American Smelting & Refining Co. v. Ridgway

• Decision Date: 09 February 1967
• Docket Number: No. 14981,14981
• Parties: AMERICAN SMELTING & REFINING COMPANY, Appellant, v. William O. RIDGWAY, doing business as Ridgway Company et al., Appellees. . Houston
• Court: Texas Court of Appeals

Page 675

412 S.W.2d 675

AMERICAN SMELTING & REFINING COMPANY, Appellant, v. William O. RIDGWAY, doing business as Ridgway Company et

al., Appellees.

No. 14981.

Court of Civil Appeals of Texas.

Houston.

Feb. 9, 1967.

Rehearing Denied March 9, 1967.

Huggins, Vickery & McConnell, Harley W. McConnell, Houston, for appellant.

Kucera, Lay & Lightfoot, Bennett Lay Houston, for appellees.

WERLEIN, Justice.

This suit was brought upon a sworn account by appellant, American Smelting & Refining Company, sometimes referred to as Federated Metals, the latter being a division of American Smelting & Refining Company, against William O. Ridgway, doing business as The Ridgway Company, and The Ridgway Company, a corporation. After the suit was filed, but before trial, appellee, William O. Ridgway, was adjudged to be of unsound mind, and appellee, William O. Ridgway, Jr., was appointed guardian of his person and estate and made a party to the suit. The case was tried by the court without a jury and judgment was rendered against the corporation and in favor of the appellees, William O. Ridgway, doing business as Ridgway Company, and William O. Ridgway, Jr., his guardian. The parties stipulated that there was due and owing on the open account the sum of $3,507.34, and the only question to be determined was the individual liability of appellee, William O. Ridgway, on such account. The only issue before us is whether the court property denied judgment against William O. Ridgway and William O. Ridgway, Jr. as the guardian of his person and estate.

At the request of appellant the court made findings of fact and conclusions of law. Among other findings, the court found that on June 1, 1960 a certificate of incorporation was issued by the Secretary of State of the State of Texas to The Ridgway Company; that prior to the year 1958 and through May 31, 1960, William O. Ridgway did business as a proprietorship under the name of The Ridgway Company and from time to time purchased supplies from American Smelting & Refining Company; that on September 10, 1958, on October 10, 1958, on December 10, 1958, on April 10, 1958, and on May 9, 1959, The Ridgway Company, a proprietorship, issued checks to appellant in various amounts ranging from $3,300.98 to $5,169.73, all of said checks being signed 'The Ridgway Co.--SPECIAL ACCOUNT' by W. O. Ridgway; that said checks were all endorsed and negotiated by appellant; that on July 13, 1961, on August 12, 1961, on September 13, 1961, on October 11, 1961, and on September 25, 1962, The Ridgway Company, a corporation, issued checks in various amounts to appellant, all of said checks being signed 'The Ridgway Co., Inc.' by W. O. Ridgway or 'The Ridgway Co., Inc.' by W. O. Ridgway, Jr.; that said checks were all endorsed and negotiated by appellant; and that the amount sued for was for merchandise delivered after the incorporation of The Ridgway Company.

The court concluded that the indebtedness sued on was that of The Ridgway Company, a corporation, and not that of William O. Ridgway; and that appellant had notice that The Ridgway Company was a corporation at the time of the deliveries of the goods described in appellant's petition.

Each of the five checks drawn on 'The Ridgway Co.--SPECIAL ACCOUNT' by W. O. Ridgway has printed in the left hand 7/8ths inch wide space on the face of the check the following: 'The Ridgway Co.--Special Acct. 7608 Jensen Drive OX--4--4791.' Each of the five checks issued after 1960 has printed in such space the following: 'The Ridgway Co., Inc., 7608 Jensen Dr. (16) OX--4--4791.' All of said checks were stamped 'For Deposit in the National Bank of Commerce of Houston, Texas, Federated Metals Division American Smelting and Refining Co.' There is no evidence as to who stamped the checks for deposit.

Appellant asserts that the trial court erred in rendering judgment that it take nothing from appellee because The Ridgway Company was incorporated without a change of firm name and appellee did not show that he complied with the notice provisions of Article 1302--2.02, Vernon's Annotated Texas Statutes. Said article provides in substance that whenever a business firm desires to be incorporated without a change of firm name, such firm shall, in addition to the notice of dissolution required at common law, give notice of such intention to become incorporated for at least four consecutive weeks in some newspaper published at the seat of State government, and in the county in which such firm has its principal business office, and that 'Until such notice has been so published for the full period above-named, no change shall take place in the liability of such firm or the members thereof.'

It is not claimed that appellee complied with said article. William O. Ridgway, Jr. testified that he did not know whether his father notified appellant that he had incorporated in 1960, and that the cancelled checks which he found were all the evidence that he had with respect to appellant being notified. Robert A. Colton, General Manager of the Houston plant of appellant, testified that he billed William O. Ridgway, the individual, as The Ridgway Company, from the middle of 1957 until the middle or latter part of 1964, and never changed the style of the account that he carried. He also testified that appellant was never notified by Mr. Ridgway that he had a corporation, and that there was nothing in appellant's file which would reflect that they ever received any notification of such incorporation.

There is no evidence that appellant had actual knowledge of the incorporation of The Ridgway Company. The name of the company was the same after incorporation as it was before. The evidence showed that appellant began dealing with appellee as a proprietorship as early as 1957 and continued to carry the account in the name of The Ridgway Company or Ridgway Company, and made no change in the billing of such company at any time. The invoices and the billing all indicated that appellant had no actual knowledge of appellee's incorporation and confirmed the testimony of appellant's plant manager. Appellee might have concluded from the invoices and billing that appellant understood it was dealing with appellee as a proprietorship.

It is our view that Article 1302--2.02 means exactly what it says. It states in unmistakably clear language that, 'Until such notice has been so published for the full period above-named, no change shall take place in the liability of such firm or the members thereof.' Appellee contends that the only purpose of said article was to inform parties dealing with the firm of its incorporation and that since the checks sent to appellant after the incorporation gave notice that appellee had become a corporation, it was not necessary to comply with said article. There might be some merit in appellee's contention if appellant had actual or express knowledge of the incorporation, since in such event it might be presumed that it was intending to contract with and sell the goods in question to the corporation. But such was not the case. There was never any change in the course of dealing. The material presumably ordered by appellee by telephone in 1964 was picked up from time to time by appellee's truck as shown by the invoices which also showed 'Sold to Ridgway Company'.

It cannot be said that the five checks delivered to appellant after the incorporation conveyed actual or express knowledge of the incorporation to appellant. There is a difference between actual knowledge and notice which might impose upon one the duty of making a reasonably diligent inquiry which might result in actual knowledge. Woodward v. Ortiz, 1951, 150 Tex. 75, 237 S.W.2d 286. See also American Surety Co. of New York v. Bache, 82 S.W.2d 181, Tex.Civ.App.1935, writ ref. Four of the checks issued after the incorporation were issued in 1961 and the last check issued is dated September 25, 1962. The indebtedness for which recovery was sought grew out of the sale and delivery of goods to Ridgway Company in the year 1964. The fact that such checks bore the signature 'The Ridgway Co., Inc.' was not sufficient to establish that the corporation was purchasing goods from appellant two or three years later or previously. As hereinabove stated, there was no change in the firm name, although ...