National Bank v. Texas Investment Co.

• Decision Date: 21 June 1889
• Citation: 12 S.W. 101
• Parties: NATIONAL BANK OF JEFFERSON <I>v.</I> TEXAS INVESTMENT CO. <I>et al.</I>
• Court: Texas Supreme Court

12 S.W. 101

NATIONAL BANK OF JEFFERSONv.

TEXAS INVESTMENT CO. et al.

Supreme Court of Texas.

June 21, 1889.

Appeal from district court, Tarrant county.

Assumpsit by the National Bank of Jefferson against the Texas Investment Company, Limited, W. A. Garner, B. B. Paddock, George B. Loving, Fore, Morphy & Henderson, a firm composed of Walker Fore, W. J. Morphy, and R. M. Henderson, J. W. Dabbs & Co., a firm composed of J. W. Dabbs, A. A. Henderson, R. M. Henderson, and Samuel T. Tomlinson, upon a promissory note. Several demurrers were interposed and a plea of non est factum. From a judgment for some of the defendants plaintiff appeals.

Carter & Wynne, for appellant. Hunter & Stewart, Ball & McCart, and Hogsett & Greene, for appellees.

GAINES, J.

This suit is founded upon a promissory note for $10,000, executed by the Texas Investment Company through its general manager, and payable to the firm of Fore, Morphy & Henderson. The note was indorsed by W. A. Garner, B. B. Paddock, and George B. Loving, and delivered to the payees, and was subsequently indorsed by the latter and by R. M. Henderson, both in his own name and that of J. W. Dabbs & Co., and was delivered to plaintiff. The petition shows that in executing the note the maker, the Texas Investment Company, acted as a corporation; but it is averred that in fact the company was not legally incorporated — First, because its charter filed under the general law is not such as was authorized by the statute; and, second, because the capital stock was never subscribed and paid for. The petition, therefore, sought a recovery against the members composing the company, as being merely partners in the enterprise, and individually liable for the debts of the concern. A copy of the articles of the incorporation are, however, annexed to the petition, and made a part of it, and it is prayed in the alternative that in the event that it should be held that the company was legally incorporated, the plaintiff have judgment against it as such. It is also averred in the petition that, after the debt sued upon was created, a new corporation was attempted to be formed, known as the "Texas Investment Company, Limited;" that the old company, being insolvent, transferred all its assets to the new; and that in consideration of such transfer the Texas Investment Company, Limited, assumed and promised to pay all the liabilities of the former company. It is also averred that the assets of the old company were not applied to the payment of its debts, but were diverted by the managers and directors of the new company to other objects. It is claimed in the petition that by reason of the facts so averred the new company held the assets of the old in trust for the payment of the debts of the latter, and on that ground a recovery is sought, not only against the new company on its assumpsit, but also against its directors for the misapplication of these assets, and against sundry individuals and incorporations who are alleged to have received and appropriated portions of the assets, having knowledge of the trust.

