author: LATTIMOBE, Justice.

text:
    ALEXANDER, District Clerk, v. DAVIS.
    No. 12896.
    Court of Civil Appeals of Texas. Fort Worth.
    Jan. 21, 1933.

      Greines & Greines, of Fort Worth, for appellant.
    Wren, Pearson & Jeffrey, A. B. Culbertson, and Stuart & Morgan, all of Fort Worth, for appellee.
   LATTIMOBE, Justice.

This cause is governed by the principles announced in the opinion in W. E. Alexander, District Clerk, v. City of Fort Worth et al. (Tex. Civ. App.) 57 S.W.(2d) 353, this day decided, with this further statement:

The defendant filed a signed document stating that he “waives the issuance of citation upon him and enters his appearance — for all intents and purposes as fully and completely as if citation had been issued and served upon him and he agrees that-the above case may be set at any time that suits the convenience of the court.” The clerk insists that this is an “answer.”

Article 2046, Bev. Civ. Statutes, provides: “The defendant may, in person, or by attorney, or * * * agent, enter an appearance in open court. Such appearance shall be noted by the judge upon his docket and entered in the minutes, and shall have the same force and effect as if the citation had been duly issued and served as provided by law.”

This statute has been in existence since statehood and gives no authority to an appearance other than such as service- of citation would have given. The question of the effect of an appearance has arisen chiefly in connection with the right to amend. Our earliest cases recognized that the statute was not exclusive and said an appearance in open court, even though not noted on the trial docket, gave the court power to grant leave to amend — a right which does not exist where jurisdiction over the defendant does not exist other than by service of citation. Hutchinson v. Owen, 20 Tex. 287, 289. Some of the later cases speak of a “general appearance,” Mueller v. Heidemeyer, 49 Tex. Civ. App. 259, 109 S. W. 447, which is said in St. Louis & S. F. Ry. Co. v. Hale, 109 Tex. 251, 206 S. W. 75, to exist “whenever the defendant invokes the judgment of the court in any way on any question other than * * * jurisdiction, without being compelled to do so by previous rulings of the court sustaining the jurisdiction.” This is more than the statutory appearance, under article 2046, but does not aid us in the solution of this question.

By article 1997, Bev. Statutes, “pleadings in civil suits in the district and county courts shall be by petition and answer,” and the answer shall consist of “the defendant’s ground of defense.” This does not forbid a defendant from filing his pleading stating that he has no defense to the petition, nor is such any the less a pleading. The defendant under indictment is asked, “Do you plead guilty or not guilty?” His answer, “guilty,” is no less a pleading. We believe that at least as far as the term “answer” is used in article 2075 it means that appearance which invokes the judgment of the court in some way upon some portion of plaintiff’s proceedings. This the defendant does not do. He agrees Liat he has been served and that the court may set the case at will. He does not even say he does or will contest it.

The judgment of the trial court is affirmed.


source: Caselaw Access Project

author: JACKSON, Justice.

license: Public Domain

text:
    STATE LIFE INS. CO. v. WILSON.
    No. 4024.
    Court of Civil Appeals of Texas. Amarillo.
    Jan. 25, 1933.
    Rehearing Denied Feb. 22, 1933.

      Bean & Klett, of Lubbock, for appellant.
    Vickers & Campbell, of Lubbock, for ap-pellee.
   JACKSON, Justice.

The appellant, State Life Insurance Company, instituted this suit in the district court of Lubbock county, on August 18, 1932, against appellee, E. Ira Wilson, to cancel a health, accident, and life insurance policy for the sum of $2,500, issued by appellant to appellee on April 11, 1921.

In an amended petition filed October 4, 1932, the appellant alleged;

■The policy provided that, if the insured,-before default in the payment of any subsequent premium, should become wholly and permanently disabled by bodily injury or disease so as to permanently, continuously, and wholly prevent him from performing any work for compensation or profit or following any gainful occupation, the company would, upon receipt of proof of such condition, waive payment of premiums thereafter becoming due and pay the insured monthly 1 per cent, of 'the original amount of the insurance during such disability. That, if insured should fail ¡to furnish such proof or should recover, the obligation to waive payment of premium and the payment of monthly installments under ¡the policy should cease and the insured should resume payments of premiums as the contract stipulated. That the company paid the insured $25 per month for the first nine months of 1931 under the policy, but refused to pay benefits thereafter, and notified the insured to that effect because he had recovered. That the' insured refused to pay the premium due April 11, 1932, and failed to furnish pro'of of his disability as required, on account of which the policy was forfeited and appellant is entitled to a cancellation .thereof. That on April 23, 1932, insured recovered judgment against the company in the county court of Lubbock county for the last three months of 1931 and the first four months of 1932, together with interest and attorney’s fees. That an appeal from such judgment was perfected and is still pending in the Court of Civil Appeals at Amarillo. That later the insured instituted suit in the county court against the company and recovered for the installments of May and June, 1932, attorney’s fees, and penalty, aggregating a judgment in the sum of $81. That ¡no appeal was prosecuted because the amount in controversy was below the jurisdiction of the appellate court. That the insured on September 7, 1932, filed suit in the county court, cause No. 3294, to recover against the company for installments for July and August. That the company filed its plea in abatement to said suit, urging the pendency of this suit in the district court. Its plea' was overruled, and said case was set for trial on October 17th, on which date, in all probability, a judgment will be rendered against the company and the amount involved is below the jurisdiction of the Court of Civil Appeals and no appeal therefrom can be had. The company attached to its petition and made a part thereof copies of the pleadings in cause No. 3294, alleged to be pending in the county court.

That the insured and his attorneys have announced that they will continue to file and prosecute similar suits for an amount below the jurisdiction of the Court of Civil Appeals and in all probability judgment in such suits will be rendered against the company. That such suits are groundless and such action on the part of the insured and his attorneys is for the purpose of harrassing and vexing the company and will harass and vex the company with a multiplicity of suits to its irreparable injury and damage in the sum of $3,-000. That the company has no adequate remedy at law, and this suit in the district court should prevail over any subsequent suit filed in justice or county court, and prayed that a temporary restraining order be issued, enjoining the insured and his attorneys from further prosecuting suits in the county or justice court until this suit in the district court for cancellation is determined, which was granted.

On November 14th the insured answered the suit of appellant in the district court toy demurrers and exceptions to the effect that the allegations in appellant’s petition showed that the county court of Lubbock county, in causes Nos. 3186 and 3268, had adjudged that the insured was totally disabled, under the provisions of the insurance contract, on April 11, 1932; hence was not required to pay the premiums on the policy on said date; that said county court had jurisdiction to hear and determine such matters, and the district court is without power and jurisdiction to again adjudge and determine such adjudicated controversy.

The appellee pleaded in detail the two judgments obtained by him against the company in the county court; that he was disabled within the meaning of the insurance policy on April 11, 1932; that such issue had been adjudicated in said court in his favor; and that the provisions of the policy stipulated that, when he is disabled under its terms, the payment of the premium is waived, and that he Is entitled to the benefits under the policy until the next annual premium date, which will be April 11, 1933.

In answer to the merits, he pleaded a general denial; that he was disabled within the terms of his insurance contract on April 11, 1932, and had been since that date, and because thereof he was not required to pay the annual premium on April 11, 1932, as under the policy the company waived the payment thereof. He alleged that he is afflicted, unable to follow any occupation for compensation, profit, or gain, that he made due proof thereof to the company, and frequently demanded his installments under the insurance contract, all of which were refused.

On hearing, without the. intervention of a jury, the court sustained appellee’s demurrers and exceptions, dissolved the injunction, and dismissed the case for want of jurisdiction, from which action this appeal is prosecuted.

According to an exhibit attached to plaintiff’s petition, the policy contains, among others, these provisions:

“Total & Permanent Disability: If the insured, after paying at least one full annual premium and before default in the payment of any subsequent premium and before attaining the age of sixty years, shall become wholly and permanently disabled by bodily injury or by disease, so that he is and will be permanently, continuously and wholly prevented thereby from performing any work for compensation or profit, or from following any gainful occupation, the company, upon receipt at its home office, of due proof of such disa!-bility of the insured as may be required by the company, will grant the following benefits:

“1. Will waive payment of premiums thereafter becoming due.

“2. In addition will pay to the insured a monthly income equal to 1% of the original amount of insurance (exclusive of any accidental death benefit). The first monthly payment will be made upon satisfactory proof of disability as above provided and subsequent monthly payments will be made on the 1st day of each month thereafter during such disability. .

