Citizens' Nat. Bank of Stamford v. Stevenson

• Decision Date: 01 June 1921
• Docket Number: (No. 224-3392.)
• Citation: 231 S.W. 364
• Parties: CITIZENS' NAT. BANK OF STAMFORD v. STEVENSON.
• Court: Texas Supreme Court

231 S.W. 364

CITIZENS' NAT. BANK OF STAMFORD v. STEVENSON.

(No. 224-3392.)

Commission of Appeals of Texas, Section B.

June 1, 1921.

Error to Court of Civil Appeals of Eighth Supreme Judicial District.

Suit by the Citizens' National Bank of Stamford against J. H. Stevenson. From judgment for defendant, plaintiff appealed to the Court of Civil Appeals, which affirmed (211 S. W. 644), and plaintiff brings error. Judgments of the trial court and Court of Civil Appeals reversed, and cause remanded to the trial court, with instructions to render judgment for plaintiff, on recommendation of the Commission of Appeals.

Andrews & Combes, of Stamford, for plaintiff in error.

Stinson, Chambers & Brooks, of Abilene, for defendant in error.

POWELL, J.

In its petition for writ of error, the plaintiff in error states the nature and result of the suit with commendable clearness and brevity as follows:

"This suit was originally brought by plaintiff in error against defendant in error in the district court of Jones county, on the 8th day of August, 1917, for the principal, interest, and attorney fees of a certain promissory note, of date the 1st day of December, 1916, executed by the defendant and payable to the order of the plaintiff for the principal sum of $958.65, due June 30, 1917, bearing interest from maturity until paid at the rate of 10 per cent. per annum, and providing for 10 per cent. attorney fees, on which there was then due, exclusive of interest, the sum of $1,054.51, in which suit the plaintiff, in due form of law, filed its affidavit and bond in attachment, which was duly approved, and the attachment was duly issued in conformity with law on August 8, 1917, and was duly levied on August 9, 1917, on the north one-half of section 21 of the Deaf and Dumb Asylum lands situated in Jones county, Tex., patent No. 311, volume 3, save and except the east 200 acres of said one-half section which had been designated by the defendant as a homestead, a copy of which writ of attachment, with the officer's return thereon, was filed with the county clerk of Jones county for record, and was recorded in the attachment records of said county whereby the plaintiff acquired an attachment lien against said property to secure the amount due on the note sued on. By its first amended original petition plaintiff prayed for judgment for principal, interest, and attorney fees due on said note, and for costs of suit and for the foreclosure of its attachment lien against said property. The defendant below answered that the obligation sued on was given by the defendant to the plaintiff for the purchase of stock in said bank, and was an illegal contract, and contravened the Constitution and statutes of the state of Texas, and therefore void, and prayed that plaintiff take nothing by said suit, and that he go hence without day and recover his costs. The cause was tried before the court without the intervention of a jury, and resulted in a judgment that plaintiff take nothing by its suit, and that the note sued on be canceled and defendant recover his costs. In due time plaintiff filed its motion for new trial, which was overruled, and the cause was brought to the Court of Civil Appeals at Forth Worth, and transferred by the Supreme Court to the Court of Civil Appeals at El Paso, where it was affirmed."

The majority opinion of the Court of Civil Appeals referred to will be found in 211 S. W. 644. Associate Justice Higgins filed a vigorous dissent in a very able and exhaustive opinion. 211 S. W. 646.

