes

       Application for writ of error pending in Supreme Court.

   Findings of Fact.

JENKINS, J.

(1) In 1902 and prior thereto, T. H. Kessler. & Co., a copartnership composed of T. H. Kessler, - Troutschold, A. J. Droke, and R. G. Ard, owned and operated a planing mill.

(2) It was agreed by the members of the firm and Oscar Myre, an employe of the firm, that they would incorporate, and that Myre would buy Troutschold’s interest.

(3) On August 25, 1902, a charter was obtained in the name of T. H. Kessler & Co., with an authorized capital of $30,000.

(4) On September 2,1902, a proposition was submitted to the directors of the corporation by T. H. Kessler for the partnership, to sell to the corporation all of the property of the firm for $15,000, which proposition was accepted by the corporation.

(5) On September 2, 1902, the partnership T. H. Kessler & Co. conveyed to the corporation T. H. Kessler & Co. all of its assets for the recited consideration of $30,000.

(6) On the same day. the corporation issued to the members of the firm of T. H. Kessler & Co., including Myre, who agreed to take Troutschold’s interest, 150 shares of stock of the par value of $100 each in proportion to their interest in said firm, as follows: T. H. Kessler, 51 shares; Oscar Myre, 48 shares; A. J. Droke, 36 shares; R. G. Ard, 15 shares.

(7) After issuing the 150 shares, as above stated, there remained unissued 150 shares of the par value of $100 each.

(8) On October 9, 1902, by order of the directors, 40 shares of the capital stock were sold to J. M. Nelson for $2,000, and a certificate for that number of shares was issued to him.

(9) T. H. Kessler remained a director of the corporation until January, 1903, at which time he died, and his wife, Mrs. T. I-I. Kess-ler, became the owner of his shares and was elected a director.

(10) On January 26,. 1903, a resolution was entered upon the minutes allowing Mrs. Kessler to draw $10 per week to be charged to her account, and, when net earnings had been declared, her part of same to be credited on her account, and, if her account was then found to be overdrawn, she to pay the balance or same to be charged against her stock at her option.

(11) On October 5, 1905, a motion was passed to sell A. L. Elliott $5,000 of “treasury stock” at 75 cents on the dollar per share. Mrs. L. E. Elliott, wife of A. L. Elliott, paid for $2,000 of this stock at 75 cents on the dollar. A. L. Elliott gave his note for 30 shares, with his stock as collateral. He paid interest on his note to July 21, 1908, but none of the principal. On July 21, 1908, by order of the directors, Elliott returned the 30 shares of stock, and his note was surrendered to him.

(12) On July 16, 1906, the certificate for 40 shares issued to J. M. Nelson was by him transferred on the hack thereof to B. Nelson, and the same was delivered to E. Nelson.

(13) On May 29, 1907, Mrs. Kessler was indebted to the corporation in the sum of $3,164.73, which, by order of the directors, she was permitted to and did pay by surrendering her certificate for the 51 shares issued to T. H. Kessler, and receiving a certificate for 19 shares.

(14) On May 29,1907, by order of the board, $5,000 of stock was sold to J. S. Harrington at 75 cents on the dollar.

(15) On May 29,1907, it was ordered by the directors that $1,000 of stock be sold to E. Nelson at 75 cents on the dollar, but this stock was never issued.

(16) On May 29, 1907, E. Nelson was elected a member of the board of directors, vice J. M. Nelson, who had sold his 40 shares of stock to E. Nelson.

(17) On May 29,1907, two additional shares were sold to Oscar Myre, at 75 cents on the dollar.

(18) Prior to March 24, 1908, A. J. Droke had died, and his widow had become the owner of his stock. On that date, Mrs. Droke having become indebted to the corporation in the sum of $500, and. Mrs. Kessler having become indebted to the corporation in the further sum of $900, by order of the directors they paid these debts by Mrs. Droke’s surrendering the certificate for 36 shares issued to A. J. Droke, and a new certificate for 31 shares was issued to her, and by Mrs. Kessler’s surrendering her certificate for 19 shares', and a new certificate for ten shares was issued to her.

(19) On July 21, 1908, the corporation, through its board of directors, sold tó J. S. Harrison, E. Nelson, and J. D. Enright each $1,000 of stock at 75 cents on the dollar.

(20) The minutes of the corporation show that at a meeting held June 3, 1911, there were present, representing stock in said corporation, as follows: Oscar Myre, 50 shares; E.'Nelson, 50 shares; Mrs. A. L. Elliott, 20 shares; R. G. Ard, 15 shares; Mrs. Droke, 21 shares; and J. S. Harrison, 80 shares— total 236 shares. Mrs. Droke’s shares had been further reduced from 31 to 21 shares by her surrendering 10 shares in payment of a debt she owed to the corporation. At this meeting the ten shares owned by Mrs. Kess-ler were surrendered and canceled in payment of a debt for $1,000, due by her to the corporation.

