Faulk v. Futch

• Decision Date: 03 November 1948
• Docket Number: No. A-1729.,A-1729.
• Citation: 214 S.W.2d 614
• Parties: FAULK et ux. v. FUTCH et ux.
• Court: Texas Supreme Court

Page 614

214 S.W.2d 614

FAULK et ux. v. FUTCH et ux.

No. A-1729.

Supreme Court of Texas.

November 3, 1948.

Rehearing Denied December 1, 1948.

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

Suit by E. W. Faulk and wife against J. S. Futch and wife to enjoin defendants from attempting to interfere with plaintiffs' operation of a common carrier motor freight line by taking physical possession of its operation, equipment and physical properties, in which defendants filed a cross-action for the balance due on a note for the purchase price of the majority of the stock of the freight line corporation, and R. T. Herrin, minority stockholder, intervened and asked appointment of a receiver therefor. To review a judgment of the Court of Civil Appeals, 209 S.W.2d 1008, reforming and affirming as reformed a judgment of the trial court, so as to allow recovery by defendants of all sums due on the note after deducting certain amounts, plaintiffs bring error.

Affirmed.

Maynard F. Robinson, of San Antonio, for petitioners.

Al. M. Heck, Park Street, Carl Wright Johnson and Nat. L. Hardy, all of San Antonio, for respondents.

Phinney, Romick & Hallman, Carl L. Phinney and Leroy Hallman, all of Dallas, Tex., for intervener Herrin.

SHARP, Justice.

E. W. Faulk and wife, Olivia Faulk, filed suit against J. S. Futch and wife, Thelma R. Futch, to enjoin them from attempting to interfere with the operation of a common carrier motor freight line by taking physical possession of its operation, equipment, and physical properties. A temporary injunction was issued by the trial court. Defendants filed general and special answers, and also filed a cross-action against the plaintiffs for the balance alleged to be due upon a promissory note in the principal sum of $33,000, dated June 14, 1946, and signed by plaintiffs. R. T. Herrin, who was the owner of 49% of the capital stock of Airline Freight Line, Inc., intervened in the case, and asked that a receiver for the freight line be appointed.

The trial was to the court without a jury, and the court entered judgment as follows:

1. That E. W. Faulk and Olivia Faulk, plaintiffs and cross-defendants, take nothing by reason of their suit for injunction, and that the temporary injunction theretofore issued be dissolved.

2. That J. S. Futch and Thelma R. Futch, cross-plaintiffs, recover from the cross-defendants, E. W. Faulk and Olivia Faulk, all right, title and interest accruing to them by reason of the ownership acquired by virtue of a sale of certain stock to the cross-plaintiffs for the sum of $15,000, paid by a credit upon an indebtedness and under the terms of a valid pledge agreement, which sale was made thereunder on February 28, 1947, in Bexar County; and all other relief prayed for by cross-plaintiffs was denied, including cross-plaintiffs' prayer for a deficiency judgment.

3. That the receivership prayed for by intervenor be granted.

The case was appealed to the Court of Civil Appeals at San Antonio, and that court, based upon the findings of fact by the trial court, reformed and affirmed the judgment of the trial court as follows: "The judgment will be reformed so as to allow appellees recovery for all sums due on the $33,000.00 note, after deducting the amount of payments made and the credit of $15,000.00 allowed for the sale of the pledged stock and, as thus reformed, it will be affirmed. Costs to be taxed against appellants." 209 S.W.2d 1008, 1011.

The dominant question presented by this case is whether J. S. Futch and Thelma R. Futch were authorized to accelerate the maturity date of the installment note signed by E. W. Faulk and Olivia Faulk and held by them, and declare the entire amount of the principal due and payable. The opinion of the Court of Civil Appeals sets out in detail the facts introduced in evidence, and reference is made to that opinion for such facts. Only the essential facts will be mentioned in this opinion.

On June 14, 1946, E. W. Faulk and wife, Olivia Faulk, purchased from J. S. Futch and wife 51% of the stock of Airline Freight Line, Inc., and five shares of the capital stock of H. & A. Truck Lines, Inc. The petitioners gave a note payable to J. S. Futch and Thelma R. Futch, in the principal sum of $33,000, secured by a pledge of the above stock. The note was payable as follows: $1,000 on September 14, 1946, and $250 in monthly installments, the first of which was due and payable on the 14th day of each succeeding month, for a period of fifteen years. The note further provided that, "in the event any default is made in the payment of any installment of principal or interest hereon, or any part thereof, when due, such default shall, at the option of the holder, at once mature the whole of this note." The note was secured by the pledge of 51% of the stock of Airline Freight Line, Inc., and five shares of stock in H. & A. Truck Lines, Inc. The pledge agreement provided: "In the event of any default in the payment of principal and interest, or any part thereof, when due on said note for $33,000.00, hereinabove described, the holder, or holders, is authorized and empowered, without either demand, advertisement or notice of any kind, to sell at public or private sale, the security then held by said holder, or holders in pledge hereunder, and deliver same to the purchaser or purchasers thereof, and to receive the proceeds of sale. Said holder, or holders, to have the same right to purchase at said sale as a stranger."

The note was payable in San Antonio, Bexar County, Texas, but no specific place was given at which payment could be made. Respondents resided in Seguin, Guadalupe County, Texas, and did not maintain a place of business in Bexar County. Therefore the note was payable at Faulk's place of business in San Antonio, Bexar County, Texas. Parker v. Mazur, Tex.Civ.App., 13 S.W.2d 174; Griffin v. Reilly, Tex.Civ.App., 275 S.W. 242; Bardsley v. Washington Mill Co., 54 Wash. 553, 103 P. 822, 132 Am.St.Rep. 1133; Beckham v. Scott, Tex.Civ.App., 142 S.W. 80; Art. 5937, § 73, Par. 3, Vernon's Ann.Civ.Stats. Furthermore, the rule is well established that, "Where the acceleration clause in a promissory note leaves it optional with the holder whether he shall declare the whole amount due upon failure to pay any installment of principal or interest, such holder cannot without presentment for payment, exercise his option to declare the whole amount due, if no specific place of payment is expressed in the note, until it has been presented to the payor at the latter's known place of business." Griffin v. Reilly, Tex. Civ.App., 275 S.W. 242, 248; Bardsley v. Washingon Mill Co., 54 Wash. 553, 103 P. 822, 132 Am.St.Rep. 1133; Beckham v. Scott, Tex.Civ.App., 142 S.W. 80; Parker v. Mazur, Tex.Civ.App., 13 S.W.2d 174; Ladd v. Anderson, Tex.Civ.App., 89 S.W.2d 1041; Curtis v. Speck, Tex.Civ.App., 130 S.W.2d 348.

It is further shown that respondents had trouble in collecting the installments due on the...