Dreeben v. First Nat. Bank

• Decision Date: 13 February 1907
• Citation: 99 S.W. 850
• Parties: DREEBEN et al. v. FIRST NAT. BANK OF McKINNEY.
• Court: Texas Supreme Court

Page 850

99 S.W. 850

DREEBEN et al. v. FIRST NAT. BANK OF McKINNEY.

Supreme Court of Texas.

February 13, 1907.

Error from Court of Civil Appeals of Fifth Supreme Judicial District.

Action by the First National Bank of McKinney against E. Dreeben and another. From a judgment for plaintiff, affirmed by the Court of Civil Appeals (93 S. W. 510), defendants bring error. Reversed.

Israel Dreeben, Church & Doyle, Abernathy & Abernathy, and Ethenage & Baker, for plaintiff in error. Garnett & Smith and R. C. Merritt, for defendants in error.

BROWN, J.

From the statement made by the honorable Court of Civil Appeals, we make the following condensed statement of all the facts bearing upon the liability of the Henderson Mercantile Company upon the note sued on in this case. In the year 1899 the First National Bank of McKinney was engaged in business in that city, and Louis I. Dreeben was a merchant in the same city. The Henderson Mercantile Company was a corporation created under the laws of the state of Texas, doing business at Henderson, Tex., and authorized by its charter to do a general mercantile business, buying and selling merchandise by wholesale or retail, and was authorized to establish branch houses to transact its business in any part of the state. Louis I. Dreeben, a stockholder, vice president, and treasurer of the said mercantile company, delivered to the said bank the following note:

                "1,000.00
                      "McKinney, Texas, January 24, 1899
                

"24th day of April after date for value received we promise to pay to the First National Bank or order, one thousand, 00-100 dollars at their office in McKinney, Texas, to bear interest at the rate of 10 per cent per annum from date. And further hereby agree that if this note is not paid when due to pay all costs necessary for collection, including ten per cent for attorney's fees.

                "No. ____. Due, ____
                "[Signed] Louis I. Dreeben
                "[Signed] E. Dreeben
                "[Signed] Henderson Mercantile Co.,
                                  "L. I. D. V. P. & T."
                

The letters "L. I. D. V. P. & T." which follow the name of the mercantile company indicate that the name was signed by Louis I. Dreeben, as vice president and treasurer of the company. The note was indorsed on the back with the names: E. Dreeben, Louis I. Dreeben. Upon this note was delivered to Louis I. Dreeben $1,000, which was deposited in the bank to his credit, and was drawn out by him on his own checks. Nothing was paid upon this note except $157.10, which was derived from the bankrupt estate of Louis I. Dreeben. This suit was brought upon the note in the district court of Collin county against E. Dreeben and the Henderson Mercantile Company, the latter entering a plea of non est factum to the note; and also pleaded that it was a private corporation, and did not have the power to make the note as charged in the petition. Louis I. Dreeben was a bankrupt and residence not known, therefore not joined in the suit. There is no positive evidence that the Henderson Mercantile Company authorized Louis I. Dreeben to sign its name to the note, and the liability of that company depends upon the following circumstances and facts as found by the Court of Civil Appeals.

Louis I. Dreeben was a stockholder and director, vice president and treasurer of the mercantile company before and after he went to McKinney. He had no means of his own, except personal property worth $300, and was employed by the mercantile company to work for it at a salary of $50 per month. When he arrived at McKinney he had a stock of goods valued at from $6,000 to $7,000, of which he had sole possession. There is no evidence to show how he obtained his goods, but the court found that he must have had financial aid from some person. When Louis I. Dreeben delivered the note to the bank, he told the cashier that his business in McKinney and the business of the Henderson Mercantile Company was "all one." The by-laws of the mercantile company contained a provision that "no contract not sealed or stamped with the seal of the corporation, bearing thereon the words `the Henderson Mercantile Company,' and signed by the president, or general manager in his stead, and the secretary, shall in any way be binding upon or bind this corporation." The corporation had a seal, but it was not attached to the instrument in suit, nor was it signed by the secretary or president of the corporation. During the time that Louis I. Dreeben was in business at McKinney he drew some checks or drafts on the Mercantile Company, which were paid, and the court finds that if others had been drawn they would have been paid. The largest sum drawn for in one draft was $200. At different times during the continuance of the business at McKinney goods were shipped from Louis I. Dreeben's store to the Henderson Mercantile Company at Henderson amounting to about $300. Louis I. Dreeben went into bankruptcy, and Harry Berwald, son of L. Berwald, president, and Israel Dreeben, secretary, of the Mercantile Company went to McKinney November 8, 1899, and requested the bank to present its claim against the estate of Louis I. Dreeben, which was done. The request was in writing, and Harry Berwald signed to it the name of L. Berwald as president and E. Dreeben. The writing recognized the validity of the note sued upon as against the mercantile company and E. Dreeben, but L. Berwald was not in the city at the time, and there is no proof that he authorized Harry Berwald to sign the paper, or that L. Berwald had seen it or agreed to its terms. L. Berwald could not write and Harry, his son, usually signed his name to...