(21) On January 10, 1911, J. L. Enright sold his certificate for 10 shares to J. S. Harrison.

(22) July 9, 1911, J. S. Harrison, for the consideration of $5,000, sold to E. Nelson his certificate for 50 shares of stock, dated May 29,1907; his certificate for 10 shares of stock dated July 22, 1908, purchased by him from J. L. Enright, and 10 additional shares.

(23) At each of the times of the respective sales of stock of the corporation, after the issuance of the first 150 shares of stock to the members of the firm of T. I-I. Kessler & Co., the corporation was a going concern and was perhaps solvent; but it needed money to operate its business and to pay debts incurred in such operation, and was unable to continue its business without such money, and had no means of obtaining such money, except by the sale of its stock, or by mortgaging its property. Each of said sales was made for the full market price of such stock, and for the highest price that could be Obtained for such stock, and no stock was at any time sold in excess of the then needs of the corporation to enable it to carry on its business. • Each of said sales was beneficial to the corporation, its stockholders, and to its then creditors. All of the money obtained from such sales was used in the prosecution of the business of the corporation, and for no other purpose, and none of the money realized from such sales of stock was used for additional investments by the corporation.

(24) None of the certificates purchased by E. Nelson were ever transferred to him on the books of the corporation by surrendering the said certificates and obtaining new certificates in lieu thereof, but the said purchases were known to the corporation, and he was elected a member of its board of directors, and on June 19, 1911, he was elected president and general manager of the corporation, and continued as such until the corporation went into bankruptcy October 15, 1912.

(25) The salary of E. Nelson, as president and general manager of the corporation, was never fixed by the board of directors, but he caused to be credited to himself, on the books of the corporation, for such services, the sum of $200 per month from July 1, 1911, to June 1, 1912, and from June 1, 1912, to October 15, 1912, the sum of $150 per month, aggregating for such salary $2,875, and his services were reasonably worth that amount. He received during said time in cash and merchandise, and caused to be charged against himself on the books, $2,972.88. He was not- otherwise paid anything for such services.

(26) From and after the 1st day of January, 1912, said corporation was heavily involved, and its creditors were insistent and pressing, and there was constant demand for money for the purpose of liquidating indebtedness, and for the purpose of paying for material ordered by said company for the purpose of carrying on its work, which said material was required to be paid for in cash, and for the purpose of paying the laborers for carrying on the work of said corporation, which was required to be paid for in cash weekly, and the corporation, from time to time, being without sufficient money to meet said obligations, the said E. Nelson voluntarily paid into and for said corporation for said purposes the sum of $3,857.49 in cash.

(27) Said payments made by said E. Nelson in said sum as aforesaid, into and for said corporation, were made by him without any contract for the repayment of the same, and were made by him on his own responsibility and in recognition of the needs of said corporation, and at the time of the payment of the same and all the same, except the sum of $252.92 paid the Owens Lumber Company on the 15th day of October, 1912, said corporation was a going concern, actively engaged in operation and the carrying out of the purposes for which it was chartered and organized, and said Nelson at the time believed the same to be solvent, and made said payments and advancements to said corporation in good faith, believing that the same would enable said corporation to tide over temporary embarrassments, and continue indefinitely a solvent and going concern.

(28) That said sum of $252.92 paid to said Owens Lumber Company on said 15th of October, 1912, was made by him because he had long prior thereto personally obligated himself to pay the same, or to see the same paid, and at the time he so obligated himself he did so in good faith, believing said corporation was solvent.

(29) On or about the 17th day of October, 1912, the corporation of T. H. Kessler & Co. went into voluntary bankruptcy, and the proceeds of the sale of its properties has proved insufficient to discharge its indebtedness, and there remains undischarged approximately $10,000 of indebtedness owed by said corporation.

(80) The referee in bankruptcy, by order duly made, directed the trustee to bring these suits for the several amounts claimed herein.

(31) The defendant E. Nelson proved up a claim in the bankruptcy proceedings against the estate of T. H. Kessler & Co., bankrupt, for the sum of $3,672.65, based on such moneys so advanced by him to and for said corporation. Such proof was made upon the advice of counsel, in view of the situation as it then existed, and was not in contemplation at the time such advancements were made, and nothing whatever has been paid on said claim, and nothing will or can be paid thereon, unless a recovery be had in these causes, and such payment would have to be made out of such recovery.