“Proofs similar to those originally required of such continuous disability must be furnished at any time, if required toy the company, but not oftener than once a year, and if the insured should fail to furnish such proofs, or should so far recover as to be able to engage in any gainful occupation, the obligation on the part of the company to waive payment of premiums and pay to the insured a monthly income shall cease, and the insured shall resume payment of premiums in accordance with this contract, beginning with the first premium becoming due after failure to furnish such proofs or after the date of such recovery.”

Under these provisions, if the insured, after paying one premium and before defaulting in any subsequent premium prior to reaching the age of 60 years, becomes so disabled as to prevent him from doing any work for compensation or following any gainful occupation and furnished the proof thereof required, the appellant waived the payment of premiums during the continuance of such condition and agreed to pay insured $25 per month for such time; however, the proofs of such disability could be required but once a year.

The appellant alleges: That in county court on April 27, 1932, the appellee obtained a judgment against it on the policy, from which an appeal was prosecuted to this court'. Our records show that the judgment in said cause was affirmed by this court, the’ opinion of which is reported in 54 S.W.(2d) 233. That appellant made application for writ of error to the Supreme Court, which is still pending. That the disability of appellee under the terms of his policy was made an issue of fact in the trial of the cause in county court and determined against appellant. The fact that the ease is still pending on an application for a writ of error deprives the judgment of (finality.

“The rule is well established in this state that the effect of an appeal or writ of error, whether prosecuted on cost or supersedeas bond during its pendency, deprives a judgment of that finality of character necessary to entitle it to admission in evidence in support of the right or defense declared by it.” Fidelity Union Casualty Co. v. Hanson et al. (Tex. Com. App.) 44 S.W.(2d) 985, 987 and authorities cited.

The appellant also alleged: That, in addition to the judgment above discussed, the appellee secured a judgment against it in county court for the installments of the months of May and June, 1932, with attorney’s fees and penalty aggregating in amount $81. That no appeal was prosecuted therefrom because such amount was below the jurisdiction of the Court of Civil Appeals. This is therefore a final judgment by a court of competent jurisdiction (article 1970 — 209, Vernon’s Ann. Civ. St.), and, in order for ap-pellee to prevail in said suit, he was required to establish either the payment of the annual premium due April 11, 1932, or that his disability was such that the payment of said premium was waived according to the terms of his policy.

In the case at bar, appellant sues to cancel the Insurance policy on the sole ground that appellee had failed to pay the annual premium due April 11, 1932. If the appellee did fail to pay but was disabled under the provisions of the policy as determined by the court in the final judgment on the installments for May and June, the appellant had by the express provisions of its policy waived the payment of the premium due on that date and the policy could not be canceled on the ground alleged.

“A sentence, judgment or decree of a court acting within its jurisdiction is res judi-cata, preventing the cause of action, fact or matter adjudicated from being relitigated in the same or any other court between the parties and privies, whether the court rendering it had general or inferior, concurrent or exclusive, jurisdiction. The relative rank of the courts involved is immaterial; if the judgment is one which in its nature operates as res judicata, it is binding upon all other courts, even the highest, although rendered by the lowest court in the judicial system.” 34 O. J. § 1285.

The principles announced above are supported by many Texas decisions, the following of which we note: Foster v. Wells, 4 Tex. 101; John D. Freeman v. J. F. McAninch et al., 87 Tex. 132, 27 S. W. 97, 47 Am. St. Rep. 79; Cleveland et al. v. Ward et al., 116 Tex. 1, 285 S. W. 1063.

“The rule which forbids splitting a cause of action is not applicable to a contract of a continuing nature, which is not terminated by a single breach. Thus in ease of a contract providing for periodical payments of money, as the purchase price of property or as rental or salary, a distinct cause of action arises when each installment falls due. Accordingly a separate action -may be brought for each breach, unless the only effect of treating the contract as continuing is to enable the plaintiff to split his cause of action. Where questions are raised and decided in one controversy which apply with equal force to the contract in its entirety, such questions may not be litigated a second time in a subsequent action based upon the contract.” 1 Tex. Jur. 673, § 55.

“Where several claims, due or enforceable at different times, arise out of the same transaction, separate actions may be brought as each liability accrues, although all of such claims which may be due at the time of bringing a given action must be included in it.” 34 C. J. § 1247.

“Where money is payable by installments, a distinct cause of action arises upon the falling due of each installment, and they may be recovered in successive actions, no judgment in the series of actions operating as a bar ti> the recovery of any installment not due at its rendition.” 34 O. J. § 1249.

See, also, Ben C. Jones & Co. v. Gammel-Statesman Publishing Co. et al., 100 Tex. 320, 99 S. W. 701, 8 L. R. A. (N. S.) 1197; Hermann v. Allen, 103 Tex. 382, 128 S. W. 115; Eastland County v. Davisson et al. (Tex. Com. App.) 13 S.W.(2d) 673; 2 Freeman on Judgments (5th Ed.) § 898 ; 2 Black on Judgments, § 749.

In Rau v. American National Insurance Co. (Tex. Civ. App.) 154 S. W. 645, 646, in passing upon an action to enjoin the assured from instituting other suits monthly on an accident policy stipulating for monthly payments because such suits would harass the company and cause it expense and irreparable damage, the court says: “The bringing of the suit in the county court on the 10 installments, then past due, did not estop appellant from instituting suits on the other installments when due, if not paid, and if appellee was vexed or harassed thereby, it must submit or pay the installments. By the terms of the policy ap-pellee had contracted to indemnify appellant, if he was disabled by accident, by the payment monthly of the sum of $100, not to exceed 24 months, for the time appellant was disabled. Appellant had a right of action for each monthly installment, each being distinct and separate from the other, and therefore he was entitled to bring suit on each installment as it became due, if not paid, and appel-lee was not entitled to an injunction without showing some valid reason therefor.”

In our opinion, the court correctly sustained the general demurrer to plaintiff’s petition.

The purported statement of facts in the record is not signed by the attorneys for appellant, nor approved by the trial court; hence it cannot be considered. Therefore, should we, be mistaken in the above holding, the case must be affirmed for the reason that appellee pleaded in the suit at bar his total and permanent disability, under the provisions of his insurance contract, on- April 11, 1932, that he had furnished proof as required, and that such disability still existed. Therefore, in support of the judgment, we will presume, in the absence of a statement of facts, that these issues were determined in behalf of appellee.

The appellant’s application to this court for a temporary writ of injunction restraining ap-pellee and his attorneys from filing further suits during the pendency of this appeal, is refused.

The judgment is affirmed.


author: JOHNSON, Chief Justice.

text:
    REED et al. v. MAGNOLIA PETROLEUM CO. et al.
    No. 4286.
    Court of Civil Appeals of Texas. Texarkana.
    Feb. 17, 1933.
    Rehearing Denied March 2, 1933.
    Cantey, Hanger & McMahon, of Port Worth, and Futch & Weldon and V. W. Mc-David, all of Henderson, for appellants.
    Walace Hawkins and W. H. Francia, both of Dallas, Brachfield & Wolfe, of Henderson, Lasseter, Simpson & Spruiell, of Tyler, Woolworth & Baker, of'Carthage, John A. Braly, of Fort Worth, Young & Wynne, of Henderson, C. S. Hardwick, of Dallas, R'. E. Seagler, of Houston, T. L. Foster, J. W. Timmins, Martin A. Row, C. H. Machen, and. R. W. Gray, all of Dallas, C. L. Stone, of Henderson, and Clay Gotten, of Palestine, for ap-pellees.
   JOHNSON, Chief Justice.

This is an appeal from a judgment of the district court of Rusk county in an action of trespass to try title filed by appellants, Bell Reed and R. L. Duncan, on February 28, 1931, for the recovery of a tract of 112 acres of land located in Rusk county, Tex., for rents, damages, and asking for an accounting of minerals produced from the land. The forty defendants were Mrs. J. C. Bradberry, the widow of J. C. Bradberry, deceased, his heirs, and those persons and corporations claiming under them. Plaintiffs specially pleaded tliat in or about the fall of 1888 or 1889 Bell Reed was then the owner of the land and rented it to J. O. Bradberry; that Bradberry moved on the land, agreeing to pay the taxes, keep the place up, and have the right to cut timber thereon, and should pay Bell Reed as rental $35 per year as long as he occupied it; that it was understood between them that Bell Reed was going away, “.out West,” for an indefinite time, and such tenancy should continue from year to year at the will of Bell Reed; and that, as such tenant, J. 0. Bradberry with his family lived on the place until he died, about the year 1924, since which time the place has been occupied by the widow and heirs of J. O. Brad-berry, deceased. The plaintiffs further pleaded the five and ten years’ statutes of limitation, and claimed an ouster by defendants as of December 11, 1930. The pleadings of the defendants consisted of joint and separate answers, containing general demurrer, general denial, plea of not guilty, and specially pleading title by reason of the five, ten, and twenty-five years’ statutes of limitation. The trial was to a jury, and the court submitted, among others, the following instructions and issues:

“(3) You are instructed that the term ‘peaceable possession’ as used in this charge, means that such possession was continuous and not interrupted by adverse suit or suits to recover the estate.