This brief statement of the case suggests several difficult questions which lie at the foundation of the action against several of the defendants, but we will first consider certain exceptions interposed to the petition by defendants on the grounds of multifariousness and inconsistency of allegation. Is the petition multifarious? "Multifariousness in equity pleading is the improperly joining in one bill distinct and independent matters, and thereby confounding them; as, for example, the uniting in one bill of several matters perfectly distinct and unconnected against one defendant, or the demand of several matters of a distinct and independent nature against several defendants in the same bill." Whart. Law Dict. The suit here, in the main, is for the recovery of one debt only, and a judgment is sought against several parties, who have, as is alleged, made themselves successively liable for its payment. It is true, as urged by counsel for appellees, that numerous issues are presented, and that the labors of the court in disposing of the litigation are thereby greatly increased. We do not understand that this is an objection which can be successfully urged under our system of practice. From an early day our courts have encouraged the bringing of all parties interested in the subject-matter of a litigation before the court, and determining their rights in one action. Clegg v. Varnell, 18 Tex. 294. We are of opinion, therefore, that as to the maker and the indorsers of the note, the Texas Investment Company, Limited, the directors of that company, and all parties who are alleged to have participated in the misapplication of the funds of the old company with a knowledge of the facts, the causes of action were properly joined in one suit. So far the suit is to collect a debt, and to hold liable for its payment those who have converted property held in trust for its security. But, on the other hand, we think that so much of the petition as seeks a recovery against the directors of the old corporation, on the ground that they were falsely and fraudulently held out to the public; that the capital stock of the corporation had been fully paid; and that thereby plaintiff was induced to discount the note sued on, — presents a distinct cause of action. It is not a suit to collect the debt, but to recover damages for having been wrongfully induced to purchase the obligation. This matter will be again referred to in another part of this opinion. We are also of opinion that it is permissible for a plaintiff in our courts to state the facts upon which he relies for a recovery, and to pray for alternative relief. In this case the plaintiff alleges the manner in which the Texas Investment Company was organized, and claims as a matter of law that the attempted incorporation was not in compliance with the statute, and that therefore it remained a mere partnership, and prays for judgment against its stockholders as individuals. But the petitioner prays that in the event that it is mistaken in its legal conclusion, then that it have judgment against the company as a corporation. The pleader must state the issuable facts upon which he relies for a recovery. It being the duty of the court to draw the legal conclusion, he is not bound by his averment of the law deducible from the facts as pleaded by him. This case is distinguishable from that of Oglesby's Sureties v. State, 11 S. W. Rep. 873, (decided at the present term.) That was an action upon two successive bonds of a tax collector with different sureties, and the petition alleged that there had been a default upon either the one or the other bond, but did not allege an unconditional default upon either. It was there held that the pleading was bad, and that, there being no privity between the sureties upon the two bonds, the two causes of action should not have been joined. The petition did not aver the facts which showed the unconditional liability of the obligors on either bond. It did not allege that the default had occurred either during the first or the second term of office, but did aver that there had been a default, and that if it did not occur during the one term it occurred during the other. The pleading failed to allege positively and directly the facts upon which a recovery was sought, and in that respect was essentially different from the case now before us.

This brings us to the question whether the Texas Investment Company was legally incorporated or not. The copies of its charter and amended charter, which are made a part of the petition, show that they were duly filed in the office of the secretary of state. At the time the note sued on was executed the company was acting under the amended charter, which stated the purpose of its organization as follows: "This corporation is formed for the purpose of buying, selling, and dealing in real estate, live-stock, bonds, securities, and other properties of all kinds, on its own account and for commission, in the United States and elsewhere." This charter was filed in the office of the secretary of state on the 18th day of May, 1883. At that time the original article 566 of the Revised Statutes, which defined the purposes for which corporations could be formed under title 20, was in force. That article, after enumerating 26 special purposes for which corporations could be organized, contained a twenty-seventh subdivision, which read as follows: "For any other purpose intended for mutual profit or benefit not otherwise specially provided for, and not inconsistent with the constitution and laws of this state." It seems to us that the provision is sufficiently comprehensive to embrace the purpose designated in the charter of the company. It was evidently intended that the business of this corporation was to be carried on for the mutual profit and benefit of its shareholders, and we know of no provision of the constitution which prohibits the formation of a corporation for the purpose named. It is not inconsistent with any law of the state then existing, unless it be some provision of the same article of the Revised Statutes. We find no inconsistency between the purpose expressed in the charter and the special purposes provided for in the previous subdivision of that article. It cannot be claimed that all purposes for which a corporation could be formed were designated in the first 26 subdivisions. We must presume that the language of the twenty-seventh subdivision was intended to mean something, and we think it should be construed to mean what it says, and to authorize a corporation for carrying on any business intended for profit which was not expressly or impliedly prohibited by the constitution or some other law. The evident intent was to attract capital and to encourage its combination for the pursuit of any lawful business. Counsel for appellant cite the case of Navigation Co. v....