Appellant, as trustee for the bankrupt corporation of T. H. Kessler & Co., brought two suits to recover an alleged balance due for 'stock in said corporation, one against J. M. Nelson et al. and one against J. S. Harrison et al. The suits were consolidated. Upon trial before the court without- a jury, judgment was rendered for the defendants. The above findings of fact are substantially those found by the trial court. The appellant prosecutes his appeal on 62 assignments of error. In view of the disposition that we make of the case, we do not deem it necessary to discuss seriatum all of the matters presented in the findings of fact and in appellant’s assignments of error.

Opinion.

It is well settled, as a general proposition, that the capital stock of a corporation is a trust fund for the benefit of creditors, and creditors may enforce the payment thereof in full as against the subscribers for such stock, and against their transferees with knowledge that such stock has not been fully paid for. Mathis v. Pridham, 1 Tex. Civ. App. 58, 20 S. W. 1023; Nenney v. Waddill, 6 Tex. Civ. App. 244, 25 S. W. 308; Sawyer v. Hoag, 84 U. S. (17 Wall.) 610, 21 L. Ed. 731; Sanger v. Upton, 91 U. S. 56, 23 L. Ed. 221; Scovill v. Thayer, 105 U. S. 143, 26 L. Ed. 968; Chubb v. Upton, 95 U. S. 665, 24 L. Ed. 523; Hawley v. Upton, 102 U. S. 314, 26 L. Ed. 179; Upton v. Tribileock, 91 U. S. 45, 23 L. Ed. 203; Webster v. Upton, 91 U. S. 65, 23 L. Ed. 384; Land Co. v. Raymond, 158 N. Y. 576, 53 N; E. 507, 47 L. R. A. 246. Nothing said in this opinion is intended to impinge upon this doctrine when applied to a proper state of facts. It has been said that this doctrine was invented by Mr. Justice Storey, and is slowly becoming obsolete. 10 Cyc. 461. It is not obsolete in Texas, and will not become obsolete anywhere until honesty shall become obsolete. It may be true in these days of frenzied finance and watered stock that professional dealers base their estimates as to the value of stocks upon the assets and liabilities of the corporations, when they find out what they are, but the investing public is daily robbed through the medium of watered stock, which is the life blood of gambling on exchanges. The Constitutions of many of the states, including our own, have provisions, that are designed to prevent the issuance of watered stock, and this is effectually accomplished by our present corporation laws. But, at the time the corporation in the instant case was chartered, our statute only required that 50 per cent, of the capital stock be subscribed, and that 10 per cent, be paid up. R. S. 1895, art. 654. This amount was subscribed and fully paid up, whether the property conveyed to the corporation was worth $30,000, as found by the trial court, or $15,000, as contended by appellant.

In considering the cases wherein it has been held that unpaid subscriptions to capital stock is a trust fund for the benefit of creditors, it must be kept in mind that there is a distinction between stock subscribed for the purpose of organizing the corporation and stock sold by an organized corporation for the purpose of enabling it to pay its debts or to carry on its business. In the former case it is held upon equitable grounds that the subscription is a contract to pay the full par value of the stock, if it becomes necessary to do so in order to protect creditors; in the latter case the purchase is a contract to pay only the price agreed upon, if the same be the fair market price of the stock purchased. Handley v. Stuz, 139 U. S. 417, 11 Sup. Ct. 530, 35 L. Ed. 227; Clark v. Bever, 139 U. S. 96, 11 Sup. Ct. 468, 35 L. Ed. 88; Eogg v. Blair, 139 U. S. 118, 11 Sup. Ct. 476, 35 L. Ed. 104; Christenson v. Eno, 106 N. Y. 97, 12 N. E. 648, 60 Am. Rep. 429; Christenson v. Quintana, 8 N. Y. Supp. 400; Morrow v. Iron & Steel Co., 87 Tenn. 275, 276, 10 S. W. 500, 3 L. R. A. 37, 10 Am. St. Rep. 658; Morowitz on Corporations, § 306; Cook on Corporations, §§ 22, 42, and 45.

In Christenson v. Eno, supra, wherein it was sought to recover of defendant 40 per cent, of the par value of the stock given him as a bonus in the purchase of the stock and certain bonds of an organized and going corporation, after recognizing the doctrine that the subscribed stock of a corporation is a trust fund for the benefit of creditors, the court said:

“Strictly the capital stock of a corporation is the money contributed by the corporators to the capital, and is usually represented by shares issued to the stockholders on the initiation of the corporate enterprise. * * * There is no pretense that Eno ever subscribed for the 25 shares of bonus stock, so called.”

In the instant case, the purchasers of stock sold for the purpose of enabling the corporation to continue its business, and not for the purpose of increasing its investment, or enlarging its plant, were not subscribers to its stock, in the sense that subscribers are required to pay the full par value of their stock.

