Altgelt v. Alamo Nat. Bank

• Decision Date: 03 February 1904
• Citation: 79 S.W. 582
• Parties: ALTGELT et al. v. ALAMO NAT. BANK.
• Court: Texas Court of Appeals

79 S.W. 582

ALTGELT et al. v. ALAMO NAT. BANK.

Court of Civil Appeals of Texas.

February 3, 1904.

Appeal from District Court, Bexar County; S. J. Brooks, Judge.

Action by the Alamo National Bank against George C. Altgelt, administrator of Amalie Elmendorf, deceased, in which Otto Staffel, as guardian of Stella Elmendorf and others, minors, intervened. From a judgment for plaintiff, defendant and intervener appeal. Affirmed.

Otto Staffel, Newton & Ward, and Denman, Franklin & McGown, for appellants. Wm. Aubrey and Chas. W. Ogden, for appellee.

NEILL, J.

This suit was instituted by the Alamo National Bank against George C. Altgelt, as administrator of the estate of Amalie Elmendorf, on five promissory notes, aggregating $54,000 principal. Each note bears 10 per cent. interest from maturity, and provides for 10 per cent. additional as attorney's fees if placed in the hands of an attorney for collection. All are made payable to the order of the Alamo National Bank, and are signed, "Elmendorf & Co.," and are alleged to have been executed after the death of Amalie Elmendorf by Henry Elmendorf, as independent executor of her estate, for money loaned to him as such executor for the purpose of carrying on the mercantile business in the name of Elmendorf & Co. belonging to the estate of his testatrix. The administrator, Geo. C. Altgelt, answered (1) by a plea in abatement that it appeared the notes were signed, "Elmendorf & Co.," a partnership, and that none of the partners were named in the petition; (2) by general and special exceptions to the petition; (3) that the notes were not executed by Amalie Elmendorf, nor any person authorized to execute the same for her as the representative of her estate or Elmendorf & Co.; (4) the statute of limitations of two and four years; (5) that the 10 per cent. attorney's fees sought to be recovered were not authorized by law, were unreasonable, and are excessive, and that defendant did not contract to pay such attorney's fees; (6) that, at the time of the death of Amalie Elmendorf, Elmendorf & Co., whose name appeared to be signed to the promissory notes sued on, was a partnership composed of Amalie Elmendorf, Emilie Elmendorf, Henry Elmendorf, and Benno Engelke, and that such partnership was dissolved by the death of Amalie Elmendorf; (7) that, under and by virtue of the will of Amalie Elmendorf, Henry Elmendorf was directed to wind up the estate, and no authority was conferred on him to create debts or execute obligations binding the estate of Amalie Elmendorf, deceased; and (8) that the business of Elmendorf & Co. was not wound up after the death of Amalie Elmendorf, as was the duty of the surviving partners to do, but was carried on in the name of, and for the benefit of, the surviving partners, without authority to bind the estate of Amalie Elmendorf, but with the hope and expectation on their part of reaping large benefits and profits therefrom, all of which was known to plaintiff at the time it contracted the indebtedness therein referred to, and the execution of the various notes sued on, and that much, if not all, of the money for which the notes were given, was appropriated by said partners for their own use and benefit, and not for the use and benefit of said estate; that the business of Elmendorf & Co. was conducted by the surviving partners from the date of Amalie Elmendorf's death, with knowledge on the part of the bank, at a loss, which the bank knew, or ought to have reasonably foreseen; that it took no steps to collect its indebtedness.

Otto Staffel, as guardian of Stella, Armine, and Edward Elmendorf, minors, intervened in the suit, alleging an interest of his wards in the estate of Amalie Elmendorf. Besides general and special exceptions to plaintiff's petition, he pleaded non est factum and the statute of limitations of two years. The exceptions of defendant and intervener to plaintiff's petition were overruled, and the case was tried before a jury, who, under a peremptory instruction from the court, returned a verdict in favor of the plaintiff for the amount—principal, interest, and attorney's fees—alleged to be due upon said notes. From the judgment entered on this verdict, the defendant and intervener have appealed.

Conclusions of Fact.