. “(4) You are further instructed that the term ‘adverse possession,’ as used in this charge, means an actual, visible appropriation of the land sued for and that such possession was commenced and continued under a claim of right inconsistent with and hostile to the claim' of the plaintiffs and all other persons.

■ “Special Issue 1. Do you find from a preponderance of the evidence in this case that J. C. Bradberry purchased through written conveyance from Bell Reed the 112 acres of land on the R. W. Smith Survey in Rusk County, Texas, in controversy in this suit? Answer: No.

“Special Issue 3. Do you find from a preponderance of the evidence in this case that J. C. Bradberry entered into a rental contract with Bell Reed, and went into possession of the 112 acres of land in controversy in this suit, under such contract? Answer: No.

“Special Issue 5. Do you find from a preponderance of the evidence in this case that the defendants, and those under whom they hold and claim, have held peaceable and adverse possession of the land in controversy in this suit, cultivating, using or enjoying the same for any period of ten years before the commencement of this suit? Answer: Yes.”

Upon the findings of the jury the court entered judgment against plaintiffs and in favor of the defendants for the land sued for, from which judgment plaintiffs have appealed.

Appellants’ assignments of errors 1 to 8, inclusive, are directed at special issue No. 5 in the court’s charge submitted to. the jury. Determined by the defendants’ pleadings, the evidence in support thereof, the definitions given by the court in its charge to the jury in connection therewith, the issue is' correctly stated, and the affirmative answer of' the jury thereto entitled the defendants to' the judgment of the court entered thereon vesting title to the property in defendants. The issue is not duplicitous as complained of in appellants’' assignments 1 and 2 by reason of containing the terms “peaceable” and “adverse.” These terms are distinct, but not disjunctive elements of the ultimate fact issue. It is necessary that they' run concurrently, and, where the period of occupancy claimed is more than ten years, the issue or issues submitted should, in the words of the statute, or other appropriate language, require the finding of the jury to include their coexistence. In this case it is not questioned that Bradberry and his family was in continuous possession, using and enjoying the land for more than forty years before this suit was filed. If the first ten years were peaceable but not adverse, and a subsequent ten years were adverse but not peaceable, and the two elements were submitted separately, the jury may have answered each of the two questions in the affirmative without involving a finding of whether they .ran concurrently.

By their assignments 3 and 4 appellants asserted that it was error for the court to submit issue No. 5 to the jury, because there was testimony undisputed by him that J. 0. Bradberry had oftener than once during every ten years of his possession of the land, in conversation with disinterested persons, stated that he was holding the land ás the tenant of Bell Reed. There is testimony in the record by witnesses not connected with' the title, and one or more during each ten-year period, testifying that J. O. Bradberry in conversation with them had made statements to the effect that he had rented the place from Bell Reed for $35 per year, paid the taxes, and kept up the place, until Bell Reed returned and wanted it; and this testimony was undenied by J. O. Bradberry at the trial —he was dead. -However, this testimony of these casual conversations is not that character of testimony which in effect estops the claimants from denying the break in, or proving the continuousness of, his claim. It was only evidentiary in character, and in this case related, first, to the issue of tenancy, No. 3 of the court’s charge, and which the jury answered in the negative; and, second, to be weighed by the jury in connection with the testimony of the defendants relating to the adverse character of Bradberry’s possession. Issue No. 5 as submitted by the court is not wanting, as complained of in appellants’ assignments 5 and 6, in the element of continuousness, when read in the light qf the definitions of “peaceable possession” and “adverse possession” given in connection therewith in the court’s charge instructing the jury to be governed thereby. And we canno.t presume that the jury ignored these definitions and instructions of the court, which presumption would be necessary to sustain appellants’ assignments 7 and 8 to the effect that this issue as submitted was calculated to mislead the jury into believing that the terms “peaceable” and “adverse,” as applied to possession, are synonymous. The fact that there was no evidence opposing the contention of the defendant that J. C. Brad-berry and those claiming under him had peaceable possession, did not make it error or misleading for the court to submit to the jury the element of “peaceable” possession, as complained in appellants’ eighth assignment of error; for the defendants pleaded it, and it was a necessary affirmative element of the ultimate fact issue to be. found by the jury before title could vest in defendants under their plea of limitation, unless it had been admitted by plaintiff or waived and found by trial court. By their 12th; 13th, 14th, and 15th assignments appellants assert that it was error to .enter judgment for the defendants upon the jury’s finding in answer to special issue No. 5 because the jury had answered issues Nos. 1 and 3 in the negative; that by their answer to special issue No. 1 the jury having found that defendants failed to establish their claim of' title by written Conveyance from Bell Reed, and the jury having in answer to special issue No. 3 rejected the plaintiffs’ claim that Bradberry went into possession as a tenant of Bell Reed, and thus havingf rejected the contention of both the plaintiffs and the defendants, relative to their respective theories under which Brad-berry went into possession of the land, therefore defendants’ claim of title by limitation of ten years fell. We do not agree with this contention. It is not inconsistent nor contradictory for defendant in an action in trespass to try title to plead and prote title by limitation, and at the same time attempt to prove title by purchase and written conveyance; and the failure to establish the latter does not defeat the former. Title by statute of ten years’ limitation is an independent plea, and is not dependent upon establishing the legal strength of facts upon which the claimant bases his claim under which he went into possession. In Charle v. Saffold, 13 Tex. 94, 111, Chief Justice Hemphill says: “The circumstances under which the possession is taken are altogether immaterial to the right, provided the occupant claim for himself and adversely to others.”

Appellants’ twenty-fifth assignment of error complains of the action of the court in refusing to give to the jury plaintiffs’ requested issue No. 5, reading as follows: “Do you find from a preponderance of the evidence in this case that J. C. Bradberry and those claiming under him, did oftener than once every 10 years of Feb. —, 1931, state in conversation to any person that Bell Reed owned the land, and that he, Bradberry, was a tenant?”

To support this assignment, appellants cité us to the case of Collins v. Megason (Tex. Civ. App.) 228 S. W. 583, 584, where the refusal of a special issue, in some respects similar to the one above quoted and requested by plaintiff, was under consideration, and Chief Justice Willson correctly said: “There is ample authority for the proposition that ‘interruption * * * of the continuity necessary to acquire title by prescription occurs when the adverse claimant recognizes the title of the disseisee,’ and for the proposition that the possession of such a claimant on such recognition ‘ceases * * * to be adverse, no matter how hostile it may previously have been, and limitation does not again begin to run against the person whose title is acknowledged until the claimant repudiates his title.’ There is also authority for saying, where the pleadings and testimony make such an issue, it is error to refuse a requested correct special charge embodying the propositions set out above when the cause is submitted to the jury in a general charge. * * * Acquiescing in the correctness of the authorities referred to, whether the assignment should be sustained or not depends on the answer which should be made to two questions. Eirst. Did the pleadings and the testimony * * * make such an issue? * * ⅞ Second. Was the refused charge a correct one when considered with reference to the pleadings and the testimony? * * * If ⅛ was not; ⅛ was not error either to refuse it or to fail to prepare and give a correct charge in lieu of it, for the court with reference to the issue to which it was applicable, correctly instructed the jury.”