The court in Morrow v. I. & S. Co., supra, after announcing in strong terms the doctrine that the capital stock of a corporation is a trust fund for the benefit of creditors, said:

“What we have said as to the construction and legal effect of the subscription involved in this case is not intended to apply to sales of, or subscriptions to, the stock of an organized and going corporation. * * * The necessities of the business of an organized company might demand an increase of capital stock, and, if such stock is lawfully issued, it may very well be offered upon special terms. * * * In such case, all questions of fraud aside, the purchaser would only be held for his contract price.”

In the instant case the necessities of business demanded, not an increase of the capital stock, but an increased issuance of capital stock, and the directors were authorized by the statute to sell the same. R. S. 1895, art. 661.

“The wholesome doctrine, so many times enforced by this court, that the capital stock of an insolvent coz-poration is a trust fund for the payment of its debts rests upon the idea that the creditors have a right to rely upon the fact that the subscribers to such stock have put into the treasury of the corpoi-ation, in some form, the amount represented by it; but it does not follow that every creditor has a Z’ight to trace each share of stock issued by such corporation, and inquire whether its holder, or the person of whom he purchased., has paid its par value for it. It frequently happens that corporations, as well as individuals, find it necessary to increase their capital in order to raise money to prosecute their business successfully, and one of the most frequent meth-qds resorted to is that of issuing new shares of stock and putting them upon the market for the best price that can be obtained; and so long as the transaction is bona fide, and not a mere cover for ‘watering’ the stock, -and the consideration obtained represents the actual value of such stock, the courts have shown no disposition to disturb it.” Handley v. Stutz, Supra.

Eor the reasons above stated, we think the judgment of the trial court should be affirmed.

We think the judgment of the trial court was correct as to E. Nelson for another reason. If it should be held that he was liable for the difference between the par value of the stock held by him and the price for which the corporation sold the same, we think that it ought to be held that he paid the same with the money advanced by him for conducting the business, as set forth in finding of fact No. 26, supra.

It is the contention of appellant that E. Nelson is not entitled to a credit for the money so advanced by him, even to the extent of making him a creditor of the corporation, for the reason that he was a volunteer in the transaction. He was the principal stockholder in the corporation, its president and general manager, and as such was intrusted with the conduct of its business; it was necessary that the corporation should have money to pay for labor and material; he advanced the money needed for these purposes; the corporation knew that such advancements were being made, and accepted the benefit of the same. We do not think, under these circumstances, that Nelson should be held to be a volunteer in the sense that he would not have been entitled to repayment of the money advanced had the corporation continued in business, if no set-off against him was shown.

Such being the case, we are of the opinion that should it be held that if Nelson, at the time that such advancements were made, was indebted to the corporation for stock held by him, the advancements should be applied to the payment of his indebtedness. There can be no doubt that this would be so had he at the time such advancements were made, or prior thereto, made a contract with the corporation to that effect. He made no such contract; neither did he ever contract to pay the difference between the par value of his stock and the price for which the same was sold. Such liability is purely a doctrine of equity invented by the courts to prevent fraud being practiced upon creditors. But this doctrine ought not to be carried to the extent of working a fraud upon one who in good faith has advanced money to the corporation, not only for the benefit of the corporation, but also for the benefit of creditors. Had the creditors been consulted at the time, no doubt they would have consented to such advancements being made and applied upon Nelson’s debt, if any he owed, for the balance due on his stock. Indeed, the money advanced by Nelson, except that which was paid for labor to keep the business going, was paid to creditors for material used in the conduct of the business.' Under these eircum-stances, we think that the same equitable power of the court that enables it to compel the payment of a debt, which the purchaser of stock never in fact contracted to pay, is sufficient to enable the court to apply to the payment of such debt money advanced to the corporation which was necessary to the conduct of its business.

For still another reason we think that the judgment of the trial court was right as to a portion of the stock sold below par.

On May 29,1907, Mrs. Kessler was indebted to the corporation in the sum of $3,164.73. On that day, by agreement with the board of directors, she surrendered 31 shares of her stock in payment of her indebtedness. This stock was fully paid up, and, if it was legally acquired by the corporation, it had the right to resell the same at any price, fraud aside, that it saw proper. A corporation may take its own stock in payment of debts owing it, and may hold and sell the stock thus acquired. 10 Cyc. 713; City Bank v. Bruce, 17 N. Y. 507; Bank v. Hunt, 7 Mo. App. 42; Ex parte Holmes, 5 Cow. (N. Y.) 426; Barto v. Nix, 15 Wash. 563, 46 Pac. 1033. On the same day that the corporation purchased the 31 shares of stock from Mrs. Kess-ler, it Sold 50 shares to J. S. Harrison. The minutes do not show that the shares acquired from Mrs. Kessler were sold to Harrison, but as the corporation had the right to sell the shares acquired from Mrs. Kessler, if it did not have the right to sell any other shares, it will be presumed, in the absence of evidence to the contrary, that it sold those that it had the legal right to sell.