Charles Elmendorf died in 1878 or 1880. He was the husband of Amalie and the father of Henry Elmendorf. Prior to his death he established and conducted under the name of Elmendorf & Co., a wholesale and retail hardware business, of which he was the sole owner, in the city of San Antonio. Upon his death he left a will by which he bequeathed, subject to a legacy of $2,000, his entire estate to his wife, Amalie, which included the hardware business, which he had owned and conducted under the name of Elmendorf & Co. The will was duly probated. After his death, Henry Elmendorf, the oldest son of Charles and Amalie Elmendorf, was given by his mother the exclusive management and control of the business in the name of Elmendorf & Co., and of all other business and property interests of his mother. He continued in the exclusive management and control of said mercantile business, as well as the control of all the property interests and business affairs of his mother, up to the time of her death, which occurred upon the 10th day of July, 1899. It appears from the record that Henry and Emil, sons of said decedents, and Benno Engelke, a son-in-law, were employed in the business, and received a share of its profits. Emil Elmendorf was engaged as a traveling salesman for the business, and received a percentage of its net profits for his services. Benno Engelke was the bookkeeper for Elmendorf & Co. since 1887, and was paid a percentage of its net profits for his services. Henry Elmendorf, as before stated, was the general manager of the business, and also received a share of the net profits. Emil Elmendorf died in 1898, prior to the date of his mother's death. At the time of his death he was credited on the books of the concern with $9,000; and his wife, Emilie, received a percentage of the profits of the business, and on the 30th day of June, 1899, she was credited in the ledger account of Elmendorf & Co. with $8,709.04. In other words, the undisputed evidence shows that she was a creditor, and not a partner in the business, at the time of Amalie Elmendorf's death, and that she has now an allowed and approved claim against the estate for that amount.

At her death, Amalie Elmendorf left a will, of which she appointed her son Henry executor. The will directs that no bond be required of him, and that no other action be had in the county court or in any other court in relation to the settlement of her estate, other than the probating and recording of the will, and a return into court of an inventory, appraisement, and list of claims of her estate. The will contains no express provision either for carrying on or discontinuing the business of Elmendorf & Co. The will was probated on the 22d day of September, 1899, and Henry Elmendorf, the executor therein named, duly qualified as such executor. The testatrix's interest in Elmendorf & Co. was inventoried by her executor at $82,025.50, which is shown to be the full value of the assets of said business. After Henry Elmendorf qualified as executor, the business of Elmendorf & Co. was conducted by him as such executor, just as it had been before the death of his mother; he having the exclusive management and control of it up to the time, hereinafter stated, of his removal from said executorship by an order of the county court of Bexar county.

For a number of years prior to the death of Amalie Elmendorf, the banking business of Elmendorf & Co. was done with the Alamo National Bank. The money earned from the business was daily deposited there. Elmendorf & Co. drew drafts and checks on the bank against these deposits to pay for merchandise purchased and current expenses whenever money was required by the business for such purposes. Frequently during the lifetime as well as after the death of Amalie Elmendorf the account of Elmendorf & Co. with the bank was overdrawn, varying from day to day in amounts. The overdrafts were honored by the bank, with the understanding that the accounts should be balanced by notes made the bank by Elmendorf & Co. for the amount of overdrafts. Frequently Elmendorf & Co. borrowed money from the bank for the purpose of carrying on the business, executing in the name of the company notes therefor. On July 10, 1899, the date of Amalie Elmendorf's death, the indebtedness of Elmendorf & Co. to the bank amounted to the sum of $28,784.08, for money loaned and paid on overdrafts and used by the business, for which the bank held its promissory notes. This sum of money is included in the notes sued on.

After Amalie Elmendorf's death, Henry Elmendorf, as independent executor of her estate, continued to carry on the business of Elmendorf & Co. in the same manner that it was conducted when she was alive. The dealings of Elmendorf & Co. through such executor continued in the same way, it being understood by the bank that the business was being conducted by the executor in the name of Elmendorf & Co. for the estate of his testatrix. With this understanding between the bank and the executor, money was paid and loaned the latter on overdrafts and promissory notes made in the name of Elmendorf & Co. by Henry Elmendorf in his capacity as independent executor of the estate of his mother, for the purpose of carrying on the business of Elmendorf & Co. The money on loans and overdrafts thus received by the executor in conducting the business of Elmendorf & Co. increased the indebtedness of the concern from $28,784.08, the amount it owed the bank at the date of Amalie Elmendorf's death, to $54,000. The notes executed to the bank for the money were from time to time, as they became due, renewed; and the ones sued on are the notes executed by Henry Elmendorf, in the name of Elmendorf...