Farmers' & Merchants' Nat. Bank of Fort Worth v. Anderson
| Decision Date | 26 September 1933 |
| Docket Number | No. 41812.,41812. |
| Citation | 216 Iowa 988,250 N.W. 214 |
| Court | Iowa Supreme Court |
| Parties | FARMERS' & MERCHANTS' NAT. BANK OF FORT WORTH, TEX., v. ANDERSON et al. |
OPINION TEXT STARTS HERE
Appeal from District Court, Woodbury County; R. H. Munger, Judge.
Action at law by plaintiff upon a promissory note executed by an unincorporated association in which defendants were shareholding members. A demurrer to the petition was sustained by the trial court, and plaintiff appeals.
Affirmed.Gamble, Read & Howland, of Des Moines, for appellant.
Jepson, Struble & Sifford, Naglestad, Pizey & Johnson, Gill & Gill, and Gleysteen, Purdy & Harper, all of Sioux City, for appellees.
On the 20th day of February, 1919, one H. L. Houghton, H. E. Trowbridge, and F. C. Shoemaker executed articles of association of an unincorporated joint-stock association to be known as Sammies Banking & Investment Company. This association was organized, and the articles of association executed and recorded at Fort Worth, in Tarrant county, Tex., which place was named as the location of its principal office. The general purposes of the company were the purchase and sale of royalties, in oil and gas or other minerals, and the holding and dealing in such royalties, or royalties, or royalty rights, and the development of oil lands by prospecting thereon for oil, gas, or other minerals, and the buying of oil lands, leases for the developing of same for oil and drilling on such leases or fee purchases, the selling of such oil, gas, or minerals produced from such lands, and other activities mentioned in the articles of association for the purpose of doing whatsoever is requisite or necessary or convenient in the conduct of a producing oil and gas company or the buying and selling of said royalties, oil lands in fee, leases on same, and all products. The capital stock of the company was $1,000,000 divided into 100,000 shares of the par value of $10 each, and a form of the certificate to be issued to shareholders was set out in the articles of association. The articles also provided that the business of the company should be managed by a board of trustees, then consisting of three members, and of such additional trustees as thereafter might be provided for and agreed upon by the present trustees board; that such trustees should execute a declaration of trust which would be binding upon them, the survivor or survivors of them, their successors, and their survivor or survivors; that the trustees, their survivor or survivors, or their successors, should have no power to bind the members or shareholders personally; that in every contract entered into relating to the business of the company, its property, or any part thereof, reference must be made to said declaration of trust, and the person, firm, or corporation contracting with such trustees must look only to the funds and property of the company for the payment of any debt that might become due or payable; and that neither the trustees nor shareholders, present or future, should be personally liable therefor, or for any debt incurred or engagement or contract made by the board of trustees, or any officer, agent, or servant acting under them or in behalf of the company. The provision for the nonliability of the shareholders for debts or obligations of the company was also contained in the form of membership certificate and in the declaration of trust which was executed in accordance with the articles of association.
The said Houghton, Trowbridge, and Shoemaker accepted said trust as such trustees, and on the 21st day of February, 1919, executed such declaration of trust, which was also filed and recorded in the office of the clerk of Tarrant county, Tex. On March 13, 1919, the said Houghton, Trowbridge, and Shoemaker, being then the only shareholders and trustees of said association, executed an amendment to the articles of association, pursuant to authority therein contained, whereby the name of the association was changed from Sammies Banking & Investment Company to Security Banking & Investment Company. This amendment to the articles of association was likewise recorded in the office of the county clerk of Tarrant county, Tex.