It will be noted that in the case at bar we have already held that the court correctly submitted the issue to the jury in special issue No. 5 of the court’s charge. In the Coí-lins Case the court found, first, that the plaintiff, in reply to the defendants’ plea of title by limitation,. had specially pleaded defendant’s recognition of plaintiff’s title during the time of his alleged adverse possession ; second, that these pleadings were supported by the testimony of plaintiff Mrs. Collins, to the effect that at a time when the question of title was under consideration between defendant and plaintiff that defendant admitted to plaintiff that he knew her deceased father, under whom she held title, owned the land, and. that he did not claim it against her and the other heirs of her father, and that defendant thereupon entered into an agreement with her whereby he undertook to pay her rent and for timber, and to move oft the place in the fall of that year, and whereby she undertook to pay him for improvements he had made; third, that the special issue prepared and presented by the plaintiffs was correctly stated. When applied to the above rules, we find appellants’ assignment wanting in several material respects. Plaintiff in case at bar did not plead the reply as was pleaded in the Collins Case to defendant’s plea of limitation. Second, the testimony in the case at bar does not of itself establish that kind of recognition of title, as when the title is brought into question, or is under consideration between the defendant and the plaintiff or his agent, and which in effect estops the defendant from denying the break in, or asserting the continuity of, his adverse possession. The testimony in this case is that of witnesses to the effect that Bradberry, in casual conversation with them, stated that he had rented the place from Bell Reed, and it is only evidentiary in character, supporting plaintiffs’ claim of tenancy submitted to the jury by the court in issue No. .3, and disputing defendants’ claim of adverse possession, submitted by the court to the jury in issue No. 5. Third, the requested issue as framed and presented by the plaintiffs in this case is not correct, in that-there is no testimony in the record that “those claiming under him (J. C. Bradberry),” there being some thirty-eight of such, ever at any time stated that “Bell Reed owned the land,” and “that Bradberry was a tenant”; and we do not find in the record any testimony where Bradberry stated in conversation with any person that “Bell Reed owned the land.” The issue as framed presented, in effect, an effort to control and give to testimony a legal effect not authorized in the case. The assignment is overruled.

The testimony of Mrs. J. C. Bradberry, that her husband, J. C. Bradberry, deceased, told her that he had made a contract with Bell Reed and his mother for Bell Reed’s part of the land, was admissible on the issue of the adverse character of Bradberry’s possession. Hickman v. Gillum, 66 Tex. 314, 1 S. W. 339; Wells v. Burts, 3 Tex. Civ. App. 430, 22 S. W. 419; Texas & N. O. Rwy. v. Broom, 53 Tex. Civ. App. 78, 114 S. W. 655; Whittaker v. Thayer, 48 Tex. Civ. App. 508, 110 S. W. 787; Bishop v. Paul (Tex. Civ. App.) 217 S. W. 435. By their 54th, 55th and 56th assignments of errors, appellants complain that the court erred in excluding, as against defendant Magnolia Petroleum Company, the testimony of three witnesses offered by plaintiffs, to the effect that some time in the early part of 1931 before the plaintiffs filed this suit at several different points in Texas they heard over the radio a broadcast inquiring of the public' as to the whereabouts of Bell Reed, and stating that if he could be found to have him communicate with the Magnolia Petroleum Company of Dallas. There is no fact offered in connection with this proposed testimony imputing ownership of the radio, agency on its part, or knowledge on the part of the Magnolia Petroleum Company with reference to the announcement made by radio. The fact that it was made by some person by means of the radio would not take it out of the rule of hearsay. 1 R. C. L. 482; 17 Tex. Jur. 536. The case of Western Union Telegraph Co. v. Campbell (Tex. Civ. App.) 212 S. W. 720, cited by appellants, is not authority for the contention made by appellants in this assignment.

Having duly considered each of appellants’ assignments of errors, and finding no error on which the case should be reversed, the judgment of the trial court is affirmed.


author: WAI/THALL, Justice.

text:
    KIRBY et al. v. FITZGERALD et al.
    No. 2755.
    Court of Civil Appeals of Texas. El Paso.
    Jan. 19, 1933.
    Rehearing Denied Feb. 16, 1933.

      See, also (Tex. Civ. App.) 35 S.W.(2d) 763.
    Bullington, Humphrey & King, of Wichita Falls, and I. M. Williams and Jed C. Adams, both of Dallas, for Fitzgerald, trustee.
    Rosser J. Coke, of Dallas, for First Nat. Bank.
    McCormick, Bromberg, Leftwich & Carring-ton, of Dallas, for Dr. Pepper Co.
    W. D. Thornton, of Dallas, for S. W. Sibley.
    Andrews, 'Streetman, Logue & Mobley, of Houston (J. G. Logue and E. J. Fountain, Jr., both of Houston, of counsel), for Kirby & Carlton.
   WAI/THALL, Justice.

Miss Grace Fitzgerald, as trustee in bankruptcy of the estate of Collin County Realty Company, a corporation, .bankrupt, by her second amended original petition, sues John Henry Kirby, O. S. Carlton, S. W. Sibley, the Dr. Pepper Company, a corporation, and the First National Bank of Dallas, Tex., for judgment against defendants John Henry Kirby, O. S. Carlton, S. W. Sibley, and Dr. Pepper Company for the title, possession, and. delivery to her as such trustee, of certain shares of the common stock of the Dr. Pepper Company, stating the number of shares, alleged to be owned by the Collin County Realty Company, and in the alternation, in ,the event defendants have placed said shares of stock beyond their control, or be not in a position to deliver same to plaintiff, that plaintiff have judgment in damages against defendants for the value of said shares of stock in the. amount alleged, with interest; further, that plaintiff have judgment against defendants Kirby, Carlton, Sibley, and the Dr. Pepper Company, for the redemption value of certain other cumulative preferred shares of stock, stating the number of shares in the value per share as of the date stated, with interest.

We think it well to here briefly state some matters as history of this case preliminary to a statement of the issues on the merits.

Plaintiff states that the Collin County Realty Company 'was duly incorporated and the date of its incorporation, the filing of its petition in bankruptcy to be adjudicated .a bankrupt, that it was duly adjudicated a bankrupt, plaintiff’s appointment as trustee of said .bankrupt estate and effects, plaintiff’s qualification as such trustee; that plaintiff was empowered and authorized by the United States District Court for the Northern District of Texas to bring this action. Defendants Kirby and Carlton each pleaded their privilege to be sued in Harris county, and on a hearing said pleas were overruled, and on appeal the ruling on the pleas were sustained. This cause went to trial before a jury, and in accordance with the verdict the district court entered a judgment in favor of plaintiff and against Kirby, Carlton, and Sibley, jointly and severally, for the sum of $3S1,844.74; that being the value as found by the jury of the shares of stock of the Dr. Pepper Company received by Kirby, together with the dividends he had received thereon, and the redemption value of certain preferred stock transferred to him by iSibley. i’he judgment was in favor of the Dr. Pepper Company and the Eirst National Bank of Dallas, successor to American Exchange National Bank of Dallas. From the judgment against Kirby and Carlton an appeal was perfected to the Dallas Court of Civil Appeals. From the judgment in favor of the Dr. Pepper Company, plaintiff Miss Grace Fitzgerald, trustee in bankruptcy, sued out a writ of error. The record in the two appeals being identical, the Court of Civil Appeals at Dallas consolidated the two appeals.

The record of the transactions leading up to the filing of this suit shows substantially the following: The Collin County Realty Company was organized as a Texas corporation on August SI, 1922, with a capital stock of $100,000. On January 23, 1925, by amendment of its charter its capital stock was in'creased to $200,000. Originally defendant S. W. Sibley was the owner of substantially ' all of the capital stock, but at the time of the ’amendment increasing the capital stock W. T. Ravencraft, trustee, subscribed for and owned $49,500 of the capital stock. At one time defendant John Henry Kirby owned one-half of "the capital stock of the company. Defendant S. W. Sibley was one of the directors of the corporation at all times from its organization. From and after March 24, 1924, T. J. Cole was president of the corporation’s board of directors until his death in May, 1926. The Collin County Realty Company became financially involved during 1925 and 1926. The corporation was adjudicated a bankrupt on May 30, 1928, and Grace Fitzgerald was Appointed trustee.

At the time of its adjudication a bankrupt, it had no assets except ten shares of the preferred stock of the Dr. Pepper Company and this cause of action. Its scheduled debts amounted to $168,975.

Prior to March 14, 1925, the Collin County Realty Company owned 6,868% shares of the common stock of the Dr. Pepper Company and 543% shares of its preferred stock. This stock had been issued to and stood in the name of the Collin County Realty Company on the books of the Dr. Pepper Company, and so remained until it was transferred under the order of defendants S. W. Sibley and O. S. Carlton to defendants John Henry Kirby and O. S. Carlton. During a portion of the time involved in these transactions, John ■Henry Kirby, O. S. Carlton, and S. W. Sibley were each directors of the Dr. Pepper Company. O. S. Carlton was its president until January 1, 1927.-

On March 14, 1925, S. W. Sibley executed his personal promissory note, signed individually, to O. S. Carlton, for the principal sum of $35,000, due six months after date. The note recited a pledge of 550 shares of the preferred stock and 4,000 shares of the common stock, of the Dr. Pepper Company. The note was payable to the.order of O. S. Carlton at Houston, Tex. At the time this note was executed none of the stock referred to was actually delivered to Carlton, and at that time stood in the name of the Collin 'County Realty Company on. the books of the company. After the maturity of the note Carlton assigned it to John Henry Kirby. Following the above transaction, O. S. Carlton executed a series of notes aggregating the sum of $35,000, indorsed by John Henry Kirby, and delivered same to S. W. Sibley; Sibley used these notes at various banks in obtaining funds for his own personal use. At the time of the execution of the Sibley note to Carlton the stock referred to was not delivered, but was then in tho possession of T. J. Cole, president of the Collin County Realty Company. Sibley had access to the safe and stock.