On March 24, 1903, the corporation purchased from Mrs. Kessler 9 additional shares in payment of a debt owing by her, and from Mrs. Droke 5 shares, in payment of a debt owing by her. On Jüly 21, 1908, the corporation purchased from A. L. Elliott, in payment of the note owing by him, 30 shares, and on the same day sold 30 shares, as follows: 10 shares to Harrison, 10 shares to E. Nelson, and 10 shares to Enright. It thus appears that, of 80 shares above mentioned, the corporation had the legal right to sell all of them, except 19 of the shares sold to Harrison on May 29,1907.

Believing that the trial court rendered the proper judgment herein, the same is affirmed.

Affirmed.

Additional Findings of Fact.

The trial court, among other things, found that the property transferred by the co-partnership T. H. Kessler & Co. to the corporation T. H. Kessler & Co. was of the value of $30,000; that 150 shares of the corporation stock was issued to the owners of the partnership property in proportion to their interest therein; and that the remaining 150 shares were treated by the corporation as treasury stock. As we cannot say that these findings of fact were not supported by the evidence, we adopt them as our own.

At the request of appellant, we also make the additional finding of fact: At the time B. Nelson made the advancements to the corporation as set out in the opinion herein, he did not know or believe that he owed anything on his stock, and did not intend that such advancements should be credited on any indebtedness for unpaid balance on stock in the corporation owing by him.

       Reported In full In the New York Supplement; reported as a memorandum decision without opinion in 65 Hun, 608.


text:
    GULF, C. & S. F. RY. CO. v. STATE.

    (No. 5300.)
    (Court of Civil Appeals of Texas. Austin.
    June 3, 1914.
    Additional Findings of Fact and Rehearing Denied July 1, 1914.)
    1. Railroads (§ 227) — Adequacy of Train Service — Orders of Railroad Commission.
    Where a railroad company stopped only two trains a day at a county seat town of 1,500 inhabitants, which practice caused many travelers desiring’ to leave or reach the town to make connections at other points, and the trains stopped did not carry Pullman accommodations, the railroad company did not furnish adequate service, and an order requiring it to stop through trains carrying Pullman cars was not unreasonable.
    [Ed. Note. — For other eases, see Railroads, Cent. Dig. § 741; Dec. Dig. § 227.]
    2. Railroads (§ 227) — Regulations as to Train Service — Duty to Stop Trains.
    Nor is such order invalid because the railroad company might be required to stop such trains at other stations; the law only requiring through trains to be stopped at county seats, unless a failure to stop at other points would amount to a clear abuse of the carrier’s duties to the public.
    [Ed. Note. — For other cases, see Railroads, Cent. Dig. § 741; Dec. Dig. § 227.]
    3. Commerce (§ 58) — Interstate Commerce —Interference with. .
    A state regulation which required a railroad company to stop through trains engaged in interstate commerce at a particular point was not invalid as an interference with interstate commerce where the railroad company, as a public carrier, owed the inhabitants of that locality the duty of stopping its trains there.
    [Ed. Note. — For other cases, see Commerce, Cent. Dig. §§ 77-86, 100; Dec. Dig. § 58.]
    4. Commerce (§ 58) — Regulation of Railroads — Railroad Commission — Authority of.
    Under Rev. St. 1911, art. 6676, subd. 2, providing that it shall be the duty of the Railroad Commission to see that every railroad shall run at least one train a day upon which passengers can be carried, and to regulate passenger train service by requiring trains to stop at designated stations, provided that four trains each day carrying passengers for hire, if so many are run, shall be required to stop at all county seat stations, the Railroad Commission has jurisdiction to order a railroad company to stop through trains engaged in interstate commerce at a county seat station, where the stopping of such trains is necessary to furnish the inhabitants of that locality with adequate train service.
    [Ed. Note. — For other cases, see Commerce, Cent. Dig. §§ 77-86, 100; Dec. Dig. § 58.]

      6. RAILROADS (§ 254)— Offenses — Continuing OFFENSE.
    Where a railroad company, for a considerable time, violated an order of the Railroad Commission requiring it to sto]D certain trains at a designated station, the railroad company was guilty of as many offenses as there were separate violations of the order.
    [Ed. Note. — For other cases, see Railroads, Cent. Dig. §§ 76^-772; Dec. Dig. § 254.]
    6. Railroads (§ 254) — Prosecution — Punishment.
    Under Rev. St. 1911, art. 6672, providing that, if any railroad company shall refuse to obey any order of the Railroad Commission, it shall pay to the state a penalty of not more than $5,000 for each violation, the imposition of a fine of $22,400 upon a railroad company, which 224 times violated an order requiring it to stop certain through trains at a designated station, was not excessive.
    [Ed. Note. — For other cases, see Railroads, Cent. Dig. §§ 764-772; Dec. Dig. § 254.]
    Appeal from District Court, Travis County; Geo. Calhoun, Judge.
    Suit by the State against the Gulf, Colorado & Santa Fé Railway Company. From a judgment for plaintiff, defendant appeals.
    Affirmed.
    Terry, Cavin & Mills and A. H. Culwell, all of Galveston, for appellant. B. F. Looney, Atty. Gen., and Luther Nichols, Asst. Atty. Gen., for the State.