Thereafter, and some time prior to the 28th day of April, 1922, the defendants became owners of shares of stock of said association. On the 28th day of April, 1922, said Security Banking & Investment Company, by its president, H. L. Houghton, and by its secretary and treasurer, F. C. Shoemaker, executed and delivered to Farmers' & Merchants' National Bank of Fort Worth, Tex., plaintiff-appellant herein, its promissory note for $58,489, due ninety days thereafter. Payment of such note not having been made when due in accordance with the terms thereof, plaintiff-appellant filed its petition in this action in the district court of Woodbury county, Iowa, on the 11th day of January, 1924. Such petition, in addition to alleging the facts already set forth, contained the further allegations that the defendants, and each of them, are owners of shares of stock in, and are members of, such unincorporated joint-stock association; that, by reason of the articles of association as amended, and said declaration of trust, a joint adventure was formed which constituted a binding partnership or joint adventure of the defendants and other shareholders in and members of said unincorporated joint-stock association; that at all times since the organization of such association, by the law of the state of Texas and under the articles of association and amendment thereto and declaration of trust, the defendants are liable jointly and are each liable individually and as partners upon the aforesaid promissory note. Said petition asks judgment against the defendants, and each of them, for the sum of $48,786.62, with interest, attorney's fees, and costs. Copies of the articles of association, of the amendment thereto, and of the declaration of trust, are attached to the petition and made a part thereof.
Four separate demurrers to the petition were filed by different defendants herein. The trial court sustained the demurrers to the petition, and plaintiff, electing to stand upon its petition, appeals from this ruling of the court. The errors assigned by plaintiff for reversal are:
“(1) The trial court erred in sustaining the demurrers for the reason that the material facts well pleaded in plaintiff's petition sustain the cause of action relied upon against the defendants jointly and severally, on the theory that defendants were partners.
(2) The trial court erred in dismissing the plaintiff's petition.”
[1] Appellant contends that the promissory note in suit being a Texas contract, the association having been organized, domiciled, and conducting its business in Texas, the law of that state should govern. The petition is silent as to the residence of the defendants and as to the place where their contracts to purchase shares in the association were entered into. Appellee contends that the contracts of subscription fix the rights and liability of the defendants, and that, in the absence of any showing to the contrary, the presumption arises that the defendants are citizens of this state, and that such contracts were entered into by them in this state. In Van Patten & Marks v. Bedow & Looft, 75 Iowa, 589, 39 N. W. 907, 908, it is said: There appears no reason why the rule thus stated in the Van Patten & Marks Case should not govern in this case.
[2] Aside from the authority of this precedent, however, and treating this action as a transitory action, we believe there is good ground for refusing to follow the principle of comity in this case. The particular phases of the Texas law which appellant contends are applicable to and should be decisive of this case are found in the decisions of the Supreme Court of Texas in the cases of Thompson v. Schmitt, 115 Tex. 53, 274 S. W. 554;Victor Refining Company v. City National Bank, 115 Tex. 71, 274 S. W. 561; and Hollister v. McCamey, 115 Tex. 49, 274 S. W. 562. All of these cases were decided by the Supreme Court of Texas at the same time. In the case of Thompson v. Schmitt, the court held that an association organized under articles and a declaration of trust, similar to the articles and declaration of trust involved in this case, did not constitute a common-law trust; that the articles and declaration of trust did not constitute a compliance with the statutory provisions for limited liability of special partners under limited partnerships; and that, as such articles and declaration of trust provided for a community of interest and a sharing of profits by the shareholders, this constituted a partnership, regardless of any provisions in the articles or declaration of trust or certificates of the shareholders by which they were not to be held for any of the liabilities of the association. The Victor Refining Company Case referred to the Thompson Case as authority for its holding that the trial court did not err in refusing to receive evidence offered to show the plaintiff creditor's knowledge of the provisions of the articles declaring shareholders not liable for debts. The Hollister Case referred to both the Thompson Case and the Victor Refining Company Case as decisive of the propositions that the members of such an association were liable as partners, regardless of the provisions of the articles of association or the knowledge of the creditor in regard to such provisions.
Appellees contend that, to apply such a rule to the facts and circumstances of this case is contrary to good morals, to the principles of abstract justice, and to the public policy of this state, and that this case should be determined in accordance...
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