After the execution of the Sibley-Carlton note, and while Carlton was president of the Dr. Pepper Company,’ and, as found by the jury, said stock was then owned by the Collin County Realty Company, Sibley secured possession of 6,868% shares of the common stock and 550 shares of the preferred stock of the Dr. Pepper Company and delivered same to Carlton as security for his note. At the time the stock was delivered to Carlton the certificates were assigned to him as “trustee.” What purported to be a copy of a resolution of the Collin County Realty Company authorizing the transfer of the stock to Carlton, ■ trustee, was secured by the brokerage firm of C. H. Thomas & Co. and transmitted with the certificate's to the St. Louis Union Trust Company, the transfer agents of the Dr. Pepper Company. The Dr. Pepper Company refused to make the transfer upon the books to Carlton and requested infox*mation as to the nature of the trust; thereupon Carlton, through said brokerage company, requested the stock transfer be made to Carlton and Kirby, which was done by St. Louis Union Trust Company. Later the stock was transferred in the name of John Henry Kirby.

The notes to Sibley in exchange' for the Sibley notes to Carlton were not delivered to the Collin County Realty Company, nor were the proceeds thereof used for the benefit of the Collin County Realty Company, but were applied to the personal use of Sibley.

Kirby sued Sibley, personally, and secured judgment on the $35,000 note, with foreclosure of the pledge upon the shares of stock, except as to 6½ shares of the preferred stock, appropriated by Carlton. The Collin County Realty Company was not a party to the suit. The stock was sold under the Kirby judgment and at the execution sale purchased by Kirby, the common stock for $2,500, and the preferred stock for $10,000, and credited on the judgment. Thereafter Kirby asserted ownership in said stock. At the time of the above judgment and sale the Collin County Realty Company had been adjudged a bankrupt. The general manager and the transfer agent of the Dr. Pepper Company were informed by Miss Grace Fitzgerald on September 14, 1920, that the shares of stock, then standing in the name of Kirby, were the property of the Collin County Realty Company. Such information was received by the Dr. Pepper Company prior to the redemption of the preferred stock and the issuance to Kirby of the preferential rights upon the common stock.

On September 7, 1929, the capital stock of the Dr. Pepper Company was increased and a preferential right offered to the record common shareholders, 70,000 shares of the common stock at $12 per share. On the same date the Dr. Pepper Company passed a resolution to redeem the preferred stock for par and accrued dividends up to November 15, 1929.

Under the above increase of the capital stock, price, and resolution, Kirby, on January 15, 1930, received $66,428 for the redemption value of 543¾ shares of the preferred stock, and subscribed for and had issued to him 6,868% shares of the common stock. Kirby also received dividends in the total sum of $17,858.75, upon the common stock held by him and transferred from the Collin County Realty Company.

Plaintiff alleged, in substance, that Carlton, Kirby,' and Sibley, had entered into an unlawful agreement to acquire the stock from the Collin County Realty Company for their personal use and benefit; that Sibley unlawfully pledged this stock owned by the Collin County Realty Company as security for a personal obligation owing by him, and that Kirby and Carlton were both cognizant of such facts.

Defendants filed separate answers; each answered by general denial, and special defensive matters.

The pleadings are too extensive to state the issues joined. The issues are sufficiently reflected in the special issues submitted on the trial. Some issues submitted the jury did not answer.

The jury found:

1. The Collin County Realty Company owned the 6,868% shares of common stock and the 543% shares of the preferred stock of the Dr. Pepper Company at the time Sibley delivered such shares to Carlton as security ior the $35,000 note.

2. The highest market value per share of the common stock of the Dr. Pepper Company after the increase and sale of the 70,000 additional shares to the time of trial was $50.

3. The fair market value per share of the common and preferred stock of the Dr. Pepper Company purchased by Kirby, at the time purchased, on July 3, 1928, was, common stock, $10, preferred stock, $60.

4. The present value per share of the common stock of the Dr. Pepper Company is $27.50.

5. “Do you find and believe from a preponderance of the evidence that S. W. Sibley delivered the stock certificates in question in pledge to O. S. Carlton and John H. Kirby with the knowledge and consent of the officers of said Company having authority to consent thereto? Answer ‘yes’ or ‘no’ as you find the fact to be.” To this question No. 5, the jury made no answer.

6. The $35,000 note executed by Sibley (to Carlton) was not so executed for the use and benefit of 'Collin County Realty Company with the knowledge and consent of the officers of said company having authority to consent thereto.

7. “Do you find and believe from a preponderance of the evidence that the proceeds of the notes for $35,000.00, executed by Carlton and endorsed by Kirby, were used in whole or in part, for the benefit of Collin County Realty Company? Answer ‘yes’ or ‘no,’ as you find the facts to be.” - The jury made no finding to question 7.

8. The Collin County Realty Company did not, acting through T. J. Cole, its president, authorize and consent to the delivery by Sib-ley to Carlton and Kirby of the stock delivered by him to them in consideration of an agreement upon the part of Sibley to use the notes executed by Carlton and indorsed by Kirby, for the benefit of Collin County Realty Company.

9. Sibley agreed with Carlton at the time of the delivery to him of the common stock in excess of 4,000 shares that such excess stock should be held in pledge on account of the deficiency in the preferred stock Sibley had agreed to deliver to Carlton and Kirby.

10. Sibley never delivered to Carlton -and Kirby certificates for more than 543% shares of the preferred stock, in Dr. Pepper Company, under his agreement with Carlton.

11. Kirby did not, from the time when the stock certificates in question.were delivered to him, claim the same adversely to every one except Sibley.

12. Kirby, from the time the stock certificates in question were delivered to Oarlton, claimed the same adversely to every one except Sibley.

13. Carlton did not, from the time when the stock certificates in question were delivered to him, claim the same adversely to every one except Sibley.

14. After the death of T. ,T. Cole, the officers, directors, and stockholders of Collin County Realty Company abandoned the corporate enterprise and turned over to Sibley the assets of said corporation to be disposed of by him in whatever manner and for whatever purpose he saw fit.

15. Sibley, Carlton,.and Kirby entered into an agreement whereby Sibley was to take the common and preferred stock of the Dr. Pepper Company standing in the name of the Collin County Realty Company and pledge the same as security, for the note of $35,000.

16. Carlton and Kirby, at the time of such agreement, knew that such stock was the then property, of the Collin County Realty Company.

17. “Do you find and believe from a preponderance of the evidence that the St. Do.uis Trust Company, transfer agent of the Dr. Pepper Company, was given authority by the Board of Directors of the Collin County Realty Company to transfer the stock from the name of O. S. Carlton, Trustee, to John H. Kirby and O. S. Carlton? Answer yes or no." To question 17, the jury made no answer.

18. The officers and directors of the Collin County Realty Company, other than Sibley, first learned of such transfer (apparently inquired about in question 17) in 1928.

19. “Do you find and believe from a preponderance of the evidence that S. W. Sibley acquired from Collin County Realty Company title to the Dr. Pepper Stock which was put up as collateral for the S. W. Sibley note of $35,000.00 in 1925? Answer yes or no.” The jury made no answer to question 19.

20 and 21. The Collin County Realty Com-jmny was negligent in permitting Sibley to have possession and control of the Dr. Pepper stock, and such negligence was the proximate cause of the injury or damage sued for against the Dr. Pepper Company.

22. The St. Douis Union Trust Company exercised ordinary care in transferring the stock into the name of Carlton and Kirby.

The court defined to the jury the terms “ordinary care,” “negligence,” “proximate cause,” “in a natural and continuous sequence,” and “new and independent cUuse,” as used in the charge.

23. “Do you find and believe from a preponderance of the evidence that on or about the 16th day of December, 1928, N. 6. Land-rum and S. W. Sibley executed a copy of a resolution of the Board of Directors of the Collin County Realty Company directing the transfer of the Dr. Pepper stock into the name of Carlton and Kirby to be forwarded to the St. Louis Union Trust Company? Answer yes or no.” To question 23, the jury made no answer.