       For other cases see same topic and section NUMBER in Dec. Dig. & Am. Dig. Key-No. Series & Rep’r' Indexes

       Application for-writ of error pending in Supreme Court.

       For other oases see same topic and section NUMBER in Dec. Dig. & Am. Dig. Key-No. Series & Rep’r Indexes

   RICE, J.

This suit was brought in behalf of the state by the Attorney General against appellant to recover penalties for the violation of an order of the Railroad Commission of Texas, requiring appellant to stop its trains Nos. 17 and 18 at Meridian, the county seat of Bosque county, a station on its line, a sufficient length of time for passengers to safely get on and off the cars at said place; and, to compel observance of said order, it prayed for a writ of mandamus or mandatory injunction.'

Appellant, after general demurrer, special exceptions, and general denial, defended on the ground: (1) That said trains were through trains, engaged in interstate commerce and carrying United States mails, and that, having furnished adequate facilities for the business at Meridian outside of trains 17 and 18, such attempt on the part of the Commission to regulate its service at said point was an unlawful and direct interference with interstate commerce, and hence was void. (2) That the Railroad Commission of Texas was without authority to make said order. (3) That the judgment of the court in assessing a penalty was excessive, contending that the act was continuous, and that only one penalty could be assessed against it. A trial before the court resulted in a judgment in favor of appellee, assessing penalties for 224 violations of said order at $100 each, aggregating $22,400, and granting mandatory writ of injunction, as prayed for, from which judgment this appeal is taken.

Meridian is the county seat of Bosque county, duly incorporated, with a population of 1,500 inhabitants, situated on the line of appellant’s railway, which extends through the state from Galveston to Red River and on to Purcell, in Oklahoma. On March 11, 1912, an order was made by the Railroad Commission of Texas, after due notice and hearing, requiring that on and after the 2d of April, 1912, said company should regularly stop trains Nos. 17 and 18 at Meridian for a time sufficient to receive and discharge passengers with safety. Said order remained in force continually from said date up to the time of the trial of this case, during which time appellant had operated said trains continuously, with certain exceptions, without stopping thereat, and it now seeks to justify its refusal so to do by urging that said trains were put on chiefly for the purpose of transporting interstate passengers and to compete with other lines of railway for similar business; that it furnished adequate facilities at said point for the accommodation of the traveling- public outside of trains 17 and 18; and that such order was violative of the Interstate Commerce Act, and was therefore void.

It was shown that said trains ran from Galveston through to Purcell, Okl., under one management, and thence were transported by the Atchison, Topeka & Santa Fé Railway Company, another corporation, to Kansas City, Chicago, and other points in the Northwest. If it be conceded that appellant furnished adequate facilities for the accommodation of the traveling public at Meridian, outside of trains 17 and 18, and the order in fact materially and directly interfered with such interstate commerce, then it seems that said order, requiring the stoppage of such trains there, was void. But this contention relative to the adequacy of such service is vigorously assailed by the state, and the court’s findings in this respect sustain appellee’s insistence. It is true that there were two other trains beside those in question, passing Meridian each way daily; yet it appears from the evidence that passengers not infrequently came in on trains 17 and 18, destined for Meridian, who were not permitted to disembark, and were carried on to Morgan and Clifton, the next stations north and south of said town, and were compelled, at extra expense, to return to Meridian by private conveyance. In addition to this fact, none of these trains, except 17 and 18, carried a Pullman furnishing sleeping car accommodations, by reason of which it appeared that citizens of Meridian and vicinity, who desired to do so', were frequently prevented from traveling thereon, because they failed to stop thereat; and, in order for such persons to be accommodated, they were required to go either to Clifton, Cleburne, Temple, or Morgan, otjier stations on its line, in order to take passage thereon.

The traveling public along the lines of railway in tMs state, we think, are entitled to the accommodations furnished hy a common carrier, upon compliance with the rules relating to such use. Of course, if the cars of such company fail to stop and receive and discharge passengers at such point, the citizens are thereby deprived of this right. It is no answer to this to say that the companies are not required to furnish sleeping car accommodations. This may be conceded; yet, when they do furnish such accommodations to a part of the public, then we think they are required to furnish the same to all others, otherwise the facilities at such point could not be regarded as adequate. In passing on the adequacy of such facilities, we must look to the convenience and comfort of the passengers, as well as other features of such service. We think the court was justified in finding that adequate facilities were not afforded by appellant to the citizens of Meridian, when it failed to stop the only two trains furnishing sleeping car accommodations in and out of said town. It is futile to argue that, if it be required to stop at Meridian, it may also be required to stop at all other intermediate stations. The law only requires such trains to be stopped at county seats for such purpose; and, unless it was shown that the failure to stop at other points along its line would be a clear abuse of its duties to the public, there would possibly be no authority on the part of the Commission to interfere with its failure to do so.