As we view it, the controlling question in this appeal is whether or not, when the stock was first issued by the bank, it had been paid for in money. If so, then the note was not void, and Stevenson was liable upon it, as well as the various renewals thereof given from time to time. As bearing upon the above issue, the findings of fact of the trial court, adopted by the Court of Civil Appeals, are:

"The dealings between the parties leading up to and culminating in the execution of the note sued on are substantially as follows: The Citizens' National Bank of Stamford, being incorporated with a capital stock of $30,000, determined to increase its capital stock to $100,000, and thereupon solicited the defendant, by its cashier, to purchase of this issue. The defendant replied that he had no money with which to make a purchase. The defendant testifies that the cashier then replied that he would make him able to buy; that thereafter he executed his demand note for $600, payable to the plaintiff. This latter statement is denied by the cashier, he testifying that defendant executed a 30-day note, payable to the Western National Bank of Fort Worth, Tex. The trial court made the following finding of fact with reference to above and the after dealings of the parties:

"`That defendant was informed that the money would be procured by him signing his note to the Western National Bank of Fort Worth, which he, on June 25, 1909, accordingly did. This note was for $600, representing the purchase price of five shares of stock of the value of $120 each; that the said note of the defendant was a demand note, and was placed by the plaintiff, or J. S. Morrow, acting for the plaintiff, with the said Fort Worth bank, and indorsed by the said J. S. Morrow, and the testimony authorizes the conclusion of fact that the money for the face value of the same was placed to the credit of plaintiff on the books of the Western National Bank; that several days thereafter the plaintiff notified the Comptroller of Currency that the necessary amount of capital stock had been subscribed and paid to the plaintiff, and thereupon the Comptroller of Currency issued his certificate to the effect, authorizing the said increase of capital stock as applied for by the plaintiff.

"`That about the time of the execution of the said note by the defendant to the Western National Bank of Fort Worth, Tex., five shares of the stock of plaintiff, of the par value of $100 per share, was issued, but not delivered, to the defendant, but placed by the plaintiff with the Western National Bank of Fort Worth, as collateral security for the note of the defendant. That thereafter and in about 30 days, the defendant executed his note to the plaintiff to cover the amount of his note to the Western National Bank of Fort Worth, whereupon the note executed by the defendant to said Western National Bank was redeemed or paid and satisfied, and at the time of the execution of the note by defendant to plaintiff, in lieu of the Fort Worth bank note, the plaintiff then delivered said five shares of stock of plaintiff to the defendant. That defendant in this case from time to time renewed his note so given to the plaintiff, culminating in the final note sued on in this case for the sum of $958.65, the interest being added in as the note was renewed from time to time.'"

The record is strikingly free from controverted issues of fact. The facts are all undisputed, except with reference to the note executed by Stevenson to the Western National Bank of Fort Worth. In the first place, Stevenson testified very positively that he never did sign a note to said bank, but only and always to the plaintiff in error. The trial court found against this contention. Again, there was some dispute in the evidence as to whether or not the Fort Worth Bank note was payable on demand, or in 30 or 60 days. The lower court found that it was a demand note, but not presented for payment until 30 days after its execution. The case was very fully developed.

The federal statutes governing the increase of capital stock and the issuance thereof by national banks provide:

"Any association formed under this title may, by its articles of association, provide for an increase of its capital from time to time, as may be deemed expedient, subject to the limitations of this title. But the maximum of such increase to be provided in the articles of association shall be determined by the Comptroller of the Currency; and no increase of capital shall be valid until the whole amount of such increase is paid in, and notice thereof has been transmitted to the Comptroller of the Currency, and his certificate obtained specifying the amount of such increase of capital stock, with his approval thereof, and that it has been duly paid in as part of the capital of such association." U. S. Comp. St. § 9679.

Article 1146 of Vernon's Sayles' Revised Civil Statutes of Texas, carrying out provisions of the Constitution of Texas, is as follows:

"No corporation, domestic or foreign, doing business in the state, shall issue any stock whatever, except for money paid, labor done, which is reasonably worth at least the sum at which it was taken by the corporation, or property actually received, reasonably worth at least the sum at which it was taken by the company. Any corporation which violates the provisions of this article shall, on proof thereof in any court of competent jurisdiction, forfeit its charter, permit or license, as the case may be, and all rights and franchises which it holds under, from or by virtue of the laws of this state."

The defendant in error invoked the Texas law in an effort to avoid his note. The plaintiff in error is a national bank,...