24 and 25. The jury made affirmative answer to question 24, submitting whether the Collin County Realty Company, after discovering in December, 1926, that the stock had been pledged to secure the $35,000 Sibley note, was negligent in not notifying or conveying such information to the St. Louis Union Trust. Company and in failing to take any steps or action in respect thereto to put St. Louis Union Trust Company on notice thereof .until after the Collin County Realty Company had been adjudged a bankrupt, but failed to find whether such negligence was the proximate cause of the transfer of the stock to Carlton and Kirby.

' 26. Certificate' No. 210 for 2,500 shares of the common stock of the Dr. Pepper Company standing in the name 'Collin County Realty Company was actually not the property of Sibley.

27. In transferring the stock into the name of Kirby and Carlton, the St. Louis Union Trust Company acted in good faith.

The court overruled motions of' Carlton and Kirby for judgment, and on the verdict of the jury rendered judgment for plaintiff against Kirby, Carlton, and Sibley, in the sum of $381,844.74. Judgment was rendered in favor of the Dr. Pepper Company and the First National Bank. Motions of Kirby and Carlton for new trial were overruled, to which they excepted, and prosecute this appeal.

We have concluded that the case must be reversed and remanded for reasons hereafter stated, but think to state our views on the matters presented.

Opinion.

Under their forty-nine assignments of error, appellants John Henry Kirby and O. S. Carlton submit twenty-two propositions upon which their appeal is predicated.

Appellants’ first four propositions, while not altogether analogous, and depending upon different facts, may be discussed together; they each question the right of appellee, the trustee in bankruptcy, to maintain this suit.

The first- two propositions are to the effect that the trustee in bankruptcy can stand in no better position than the bankrupt corporation and that where the bankrupt corporation consented to the taking of the Dr. Pepper Company certificates of stock by Sibley, its vice -president, and principal owner of the Realty Company stock, no action for conversion will lie. The third proposition is to the effect that prior to the bankruptcy of the realty corporation its entire corporate enterprise was abandoned, and its officers, directors, and stockholders turned all its assets oyer to Sib-ley to be disposed of by Sibley in whatever manner and for whatever purpose he saw fit, and for such reasons no judgment in favor of the trustee can be sustained.

The fourth proposition submits that “one having sued for a conversion treats the alleged unlawful appropriation of the property by defendants as having divested plaintiff of title and cannot sue in the same suit, and especially when not in the alternative, for the property or attempt to trace the proceeds of the property.”

In discussing these several propositions we must look to the findings of the jury for the facts involved in the proposition. If the fact or facts involved in the proposition are not among the jury findings, or admitted, the proposition would be without merit.

We think it might be admitted as a sound proposition of law that the trustee in bankruptcy stands in a similar relation to the property of the bankrupt as does the bankrupt. His position is peculiar; he takes the place of the bankrupt, being vested by operation of law with his title; the law imposes on the trustee the duty of taking into his possession property and assets belonging to the estate of the bankrupt, and of instituting suits for the purpose of collecting and reducing to money the estate property. Texas Jurisprudence, vol. 6, par. 4, and cases cited. All choses in action which are assignable and right of action founded on fraud, the right to recover property belonging to the bankrupt which has been illegally transferred to another, go to its trustee. Under the provisions of the bankrupt act the trustee is vested with property which the bankrupt “could by any means have transferred.” Texas Juris. vol. 6, par. 15; First Nat. Bank v. Lasater, 196 U. S. 115, 25 S. Ct. 206, 49 L. Ed. 408.

•If the Collin County Realty Company was the real owner of the shares of the Dr. Pepper Company at the time Sibley delivered it to Carlton as security for his note, as found by the jury in its first finding, the trustee had the right, by a proper action, to recover- it or its value, unless his right is defeated by some act of omission or commission of the bankrupt corporation.

The second proposition submits that the corporation consented to the taking of the stock by Sibley, and for that reason an action for conversion is not sustained.

The third proposition submits that, on the jury’s findings, the corporate enterprise was abandoned and the officers, directors, and stockholders turned all the assets over to Sib-ley to be disposed of as Sibley saw fit, and on isueh finding no judgment in favor of the trustee can be sustained.

The issues submitted and included in the propositions are numbers 5, 8, and 14. 'No. 5 was not answered. On issue 8 the jury found that the corporation acting through T. J. Cole, its president, did not authorize and consent to the delivery by Sibley to Carlton and Kirby of the Dr. Pepper stock, as submitted in the proposition. On issue 14 the jury found that after the death of T. J. Cole “the officers, directors, and stockholders of the Collin County Realty Company abandoned the corporate enterprise and turned over to Sibley the assets of said corporation to be disposed of by him in whatever manner and for whatever purpose he saw fit.” On other issues the jury found that at the time the stock was pledged to secure the Sibley note, Carlton and Kirby knew that the stock pledged was then the property of the Collin County Realty Company. The finding necessarily included the shares of stock of the Dr. Pepper 'Company owned by the realty corporation at the time of such abandonment and turning over to Sib-ley of its remaining assets.

To appellant’s propositions that under such findings “no action for conversion can be had,” and “no judgment in favor of the trustee can be sustained,” the appellee trustee submits that: “A corporation is without authority to consent to the pledge of its assets by one of its officers as security for his personal indebtedness, and such pledge can be set aside by the corporation or any judgment creditor thereof,” and “the abandonment of the corporate enterprise by the officers, directors and stockholders of a corporation and the delivery of the corporate assets to one of the directors creates such director a trustee to dispose of said corporate assets for the benefit of the stockholders and creditors of such corporation. Such assets thereupon become a trust fund and such officer is without authority to appropriate such assets to his personal use of pledge same for his personal indebtedness.”

The sufficiency of the evidence to justify the submission of the above issues to the jury and to sustain their findings are not questioned. The question presented is as to their legal effect.

We do not attribute much force to the finding, as affecting the corporate property, “that the officers, directors and stockholders of the Collin County Realty Company abandoned the corporate enterprise.” Such abandonment did not have the effect to dissolve the corporation nor to change or affect the rights and duties of its officers with respect to its assets. So far as the .estate of the corporation is concerned, it could mean only that there was a final and complete cessation, a failure to go on in the purpose for which the corporation was organized. Here we are dealing only with the property of the corporation after it has ceased to function and become bankrupt, and the title and right of possession, not otherwise legally disposed of, has passed from the corporation and its officers into the trustee in bankruptcy. Under the finding that the officers, directors, and stockholders “turned over to Sibley the assets of the corporation to be disposed of toy him in whatever manner and for whatever purpose he saw fit,” the difficult and crucial question is presented as to the rights of the corporation, and those of iSibley and Carlton and •Kirby, to whom Sibley pledged the corporate assets.

Under the sixteenth jury finding at all the •times Carlton and Kirby were dealing with Sibley with reference to the Dr. Pepper stock they knew that said stock was then the property of the Collin County Realty Company.

The 'Collin County Realty Company is a domestic corporation organized under the Texas statutes. Under article 1320, it had the power to purchase, hold, sell, mortgage, or otherwise convey such real estate and personal estate “as the purposes of the corporation shall require,” and “to enter into any obligation or contract essential to the transaction of its authorized business.”

Under article 1349 the corporation is inhibited from using its assets for any purpose other than to accomplish the legitimate business of its creation. As we view it the statute enacts a limitation upon the power of the corporation in the matter of its property that it shall not divert its funds from that declared in its charter, and, to do otherwise than permitted, the corporation would be acting beyond the ambit of its corporate powers. Starke v. J. M. Guffey Petroleum Co., 98 Tex. 542, 86 S. W. 1, 4 Ann. Cas. 1057, and statutes and cases cited; Farracy v. Security Nat. Bank of Dallas (Tex. Com. App.) 29 S.W.(2d) 1073, affirming (Tex. Civ. App.) 4 S.W.(2d) 331, on the point involved here; W. C. Bowman Dumber Co. v. Pierson et al., 110 Tex. 543, 221 S. W. 930, 11 A. L. R. 547; Northside Railway Co. v. Worthington, 88 Tex. 562, 30 S. W. 1055, 53 Am. St. Rep. 778.

We have concluded that the act of the abandonment by the corporation of its corporate enterprise, and the turning over to Sibley the assets of the corporation to be disposed of toy him as he saw fit and Sibley’s pledge of the Dr. Pepper shares of stock to. Carlton and Kirby, in no way affected the title or right to the possession of such shares of istock of the trustee in bankruptcy.

