Cameron v. First Nat. Bank

• Decision Date: 04 October 1893
• Citation: 23 S.W. 334
• Parties: CAMERON et al. v. FIRST NAT. BANK OF DECATUR.
• Court: Texas Court of Appeals

23 S.W. 334

CAMERON et al. v. FIRST NAT. BANK OF DECATUR.

Court of Civil Appeals of Texas.

October 4, 1893.

Appeal from district court, Wise county; J. W. Patterson, Judge.

Action by the First National Bank of Decatur against Wm. Cameron & Co. and others, partners in a firm known as the Decatur Roller Mill Company, for money loaned said firm. Judgment for plaintiffs. Wm. Cameron & Co. appeal. Reversed.

J. H. Cobb, for appellants. Carswell, Fuller & Terrell, for appellee.

Conclusions — Facts.

STEPHENS, J.

The parties to this appeal, being co-owners of a certain mill at Decatur, Tex., on the 25th day of May, 1888, formed a joint-stock company to operate the mill for one year from that date, under the firm name of the Decatur Roller Mill Company. The partnership agreement lodged the management of the business in a board of directors, consisting of the following four members: Henry Greathouse, who was also vice president and general manager of appellee bank, D. Waggoner, president of said bank, George W. Trenchard, and C. More. The power to borrow money and create debts against the concern, with the restriction that the rate of interest should not exceed 12 per cent. per annum, was lodged exclusively in this board of directors. Greathouse was made treasurer and Waggoner president of the mill company. The plant was valued at $10,000, but there were no other assets, and in order to operate it the board of directors met and determined to borrow $2,000 of appellee bank, which was accordingly done, and the amount evidenced by the promissory notes of the mill company. Upon these notes, or renewals thereof, and an open account for moneys afterwards advanced by said bank in the nature of loans to cover overdrafts drawn by certain officers of the mill company, this suit was instituted by appellee bank against the several stockholders, to recover from them their pro rata parts of the alleged debt, the mill venture having proven a failure. The bank recovered the amount both of the original loan and of the overdrafts, from which judgment Cameron & Co. alone appeal.

About the 1st of December, 1888, Trenchard moved to a distant part of the state, and had no further connection with the board, and soon thereafter More dropped out, and ceased to act as a director, having being deprived of the position of service assigned him in the beginning at the mill, to wit, grain-buyer, which left the management entirely in the hands of Greathouse, then general manager still of the bank, and Waggoner, president of the bank, who acquiesced in the management of Greathouse. During this time the mill was supplied with money by the bank to buy grain, and pay operating expenses, as shown by the overdrafts of the officers of the mill company, upon which recovery was in part had, without any affirmative action on the part of the board of directors in relation thereto. The mill deposits were all kept at the bank, and interest at the rate of 1 per cent. per month was charged on these overdrafts. One Dwyer, as part owner of the mill, was made a defendant in order to have partition of the real estate, but, as he did not sign the partnership contract, no recovery was sought against him, and he was not included in the appeal.

Law.

1. Appellants' first defense — that a national bank is without power to become a partner in the milling business — was properly held inapplicable in this case. The bank certainly had the power to lend money, and this suit was brought to recover in the capacity of creditor, and not as a partner to recover a share of profits, of which there were none. Other reasons might be assigned for the insufficiency of the ultra vires defense in this case. This disposes of the first assignment of error.

2. The exceptions to the auditor's report were properly overruled. The report should have contained a statement of the several items of...