Blocksom v. Guaranty State Bank & Trust Co.
| Decision Date | 30 May 1923 |
| Docket Number | (No. 433-3803.) |
| Citation | 251 S.W. 1025 |
| Parties | BLOCKSOM et al. v. GUARANTY STATE BANK & TRUST CO. et al. |
| Court | Texas Supreme Court |
Suit by the Guaranty State Bank & Trust Company against W. A. Blocksom, Fred C. Pearce, and Wilkie Carter. From a judgment for plaintiff against defendants, and for defendant Carter on his cross-petition, defendants Blocksom and Pearce appealed to the Civil Court of Appeals, which reformed and affirmed the judgment (241 S. W. 315), from which defendants Blocksom and Pearce bring error. Judgment of Civil Court of Appeals and the trial court reversed, and cause remanded for another trial.
Harrison, Cavin & Key, of Eastland, for plaintiffs in error.
Scott, Brelsford, Fundeburk & Ferrell, of Eastland, for defendants in error.
The Guaranty State Bank & Trust Company, defendant in error, brought suit against W. R. Blocksom and Fred C. Pearce, plaintiffs in error, and Wilkie Carter, one of the defendants in error, on a note payable to it and signed by said parties. Said note was in the principal sum of $9,350. It was given in renewal of a former note executed by said parties to said bank in the principal sum of $9,000. The additional sum of $350 included therein was unpaid interest on the original note. The makers of said note were all interested in the Rosedale Oil Company, a common-law trust. Said company was drilling for oil on a tract of land designated as the Goodman lease. It had valuable properties incident to said work assembled thereon. Said oil company owed said bank a note for the principal sum of $12,500, which was the limit which banking laws permitted the bank to lend to one borrower. It needed more money, and, in order to secure the same, Blocksom, Pearce, and Carter executed and delivered to the bank said original $9,000 note, and deposited the proceeds of the same in the bank to its credit. It seems this procedure was suggested by the bank. The purpose in securing this money was to enable the oil company to purchase some casing and other supplies necessary in the prosecution of its work. It purchased such casing and supplies, and paid therefor the sum of $19,000; $9,000 of such purchase money was the proceeds of said note, turned over to it by the makers thereof, as aforesaid. The oil company caused a bill of sale to said casing and supplies to be made to the makers of said note, and they executed and delivered to the bank a chattel mortgage thereon with power of seizure and sale to secure the same. The bank held a mortgage on all the other property of the oil company to secure its $12,500 note. It was agreed by Blocksom, Pearce, and Carter on the one hand and the Rosedale Oil Company on the other that it should assume and pay the $9,000 note, and should use the casing and other supplies purchased in part by the proceeds thereof. Subsequently Carter sold his interest in the oil company to Blocksom and Pearce, and they agreed to protect him from liability on said note. There is no contention that the entire situation was not known to the bank and consented to or acquiesced in by it.
It appears that a few months later Rosedale Oil Company was no longer able to meet its current obligations, and the bank insisted that it liquidate. To aid in accomplishing this purpose the bank demanded and the oil company gave to it a bill of sale to all its properties on the Goodman lease, which properties were alleged to be of the value of $50,000. This bill of sale included the casing and other supplies purchased in part by the proceeds of the original $9,000 note, and upon which the bank still held a mortgage to secure such note. Neither Blocksom nor Pearce joined in the execution of this bill of sale, but they knew of its execution and delivery, and consented to or acquiesced in the same. The bank, shortly after receiving such bill of sale, took charge of the properties and disposed of the same, and applied the proceeds toward the discharge of the obligations of the oil company held by it, including the note sued on. It claimed that it made an equitable distribution of the proceeds of sale between said $12,500 note of the oil company and the $9,350 note sued on. As a result of such distribution the note sued on was credited with $5,694.70. The other note was subsequently fully satisfied; but the record does not disclose how this was done, other than by crediting thereon a part of the proceeds of the sale of the properties covered by said bill of sale.
A trial was had before the court, and resulted in a judgment in favor of the bank against W. R. Blocksom, Fred C. Pearce, and Wilkie Carter for the balance due on said note in the sum of $4,399.60, and for foreclosure of lien on said casing and supplies embraced in their mortgage to secure the same, except such part of such casing and supplies as had theretofore been sold and the proceeds paid to said bank. Judgment was also rendered in favor of Wilkie Carter against W. R. Blocksom and Fred C. Pearce for such amount as he might be compelled to pay to plaintiff on such judgment. Blocksom and Pearce appealed. The Court of Civil Appeals reformed the judgment of the trial court by allowing two credits claimed by Blocksom and Pearce in the aggregate sum of $590, and, after deducting the same from the judgment rendered by the trial court, affirmed said judgment as so reformed. (Tex. Civ. App.) 241 S. W. 315. Blocksom and Pearce applied for writ of error, which was granted by the Supreme Court.
The pleadings of plaintiffs in error were lengthy, and we do not deem it necessary to copy the same here. They pleaded the facts substantially as above set out, except as to some minor details. They denied the right of the bank to seize and sell said property, and pleaded in the alternative, in event it should be held that the bank had the right to seize and sell the same, the following defenses:
(a) They alleged that the bank endeavored to pull the said casing from the well, and that in...
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