In the injunction suit to temporarily enjoin John Henry Kirby and the sheriff of Harris county from making sale of the Dr. Pepper stock in question, appellees took the position that the debt, the Sibley $35,000 note in question, was the debt of the Collin County Realty Company, and on such position the United States District Court temporarily enjoined the sale of the Dr. Pepper stock. Appellants submit that Miss Grace Fitzgerald, trustee in bankruptcy, is now precluded in this suit from changing that position as to the $35,000 note to the position now assumed that the Collin County Realty Company was and is a stranger to that transaction.

Appellants, by several propositions, submit in effect: That, the trustee in the injunction proceedings having assumed the position that the $35,000 note was the debt of the Collin County Realty Company, she could not change that position and on the trial on the merits assert the said note to be the debt of Sibley. We do not concur in the position. The entire record shows beyond controversy that the Sibley $35,000 note, for the payment of which ■Sibley pledged the Dr. Pepper stock, was Sib-ley’s individual indebtedness, and not the debt of Collin County Realty Company, and that Sibley, Carlton, and Kirby knew that the debt was Sibley’s and were not misled by such mistake of fact; their theory of defense in this case is that the note was Sibley’s note and that Sibley, by reason of the abandonment of the Collin County Realty Company corporate enterprise, and the disposition made by the corporation of the Dr. Pepper stock, owned said stock and had the right to secure his note by pledging said stock. The record seems clear that Carlton and Kirby were not misled by the asserted fact in the injunction proceeding that the indebtedness evidenced by the Sibley note was the debt of the corporation.

The judgment in the federal court was on' an ancillary proceeding and not on the merits. Foster v. Wells, 4 Tex. 101; Horton v. Hamilton, 20 Tex. 606; Philipowski v. Spencer, 63 Tex. 604; Cook v. Burnley, 45 Tex. 97; Boykin v. Rosenfield (Tex. Civ. App.) 24 S. W. 323; C. J. vol. 21, p. 1223; Id. p. 1064.

Appellants refer us to Houston Terminal Band Co. v. Westergreen, 119 Tex. 204, 27 S.W.(2d) 526, 527; Stephenson et al. v. Miller-Link Lumber Co. (Tex. Com. App.) 277 S. W. 1039; and other cases. A review of the cases shows that the estoppel by judgment discussed are judgments rendered upon the merits. In the first ease cited, Judge Pierson illustrating the rule to be applied quotes at length from Hanrick v. Gurley, 93 Tex. 479, 54 S. W. 347, 55 S. W. 119, 56 S. W. 330, where it is said: “There is a difference between the effect of a judgment as a bar or estoppel against the prosecution of a second action upon the same claim, * * * and its effect as an estoppel in another action between the isame parties upon a different claim or cause of action. In the former case the judgment, if rendered upon the merits, constitutes an absolute bar to a subsequent action.”

The cases cited by appellants, as we view them, do not state a different rule from the cases we have cited.

We think the question as to whether the $35,000 note was a debt of the Collin County Realty Company or a debt of Sibley, created by Sibley, without any act or signature, resolution, or otherwise on the part of the corporation, was not a material .issue in the. case; it seems to us to be no more than a statement in explanation of Kirby’s possession of the Dr. Pepper stock. Whether the debt was the debt of the corporation or of iSibley, the trustee could recover the stock unless the corporation by some act of its own has through Sibley or otherwise disposed of the stock. The record shows without controversy that the pledge of the stock was made 'by Sibley on March 14, 1925, at a time when the corporation had a president in the person of T. J. Cole, and a board of directors; when the stock stood in the name and was owned by the corporation, and no act of the corporation is shown authorizing Sibley to take or to pledge the stock.

Finding No. 14 has reference to happenings after the death of T. J. Cole on May 10,1926; We do not see how the assets thereafter turned over to Sibley could refer to or include the Dr. Pepper stock already, taken and pledged by Sibley.

The record shows by Sibley’s own statement that he abstracted the Dr. Pepper stock and pledged it for his personal indebtedness, an act inhibited by article 1349 of our statutes ; conceding that the Dr. Pepper stock was included in the assets turned over to Sib-ley and that the corporation authorized such disposition prior to the bankruptcy of the corporation, we see n'o reason why the trustee may not recover such stock so disposed of in direct violation of article 1349, unless it could be said that the title to the stock, as well as its possession, passed to Sibley. Carlton and Kirby, with full knowledge as to Sibley’s rights in the matter .of his possession, got no better title than Sibley had. In the case of Firestone Tire & Rubber Company v. Cross (C. C. A.) 17 F.(2d) 417, referred to by appellants, the court was construing a contract of bailment made by the bankrupt with defendants of the estate or effects of the bankrupt under the statute of South Carolina, a statute different in many respects from the Texas statutes. The court adhered to the construction of the South Carolina courts as the courts of that state had construed its statutes to be applicable to bailments. In that case the defendants’ bailees had possession of the property under the contract prior to the filing of the petition ⅛ bankruptcy; the court held that in the light of the interpretation placed upon the registration laws (the bailment contract not having been recorded as required by statutes of South Carolina), the trustee was not entitled to recover the property or its value. In that case the opinion states that the defendants were not holding the property as security for a debt but as property which belonged to them absolutely and unconditionally, the title to which they 'had never parted with; that the property in controversy was not the property of the bankrupt; and was not transferred in payment of a debt, and whether the taking of possession, even where there was a debt, is valid against a trustee, depends upon the law of the state. The court was dealing with an aetion by the trustee to recover property, not the property of the bankrupt, on the ground that the unrecorded bailment contracts were void as against creditors of the bailee who had not secured a lien; held, that under the facts and the law of South Carolina the trustee could not recover.

We understand that under the Bankruptcy Act (11 UlSCA), rights of action arising from the unlawful determination of the bankrupt’s property, pass to the trustee by the terms of the act.

Appellants submit that the alleged conversion is barred by the two-year statute of limitations (Rev. St. 1925, art. 5526), expressly pleaded. We think that under the evidence the suit is not barred. The evidence shows that the Dr. Pepper stock was held as security for a debt owing by Sibley. Kirby seems to have asserted no unconditional ownership of the stock until he purchased the stock on July 3, 1928. However, we will discuss that later. The suit was filed on October 31,1929. There is an apparent conflict between findings 11 and 12, but we think, under the evidence, without reproducing it, the meaning of the jury possibly becomes appárent and removes the conflict.

The above are the issues submitted on the limitation. Should it be held that issues 11 and 12 are in irreconcilable conflict, and for that reason the issue was not determined, the rule seems well settled that the burden of the issue being with appellants, and a complete defense to the suit, and the case having been submitted on special issues, a failure of appellants to request a submission of the issue waives such defense. Ormsby v. Ratcliffe, 117 Tex. 242, 1 S.W.(2d) 1084, and cases cited. Again, appellants held the stock prior to its sale in the Kirby v. Sibley suit as collateral security to Sibley’s note. In such case to make limitation available repudiation of the pledge and appropriation of the stock with intent to permanently deprive the other party of it, notice 'of such repudiation and appropriation must be shown and that such repudiation, appropriation with notice, had continued for the full statutory period. Davis v. Hardwick, 43 Tex. Civ. App. 71, 94 S. W. 359; Cavitt v. Gulledge (Tex. Civ. App.) 255 S. W. 784.

The jury found (issue 18) that the Collin County Realty Company had not learned of the transfer 'of this stock to Kirby and Carlton until 1928.

In preparing the petition for the injunction suit heretofore referred to, Sibley narrated the statement to his attorney, and attorney for Hiss Fitzgerald, trustee; Mr. Will H. Harris giving in detail the facts and circumstances under which John H. Kirby purchased the Dr. Pepper stock. When and as Sibley made the statement, the attorney, Will H. Harris, dictated to his secretary the Sibley statement. From the Sibley statement, as dictated to the secretary by Mr. Harris, the secretary made a statement referred to in the record as Exhibit No. 127. From the secretary’s statement the petition for the injunction suit was prepared. Sibley verified the petition in the injunction suit. On the trial of this suit appellants offered in evidence the dictated statement of Attorney Harris as prepared by the secretary. Mr. Harris testified that the statement as prepared by the secretary and narrated by him was, in substance, the statement as made by Sibley. Appellee, and Sibley, objected to the evidence on several grounds; briefly stated, the statement offered was not reduced to writing by Sibley, was not signed by Sibley, was a declaration made by iSibley, was hearsay as to Harris and not the best evidence, was a self-serving statement on the part of Sibley, made after the conversion of the stock, was a confidential communication between attorney and client and not admissible against the trustee, was an ex parte statement of attorney Harris based upon what he heard Sibley say. The court sustained the objection and appellant assigns error.

The court permitted Attorney Harris to testify to the facts in the statement as made by Sibley, and appellee submits that if the exclusion of the statement as prepared by the secretary was error, it was rendered harmless by reason of the admission of Harris’ testimony to substantially what Sibley said.