Appellant cites, in support of its contention, the cases of Herndon v. C., R. I. & P. Ry. Co., 218 U. S. 135, 30 Sup. Ct. 633, 54 L. Ed. 970; Atlantic Coast Line v. Wharton, 207 U. S. 325, 28 Sup. Ct. 121, 52 L. Ed. 230; Illinois Central R. R. v. Illinois, 163 U. S. 142, 16 Sup. Ct. 1096, 41 L. Ed. 107; C., C. & St. L. Ry. Co. v. Illinois, 177 U. S. 514, 20 Sup. Ct. 722, 44 L. Ed. 868; Mississippi R. R. Commission v. Illinois Central, 203 U. S. 335, 27 Sup. Ct. 90, 51 L. Ed. 209. A review, however, of these cases, we think, will show that they are predicated upon facts dissimilar to those in the instant case in several respects, for which reason they are not regarded by us as of controlling effect. Besides carrying United States mail under contract, the companies involved in those cases were each wholly engaged in interstate traffic and the transportation of interstate passengers, whereas, in the instant case, appellant carried both intrastate and interstate passengers, and is shown to have stopped in most of the county seats in Texas along its line, as well as other stations, and was scheduled to stop at every station between Red River and Purcell, in Oklahoma. Nor was it made to appear in the instant case that a compliance with said order would interfere with such interstate travel, but, on the contrary, the court found that to comply with such order would be an aid thereto.

In the Herndon Case supra, which was an action to require the railway company to comply with the provisions of an act of the state Legislature requiring all railroad companies operating within that state to establish depots and stations at junction of other railways and stop a reasonable time for putting off and taking on passengers thereat, it appeared that no necessity existed requiring such stoppage, because ample local accommodations were afforded by several other trains, and that to stop the trains in question would seriously interfere with travel, and connections could not be made as per schedule. The same was also true in the case of C., C. & St. L. Ry. v. Illinois, supra.

In the Wharton Case, supra, ample local facilities outside of the train in question were afforded, two of which carried Pullman sleeping cars, as well as mail, express, and baggage cars. The only objection urged in that case was the want of sufficient speed.

In Illinois Central v. Illinois, supra, to comply with the requirements, it would have been necessary for the train in question to have deviated seven miles from a direct course in order to stop at the particular county seat. In the instant case, the depot of appellant was within the corporate limits of Meridian; and a stop of from three to five minutes, it is shown, would have been sufficient for all purposes.

In Mississippi R. R. Com. v. Illinois Central, supra, among other things, it is said:

“Upon the principles decided in these cases, a state Railroad Commission has the right, under a state statute, so far as railroads are concerned, to compel a company to stop its trains under the circumstances already referred to, and it may order the stoppage of such trains if the company does not otherwise furnish proper and adequate accommodation to a particular locality, and in such cases the order may embrace a through, interstate train actually running and compel it to stop at a locality named.”

Also in effect holding that what is adequate accommodation is a question of law to be determined by the facts in each particular case, and all the phases of the service may be looked to and considered in connection with what is meant by “adequate facilities.”

In a note to the case of Peterson v. State, 14 L. R. A. (N. S.) 293, is found a collection and partial review of the cases on this subject from which we take the following extract:

“It was held in Gladson v. Minnesota, 166 U. S. 427 [17 Sup. Ct. 627, 41 L. Ed. 1064], affirming 57 Minn. 385, 59 N. W. 487, 24 L. R. A. 502, that a statute requiring all regular passenger trains to stop at all county seats within the state was valid; and that a train carrying the United States mails would not be exempt therefrom. The court distinguished this case from that of Illinois Central v. Illinois,' supra,” where it was “necessary for the trains to deviate seven miles from a direct course in order to stop at a particular county seat, while in the case at bar the trains ran directly through the county seat. In Lake Shore & M. S. R. Co. v. Ohio, 173 U. S. 285 [19 Sup. Ct. 465] 43 L. Ed. 702, affirming 8 Ohio Cir. Ct. R. 220, a statute was held valid which required each railroad company operating within the state to cause three, each way, of its regu-1'ar trains carrying passengers, if so many were rnn daily, to stop long enough at a station, city, or village containing over 3,000 inhabitants to receive and let off passengers, as such statute was for the public convenience, and did not constitute a regulation of interstate commerce which would be unconstitutional when applied to trains of a corporation of the state engaged in such commerce. A statute or ordinance regulating the speed of trains within the settled portions of municipalities is not an unconstitutional regulation of interstate conjmerce (Erb v. Morasch, 177 U. S. 584 [20 Sup. Ct. 819], 44 L. Ed. 697, and other cases); and such ordinance will not constitute an unlawful interference with the operation of mail trains running exclusively within the confines of a state (Whitson v. Franklin, 34 Ind. 392).”

