Cotton v. Cooper

• Decision Date: 19 February 1919
• Docket Number: (No. 29-2666.)
• Citation: 209 S.W. 135
• Parties: COTTON v. COOPER.
• Court: Texas Supreme Court

Page 135

209 S.W. 135

COTTON v. COOPER.

(No. 29-2666.)

Commission of Appeals of Texas, Section A.

February 19, 1919.

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

Action by Will Cooper against Almon Cotton and another. Judgment for plaintiff was affirmed by the Court of Civil Appeals on appeal of the named defendant (160 S. W. 597), and said defendant brings error. Affirmed.

J. V. Meek, of Houston, and Terrell, Walthall & Terrell, of San Antonio, for plaintiff in error.

Barkley & Green and A. N. Denton, all of Houston, for defendant in error.

SONFIELD, P. J.

Suit by Will Cooper, plaintiff, against Almon Cotton and G. E. Cotton, defendants, to recover actual damages in the sum of $700, alleged to have been suffered by plaintiff by reason of his discharge from the service of the railroad company through the wrongful, fraudulent, and malicious conduct of defendants and their agents, and for $5,000 exemplary damages.

Plaintiff alleged that the defendants, falsely claiming that he was indebted to them in the sum of $35, filed with the Houston & Texas Central Railway Company, his employers, copies of two written instruments, purporting to be assignments made by the plaintiff of portions of his salary or wages to Almon Cotton; that at the time the said assignments were filed by the defendants the said railway company had in force a custom or rule, to the effect that any employé known to have given an assignment or any part of his salary or wages should at once be discharged from its service; that, although the defendants were aware of such rule at the time, and were also aware that at such time he was not indebted to them in any sum, they nevertheless wrongfully, willfully, and maliciously, with wanton disregard of the rights of the plaintiff, and for the purpose of procuring his discharge, filed copies of said assignments, together with notice thereof with the said railway company, and because of the acts of defendants complained of he was discharged by the said railway company from their service, and his wages then due were withheld from him. Trial in the district court before a jury resulted in a verdict and judgment for plaintiff against Almon Cotton for $400 actual damages, and $3,500 exemplary damages.

On appeal the Court of Civil Appeals affirmed the judgment of the district court. 160 S. W. 597.

The following is in part a statement of the facts by the Court of Civil Appeals:

"Almon Cotton is father of G. E. Cotton. G. E. Cotton is 28 years old; * * * he is married and has four children. Almon Cotton owns and operates what he calls `loan offices' in many of the Southern states, in Louisiana, Mississippi, Alabama, Florida, Arkansas, and Texas, apparently only where ignorant negro labor is abundant. In some cities he conducted several of these agencies or loan offices, always under high-sounding names, such as the `Dixie Loan Company,' or some name concealing his own identity and calculated to give to the public the impression of a corporation. In Houston, Tex., he operated the Texas Loan Company, the Empire Loan Company, the New York Loan Company, and the Eagle Loan Company. His business was to loan money on chattels and to `buy' salaries or wages. And this was his method: His own office, called `Central Office,' was in one of the large office buildings of the city of Houston. His various loan companies were scattered about town. In general charge of the loan offices he had one L. H. Joyner, who was his general agent and manager, vested with full authority to act at all times. He also had `outside men' whose duty it was, among others, to advise the needy and helpless that they could always get money from one of Cotton's institutions. The interest charged upon loans seems uniformly to be 20 per cent. per month to whites and 30 per cent. per month to negroes. Each office had positive orders not to make a `loan' upon salaries or wages, but, instead, to `buy' salaries and wages or any such part thereof as the customer should desire to sell and to take an assignment of such an amount thereof as should be `bought' together with power of attorney to Almon Cotton to collect from the borrower's employer. The advances were made in this manner: The borrower executed his assignment and power of attorney, we will say for $19.50, and was thereupon given $15 in cash. At the end of the month he was `permitted' to collect his own salary and bring in the portion which he had pledged to the loan office. If he desired to retain the money he had borrowed, he did not pay the 30 per cent. interest and renew the obligation. Instead, he went through the formality of paying $19.50 in cash. He then executed a new obligation and assignment and received back $15 of the money paid by him. * * *

"Appellee, Cooper, in December, 1909, negotiated with appellants' office, known as the Texas Loan Company, what he thought was a loan of $10 on his salary. The contract he signed was for $13, which, instead of being in form of a loan, was written so that it appeared that he had `sold' that portion of his salary to accrue the succeeding month and also made a power of attorney for the collection of the amount by Cotton. Cooper was a negro brakeman or yardman in the service of the Houston & Texas Central Railway Company, earning about $115 per month. He could not read or write, and the paper which he signed was never read to him. Monthly thereafter, with perhaps a few exceptions, he renewed his loan in the manner above described, up to the time of beginning litigation with appellant. The amount was increased or was made less in accordance with his needs; it appearing that at least once he was entirely out of debt to Cotton. He also had some dealings with another of Cotton's loan offices. The method of doing business was always the same and the rate of interest was always the same. In August of 1911, litigation was begun between appellee and appellant in the courts of Harris county involving the transactions above mentioned. On January 2, 1912, Almon Cotton transferred all his loan business in Texas to G. E. Cotton, his son. The terms of that assignment, briefly stated, were: The consideration was $300,000, all on credit. G. E. Cotton executed his note for that sum to Almon Cotton, due on or before two years after date, and bearing 8 per cent. interest. In case the note should not be paid at maturity, G. E. Cotton agreed to convey the business to any one named by Almon Cotton and at the price fixed by him. And it was also agreed that all the moneys collected by G. E. Cotton, whether principal or interest, except necessary operating expenses and a salary of $100 per month to be retained by him for his services, should be `turned over to Almon Cotton or placed in the Commercial National Bank of Houston, Tex., to his credit.' He agreed to apply such money first to payment of interest and next to discharge of the principal. Almon Cotton was a man of large means, while G. E. Cotton was then insolvent and wholly execution proof. No effort was made to show that the business, purported to have been sold to G. E. Cotton, was worth $300,000 or any other sum. At this time the litigation filed by Cooper against Almon Cotton was pending. On January 8, 1912, L. H. Joyner, who claimed he was acting under the advice of J. V. Meek, attorney for Almon Cotton, wrote upon the back of the two salary assignments referred to an indorsement, `Without recourse,' to G. E. Cotton, which was then signed Almon Cotton. Joyner then filed copies of said assignments with the Houston & Texas Central Railway Company, accompanied by a letter asserting that appellee was then indebted to G. E. Cotton, assignee of Almon Cotton, in the sum of $35 upon those assignments. The railway company at once discharged Cooper and retained funds due to him in the sum of $99.60 to satisfy the appellants' assignments."

The pleadings and evidence raised the issue as to the true character of the two instruments of date, the 16th day of January, 1912, and whether the transactions evidenced thereby were independent or a continuation of a contract theretofore existing between the parties. These issues were properly submitted to the jury and the verdict involved the findings that the transactions were a continuation of the prior contract and were loans made to plaintiff by defendant under the guise of assignments or sales of wages to cloak usury. The verdict involved the further findings that the payments by plaintiff to defendant as interest were sufficient to pay the principal sum, with interest at the rate of 10 per cent. per annum, and that the purported sale by def...