Easter Oil Corporation v. Strauss
| Decision Date | 04 June 1932 |
| Docket Number | No. 12694.,12694. |
| Parties | EASTER OIL CORPORATION v. STRAUSS.<SMALL><SUP>*</SUP></SMALL> |
| Court | Texas Court of Appeals |
Appeal from District Court, Wichita County; P. A. Martin, Judge.
Suit by J. C. Strauss against the Easter Oil Corporation. From judgment for plaintiff, defendant appeals.
Reversed and rendered.
Taylor, Muse & Taylor, of Wichita Falls, and Slay & Simon, of Fort Worth, for appellant.
Fischer & Fischer, of Tyler, for appellee.
J. C. Strauss instituted this suit in the Eighty-Ninth district court of Wichita county, seeking to recover a judgment against the Easter Oil Corporation for the balance alleged to be due upon a promissory note executed on the 1st day of October, 1928, in the sum of $4,500, and payable on demand, with interest at the rate of 6 per cent. per annum, and for 10 per cent. additional as attorneys' fees. The plaintiff alleged that the note was long past due and no part thereof had been paid except $225, which was paid on January 21, 1931; credit therefor being allowed in the petition.
The defendant in answer pleaded substantially that the note was not that of the corporation for the reason (1) that it had been executed by the president and secretary without authority by the board of directors to execute the same; (2) that Alleine Kelley, the president of the corporation, who executed the note as such, was at the time a married woman, the wife of Kork Kelley, and that the note had been executed without the knowledge or consent of her husband and without his participation in the transaction, and therefore the note was unenforceable; (3) that, while Alleine Kelley had been elected as president of the corporation, yet, when the directors were assembled in meeting, the plaintiff, who was vice president of the corporation, would take charge of the meeting and preside over it, and that Alleine Kelley was president in name only, and hence unauthorized to bind the corporation; (4) that, if the defendant was ever indebted to the plaintiff, as evidenced by the note sued on, it has long since been fully paid, satisfied, and discharged, by reason that plaintiff, while acting as an officer of the corporation, induced its officers and agents to deliver to him checks and payments wholly unauthorized by the defendant corporation or its board of directors largely in excess of the amounts claimed, and hence the note had been discharged; (5) that the note sued on had been prepared by the plaintiff several months before its execution, and that Alleine Kelley for a long period refused to sign the same, but finally did so upon the representation of plaintiff that it was an obligation of defendant corporation, whereas in fact it was for borrowed money due the plaintiff.
To these pleas the plaintiff replied by supplemental petition that, if Alleine Kelley as president and Gordon West as secretary, who had executed the note for the corporation, did so without express authority of the board of directors of the corporation, they were at least impliedly authorized, in that they were the active officers and managers of the corporation, and transacted all of its business with the consent and acquiescence of the directors and stockholders; that the directors all knew of the indebtedness to plaintiff, and had full knowledge of the execution of the note after its execution, and they ratified the same, and at no time ever repudiated it as an obligation of the corporation; that if for any reason the court should hold that Alleine Kelley and Gordon West were not authorized either expressly or impliedly to execute the note, and the note was not an obligation of the corporation, then the plaintiff alleged in the alternative that he was entitled to a judgment for the money he had loaned the corporation with interest at the rate of 6 per cent. per annum from the date of loaning the same, setting out specifically the dates and amounts advanced by the plaintiff to the corporation, which aggregated $4,500.
The defendant filed a supplemental answer in which it reiterated practically the same matters that it alleged in its first amended original answer as to the lack of authority on the part of the president and secretary, and in addition thereto alleged that plaintiff had sold his stock in the corporation, receiving therefor $32,000, and that R. S. Allen, a stockholder, had put $60,000 in the corporation, and had never drawn out anything; that H. E. Clark, another stockholder, had put $70,000 in the corporation, and had never drawn out anything; and that Alleine Kelley and her husband had put in valuable tools and equipment, and had never drawn anything out of the proceeds; and that hence plaintiff should not be permitted to collect his indebtedness at this time, especially in view of the fact that defendant owed large sums of money to its creditors and that plaintiff's debt should not be paid until the other creditors were satisfied, etc.