The note further says that:

“Much more drastic applications óf the police power than this have been sustained”— citing Knobloch v. Chicago, M. & St. Paul R. R. Co., 31 Minn. 402, 18 N. W. 106, and many other cases.

In discussing this subject, Mr. Cook in his work on the Commerce Clause of the Federal Constitution, at page 225, § 101, says:

“It is obvious that the complete exercise of what we have seen to be the power of a state to establish, not only regulations ‘pertaining to the health, morals, or safety of the public,’ but even such as are ‘designed merely to promote the public convenience’ and general welfare, must involve power to regulate the conduct of those engaged in transportation within the scope of the commerce clause. A provision for such regulation is, perhaps, especially sustainable, if of general application, and not having a special application to those engaged in such transportation. Under this head excellent illustrations are furnished by provisions regulating the speed of railroad trains or other means of transportation, and otherwise the proper scope of such provisions is very broad and not capable of precise definition. A rather extreme instance seems the prohibition of transportation on the Sabbath, by way of giving effect to the policy of the state to prohibit labor on that day.”

The same author (section 104, p. 234) holds that there is no inherent objection to a requirement under the authority of the state that a train employed in transportation within the scope of such commerce clause shall stop at certain times and places, remarking that to what extent such a requirement is sustainable seems difficult to determine, though it seems vaguely assumed that it must be “a reasonable provision for the public convenience,” and is not justified if “all local conditions have been adequately met.”

Believing as we do, under the findings of the court and the facts of this case as disclosed by the record, that the local service at Meridian, outside of trains Nos. 17 and 18, was inadequate for the accommodation of the public at said station, we hold that the order of the Commission was not violative of the interstate commerce clause of the federal Constitution, as contended by 'appellant, and overrule its first seven assignments, predicated thereon.

Again it is urged on the part of appellant that the Railroad Commission was without authority to enter said order. Concerning this insistence, we think it sufficient to call attention to our statute upon this subject (subdivision 2 of article .6676, R. S. 1911) which provides that:

“It shall be the duty of the commissioners to see that, upon every railroad and branch of same carrying passengers for hire in this state, shall be run at least one train a day, Sundays excepted, upon which passengers shall be hauled; and the Commission shall have no power to relax this provision, and shall further regulate passenger train service by requiring all passenger trains carrying passengers for hire to stop for a time sufficient to receive and let off passengers at such stations as may be designated by the commissioners: Provided, that four trains each way, carrying passengers for hire, if so many are run daily, Sundays excepted, be required to stop as aforesaid at all county seat stations.”

This statute gives to the Railroad Commission the power to regulate passenger train service as above outlined, and clothed the Commission, we think, with power in the present case to enter the order complained of. The statute further gives to the Railroad Commission the power to enforce the laws and make all reasonable regulations for the operation of railway trains. Article 6675, R. S.

We do not believe that there is any merit in appellant’s contention to the effect that the punishment was excessive, or that only one offense was committed by the company. The evidence showed, and the court found, that there were 224 violations of this order embraced within the time complained of by the prosecution. Article 6672 of the Revised Statutes, among other things, provides that, if any railway company doing business in this state shall fail, neglect, or refuse to obey any lawful requirement, order, judgment, or decree made by the Railroad Commission of Texas, for every such act of violation it shall pay to the state of Texas a penalty of not more than $5,000.

Every failure on the part of appellant to stop its trains 17 and 18 at Meridian in obedience to said order, constituted, we believe, a complete, separate, and distinct violation of law, for which it was subject to the penalty imposed by the statute. In the nature of things it was not and could not be a continuous offense; hence we think the court did not err in adjudging a penalty for every failure on the part of the company to comply with said order, and overrule the assignments • relating to this matter.

The remaining assignments have been duly considered, and are regarded without merit.

Finding no error in the proceedings of the trial court, its judgment is in all things affirmed.

Affirmed.

Additional Findings of Fact.

In response to appellant’s motion for additional findings of fact, we state that, at the time of the trial, it appeared that four trains per day were operated each way by appellant through Meridian, three of which were scheduled to stop thereat, but that trains Nos. 17 and 18 were not among those so scheduled, and they did not in fact at any time stop in obedience to the order of the Railroad Commission.