Farmers' State Bank & Trust Co. v. Gorman Home Refinery

• Decision Date: 16 April 1925
• Docket Number: (No. 1721.)
• Parties: FARMERS' STATE BANK & TRUST CO. et al. v. GORMAN HOME REFINERY et al.
• Court: Texas Court of Appeals

Page 694

273 S.W. 694

FARMERS' STATE BANK & TRUST CO. et al. v. GORMAN HOME REFINERY et al.

(No. 1721.)

Court of Civil Appeals of Texas. El Paso.

April 16, 1925.

Rehearing Denied May 21, 1925.

Appeal from District Court, Eastland County; E. A. Hill, Judge.

Action by the Farmers' State Bank & Trust Company and another against the Gorman Home Refinery and others. From the judgement denying recovery against certain defendants, plaintiffs appeal. Affirmed.

Witt, Terrell & Witt and Sam R. Scott, all of Waco, for appellants.

J. R. Stubblefield, Chas. C. Robey, Burkett, Orr & McCarty, Dabney & Callaway, Scott W. Key, and Turner, Seaberry & Springer, all of Eastland, J. L. Alford, of Rising Star, J. Frank Sparks, of Gorman, S. R. Carruth, of Meridian, R. F. Higgins, of Marlin, and Callaway, Dalton & Callaway, of Dallas, for appellees.

HIGGINS, J.

This action was originally brought by the Farmers' State Bank & Trust Company against the Gorman Home Refinery, hereinafter designated as the refinery. The third amended original petition upon which the case was tried names said bank and J. L. Chapman, commissioner of insurance and banking, "in charge of the affairs of said bank in course of liquidation," as plaintiffs, the Gorman Home Refinery and numerous individuals, as defendants.

Briefly stated, the amended petition avers the following facts:

The refinery is a joint-stock company or association, J. M. Thomas and Jay F. Smith being its trustees; the other defendants are shareholders in the refinery. On March 17, 1920, J. M. Thomas and W. A. Hickey, then trustees of the refinery, created a debt to the plaintiff bank in the sum of $65,000, to be used in the conduct of the business of the refinery, and to evidence such indebtedness the refinery, acting by its said trustees and agents, executed to the bank three notes aggregating said amount. At the time it was contemplated that the refinery would become further indebted to the bank. To secure the payment of the notes and future indebtedness, the refinery executed a deed of trust upon its property. The three notes have not been paid and the indebtedness which they evidence is now represented by certain renewal notes executed for the use and benefit of the refinery by its trustees as follows:

A demand note in the sum of $6,000 to the order of the makers, dated July 12, 1920, signed by the refinery by J. M. Thomas and F. S. Perry, trustees, and by the makers indorsed in blank.

Four notes in the sum of $5,000 each, to the order of the makers, dated September 30, 1920, due December 31, 1920, signed by J. M. Thomas, F. S. Perry, J. T. Neill, and R. T. Haile, and by the makers indorsed in blank. As to these four notes it was alleged that, while neither of them "were signed by Gorman Home Refinery nor by the trustees thereof as such, the money so obtained upon said note from this plaintiff was for the use and benefit of the said Gorman Home Refinery, and was delivered to it through its trustees."

Two notes in the sum of $5,000 each to the order of the makers, dated October 13, 1920, due in 90 days, signed by the Gorman Home Refinery, J. M. Thomas, trustee, F. S. Perry, trustee, and by them indorsed in blank, and also indorsed by said Thomas, Perry, and J. T. Neill individually. As to these two notes it was alleged:

"That the execution and indorsement of said notes, at the time and in the manner stated, was authorized by the defendant Gorman Home Refinery."

One note in the sum of $5,000 to the order of the makers, dated November 10, 1920, due in 90 days, signed by J. M. Thomas, F. S. Perry, and J. T. Neill, and by them indorsed in blank. As to this note it was alleged:

"That the execution of said notes by F. S. Perry and J. M. Thomas was for the defendant Gorman Home Refinery, and they had authority so to do for said defendant."

Four notes in the sum of $5,000 each to the order of the makers, dated June 11, 1921, due in 90 days, signed by said Thomas, Perry, and Neill, and by them indorsed in blank.

As to these four notes it was alleged:

"That said F. S. Perry and J. M. Thomas executed said notes for defendant Gorman Home Refinery and had its authority so to do."

As to all of the above notes it was alleged that they "were obligations of the defendant Gorman Home Refinery," and also the obligations of the various individual makers according to the signatures of such individuals.

The petition also declared upon an additional indebtedness amounting to about $22,000, created by the refinery to the bank about December, 1920, as evidenced by certain customer's sight drafts drawn by the refinery, trade acceptances of the refinery, and the further sum of $1,468 for money advanced to it. It is alleged:

"As to each of the individual defendants hereinbefore named, they and each of them are stockholders in said joint-stock company or association, and as such are liable to plaintiffs for each and all of the obligations hereinbefore set out, by reason of their being stockholders or shareholders and members in said company or association."

The petition admits a credit of $14,039.73, realized from the sale of the property covered by the deed of trust, and applied on the three notes dated June 11, 1921; also an additional credit of $7,196.98, which had been applied first to the payment of the above item of $1,468, and the balance upon the amount due on the customers' drafts. A copy of the Gorman Home Refinery declaration of trust was attached to and made a part of the petition.

Prior to the trial, the refinery was adjudicated a bankrupt. F. S. Perry was also adjudged a bankrupt and dismissed from the suit.

The pleadings of the defendants are very lengthy and need not be stated. The case was submitted upon numerous special issues, and, upon the answers returned, judgment was rendered in favor of the plaintiffs as follows: Against the refinery and J. M. Thomas for $533, being the balance due on the $6,000 note dated July 12, 1920, and the two notes for $5,000 each, dated October 14, 1920, less the sums of $14,039.73 and $7,196.98, admitted to have been received by the plaintiffs in their petition; the judgment making a different application of the payments than was sought to be made in the petition. Against J. M. Thomas, J. T. Neill, and R. T. Haile for $28,600 principal, interest, and attorney fees due upon the four notes for $5,000 each, dated September 30, 1920. Against J. M. Thomas and J. T. Neill for $34,030, due upon the five notes for $5,000 each; one being dated November 10, 1920, and the other four dated June 11, 1921.

The court rendered judgment in favor of all defendants upon the acceptances and customers' drafts and the item of $1,468 for money advanced. It was ordered that the plaintiffs take nothing by their suit against the individual defendant stockholders of the refinery.

The bank and Chapman, commissioner of banking, appeal from this judgment. No proposition is submitted challenging the correctness of the court's action in applying the admitted credits as shown in the judgment. The appeal involves the right of the plaintiffs to recover against the various stockholders of the refinery other than the signers of the notes, upon the theory that they were liable as partners for all of the refinery's debts.

To those portions of the petition declaring upon the notes dated September 30, 1920, November 10, 1920, and June 11, 1921, the appellees excepted, upon the ground that it affirmatively appeared that these notes were not signed by the refinery, its agents, nor by them, nor were any other facts alleged which would make these notes the obligation of the refinery or said appellees. This exception was sustained,...