When the case was called for trial, the defendant, in order to be allowed to open and conclude the case as to the introduction of the testimony and the argument, filed his admission of plaintiff's cause of action as set forth in the petition, except so far as it may be defeated by the facts of the answer constituting a good defense.
Upon the conclusion of the evidence the court, upon a motion of the plaintiff, gave a peremptory instruction to find in plaintiff's favor for the amount due on the note, with interest and attorneys' fees as sued upon. The jury so returned its verdict, and the court thereupon entered judgment in favor of the plaintiff for the sum of $4,409.22, with interest thereon at the rate of 6 per cent. per annum from the date of the judgment.
The defendant filed a lengthy motion for new trial, urging numerous errors, which was overruled, and to which ruling the defendant excepted and has duly prosecuted this appeal.
For reasons hereinafter stated, we will but briefly discuss, several of the questions materially relating to the trial of the case as presented below and as presented here on appeal. One of appellant's defenses presented below and urged here is that the note declared upon by the plaintiff was of no force and effect because executed by Alleine Kelley, a married woman without the joinder of her husband. As to this it must be said that, whatever may be the rule in other jurisdictions, it has been expressly provided by our Legislature that: Article 1306, Rev. Civ. Statutes.
As shown in the evidence, one of the bylaws of the corporation duly adopted reads in part as follows: "The affairs and business of the corporation shall be under the management and control of a board of directors of seven members. * * *"
It is undisputed that the note in question was executed and delivered by the president, Alleine Kelley, without having been so directed or authorized by a resolution or order of the corporation's board of directors, hence the authority for the execution and delivery of the note to the plaintiff must rest upon the evidence of appellee's alleged ratification of those acts by the manners of the board of directors or upon such general authority as must be ascribed to the president and secretary of the corporation who signed the note. While it may be conceded that the president and secretary would have authority by virtue of their offices to create obligations in minor matters arising during the performance of their duties, we are not prepared to hold that such inherent authority extends to the acts under consideration. Appellee himself testified that the note was required by him to cover moneys advanced long before the execution of the note, and there is nothing in the evidence to indicate that the board of directors as such, or any majority thereof, requested or consented to any such advances, amounting in all to some $4,500. It further appears in the evidence that Alleine Kelley long objected to and refused to execute the note, but finally did so, acting under the belief that it was to cover indebtedness for well drilling material theretofore procured from the Strauss-Allen corporation, of which the plaintiff was the president and manager. We do not think the issue of ratification presented by the plaintiff was conclusive, however, and hence should not have been taken away from the jury by the court's peremptory instruction. The charter provided for seven members who were authorized, as we have seen, to manage and control the business, and we do not feel prepared to say that as a matter of law the directors Allen, Clark, and Kork Kelley approved the act of Mrs. Kelley and the secretary in executing and delivering an obligation in a large amount that was immediately enforceable against the property of the corporation. On the contrary, in the statement of facts reference is made to a meeting of the directors of the corporation in which at least a majority of the directors were present, and in which it was urged or suggested that the plaintiffs Strauss, Allen, and Clark be not paid until after all the general creditors had been satisfied.
It is urgently insisted in behalf of appellee that appellant's admission at the opening of the trial had the effect to preclude it of all relief in its behalf. And in this court it is insisted that the effect of the admission was to admit that the note declared upon was the note of the corporation; that it was valid, due, and unpaid, and hence that the court could do nothing else than give the peremptory instruction, citing Dashiel v. Lott (Tex. Com. App.) 243 S. W. 1072; ...
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Pike v. Wachovia Bank & Trust Co., 766
...39, 174 A. 20; Alexander v. Turner, 139 Neb. 364, 297 N.W. 589; McKee v. Capitol Dairies, 164 Or. 1, 99 P.2d 1013; Easter Oil Corp. v. Strauss (Tex.Civ.App.) 52 S.W.2d 336. The outstanding difference between a partnership and a joint adventure is that the former ordinarily relates to a cont......