Appellant submits that the statement offered was admissible as impeaching testimony and it was error to exclude it. Appellants refer us to Richard Cocke & Co. v. New Era Gravel & Development Co. (Tex. Civ. App.) 168 S. W. 988; Pruett v. State, 114 Tex. Cr. R. 44, 24 S.W.(2d) 41; Johnson v. Taylor (Tex. Civ. App.) 22 S.W.(2d) 947; Clay v. Richardson (Tex. Civ. App.) 38 S.W.(2d) 849.

We think the exclusion of the statement iis not reversible error. Appellants had the benefit of substantially the same evidence in the testimony of attorney Harris.

Failure of the jury to answer gome of the Questions submitted was assigned as ground for a new trial, and, on that ground, error is assigned to the refusal of the court to grant a new trial. The jury failed to answer questions 5, 7, 17, 19, 23, and 25.

Our present statute, 1925, article 2202, as did the former statute, article 1988, provides ■that' the verdict of the jury “shall comprehend the whole or all the issues submitted to it.”

It would be a difficult and probably a useless task for this court, in the condition of the findings, to undertake to determine severally the materiality of the matters submitted in the several issues, and the dependence upon and relation of the one to the other. Some of the issues submitted upon which no finding was made seem to indicate that the board of directors of the corporation authorized the transfer of the stock to Kirby. In such condition as to the title, as well as possession of the stock before bankruptcy, it would be impossible for this court to determine, in the absence of other findings, whether Kirby then held the stock as trustee for the corporation or as owner — a very important issue in the case. To us the issues submitted, taken as a whole, seem to be confused. There seems to be a confusion, if not a conflict, between findings 11 and 12. The judgment is for a large sum, and we feel that the verdict upon which the judgment is based should be clear. For the reason stated we have concluded that the case must be reversed and remanded.

In view of another trial we do not undertake to discuss whether the verdict is excessive.

The trustee in bankruptcy, Miss Fitzgerald, and the Dr. Pepper Company have agreed and filed a motion asking that the judgment of the court below in favor of said company be affirmed.

Said motion is granted, and for the reasons stated above the judgment against Kirby and Carlton is reversed and remanded.


author: LATTIMORE, Justice.

text:
    GADBERRY v. HOME MUT. LIFE ASS’N.
    No. 12758.
    Court of Civil Appeals of Texas. Fort Worth.
    Jan. 7, 1933.

      Joe S. Gambill, of Denton, and W. O. Davis, of Gainesville, for appellant.
    Sullivan, Speer & Minor, of Denton, for ap-pellee.
   LATTIMORE, Justice.

The appellee is a local mutual aid association such as is referred to in article 4859, Rev. Civ. Statutes. In 1924 it issued its certificate of insurance membership to Bill Gadberry; death benefits payable to Josephus S. Gadberry. This certificate was in response to an application which recited that Bill Gadberry was then in good health and had no lameness, deformity, or injury. The insured died in 1926, and to a suit on the certificate the appellee answered that the recitals above stated in the application were untrue and were material to the risk. When the application was offered in evidence, the appellant objected because neither the same, nor a copy, was attached to the policy, under the authority of article 4951, Rev. Statutes (1911), Whatever may be our views on the questions, if of first impression, is of no consequence. We regard the issue foreclosed under First Texas Prudential Ins. Co. v. Pedigo (Tex. Com. App.) 50 S.W.(2d) 1091, 1092, which stated that article 4951 (1911), now article 5049 (1925), “does not apply to life policies of insurance written after 1909.” “Nothing is found in the language of these statutes to justify the conclusion that the Legislature intended to render unavailable to the insurer as a basis for defense any false representation contained in the application unless the application accompany the policy as a part of it.” The opinion was approved by the Supreme Court.

It is certain that deceased suffered from a serious deformity. The application was signed “Bill Gadberry by Josephus Gadberry.” It being admitted in evidence, appellant contended that he did not sign the application, and that the signature was that of the deceased insured; that the appellee saw Bill Gad-berry at the time it took his application and therefore knew of his deformity, and, not having rescinded the insurance within 90 days, may not claim the defense, by virtue of article 5044. Appellee insisted it never saw Bill Gadberry, and that appellant made out and presented the application. To afford a basis for expert testimony by comparison, ap-pellee questioned appellant if certain tax assessments shown him did not bear his signature and appellant admitted his signature on same, and they were introduced in evidence, and thereafter appellee produced experts who swore'the signatures to be those of the same person, all over appellant’s objection.

The question is not whether appellant can deny the signature to an application which is a part of the contract on which he declares, but rather, is a party to a suit, offering a signature the validity of which is denied, entitled to produce, for the purpose of proving that signature at issue, signed documents otherwise alien to the case, and question the party whose signature is alleged whether the signature thus presented on such alien documents is his, and, upon receiving an affirmative answer, introduce such signature in evidence for the purpose of a predicate for comparison to show validity of the signature which is at issue in the lawsuit?

In the original case, Hanley v. Gandy, 28 Tex. 211, 91 Am. Dec. 315, the authorities are reviewed at great length, and the rule is laid down, subject to certain exceptions, that a witness will not be permitted to express his conclusion as to handwriting when that conclusion is “by means of a comparison of the disputed writing with another written specimen of the same individual produced in court” by the party offering the comparison. The rule is based upon several considerations: Collateral issues which would inevitably arise to distract the attention of the jury, the thorough investigation of which would delay interminably the dispatch of the real issues of the lawsuit, the opportunity • to select specimens of handwriting especially favorable to the party offering them, and the surprise thereby occasioned which would force the postponement of the trial.

The rule, however, has its exceptions: (1) There is the exception concerning ancient documents. Just as the general rule is one of necessity to keep the wheels of justice turning, equally necessary is it that, when documents so long in existence as all witnesses to their execution and acquaintance with the signature are dead, the law permits proof by expert testimony from comparison. Cook v. First Nat’l Bank (Tex. Civ. App.) 33 S. W. 998. This rule explains the correctness of Mardes v. Meyers, 8 Tex. Civ. App. 542, 28 S. W. 693, although the opinion gives other reasoning. (2) Also those signatures which are introduced in evidence for some other purpose by the opposing side so that the authenticity is vouched for. Smyth v. Caswell, 67 Tex. 567, 4 S. W. 848. (3) Likewise those signatures which are already a part of the record and genuine by admission or estoppel. Kennedy v. Upshaw, 64 Tex. 411.

The language, “admittedly genuine,” used, by our courts in regard to this last exception (quotation from Eborn v. Zimpelman, 47 Tex. 503, 518, 26 Am. Rep. 315) is the phrase which has led to a wide divergence in later decisions of the Texas courts. The appellant there contended the signature for comparison w.as admissible where established by the “most satisfactory proof.” The court did not in that case state any approval of such proposition. However, under it some of our courts, as in Kveton v. Keding (Tex. Civ. App.) 286 S. W. 673, and Cannon v. Sweet (Tex. Civ. App.) 28 S. W. 718, have extended the rule to allow extraneous documents with signatures to be introduced for comparison on the production by the one offering same of a witness who testified he saw the person, whose signature was in question, sign the extraneous document. To allow such is to assume that the witness cannot be mistaken or untruthful, or else to permit the opposing litigant to produce evidence to show such mistake or deceit. If the former, it violates the fundamental idea of justice; and if the latter it turns the trial aside to decide collateral issues prohibited by our Supreme Court. Hanley v. Gandy; Smyth v. Caswell, supra.

Other of our courts have declined to give the exceptions any such extension. Campbell v. Campbell (Tex. Civ. App.) 215 S. W. 134; Cook v. First National Bank, supra; Texas State Bank v. Scott (Tex. Civ. App.) 225 S. D. 571; Tarwater v. Donley County State Bank, (Tex. Civ. App.) 277 S. W. 176, 177.

“Law ought to be the crystallization of the rules of reason which govern society. The rule is the shadow, the right is the substance. When the reason fails the shadow fails.” The wisest mind of all ages said: “The letter kill-eth but the spirit maketh alive.”

Tested by each of the reasons for the rule, this evidence was admissible. It raised no collateral issue; for if Gadberry had not admitted his signature to the tax assessment, the inquiry was at an end. It raises no confusion in the jury’s mind, for the signature is admitted. No unfairness or surprise can be urged when Gadberry admits his own signature. We conclude that the tax assessment signature was admissible upon the testimony of Gadberry that same was his signature.

We have examined all* assignments of error, and find no error authorizing us to reverse the cause, and same is affirmed.