First Nat. Bank v. Rush

• Decision Date: 02 April 1919
• Docket Number: (No. 54-2733.)
• Citation: 210 S.W. 521
• Parties: FIRST NAT. BANK OF AMARILLO et al. v. RUSH.
• Court: Texas Supreme Court

210 S.W. 521

FIRST NAT. BANK OF AMARILLO et al. v. RUSH.

(No. 54-2733.)

Commission of Appeals of Texas, Section B.

April 2, 1919.

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

Suit by the First National Bank of Amarillo against J. W. Rush, in which W. H. Fuqua intervened. There was a judgment of the Court of Civil Appeals reversing a judgment in favor of plaintiff (160 S. W. 319, 609) and plaintiff and intervener bring error. Judgment of Court of Civil Appeals affirmed.

W. F. Ramsey, of Dallas (Reeder & Dooley, and Madden, Trulove & Kimbrough, all of Amarillo, of counsel), for plaintiffs in error.

H. H. Cooper, of Houston, J. A. Stanford, of Waco, and L. C. McBride, of Dallas, for defendant in error.

MONTGOMERY, P. J.

This suit was instituted by the First National Bank of Amarillo (hereinafter for convenience designated as the bank) on the 16th day of March, 1910, against J. W. Rush and Mattie E. Rush, his wife.

The plaintiff alleged that the defendant had on the 24th day of March, 1906, executed and delivered to it a promissory note for $12,000, payable on demand and bearing interest at 10 per cent., and providing for 10 per cent. attorney's fees. The bank sought a judgment for the amount of the note, interest, and attorney's fees, and also a foreclosure on certain notes executed by one Gid Jowell to defendant J. W. Rush of the face value of $20,000, which the bank alleged had been pledged to it as collateral to secure the notes sued on. The defendant Rush answered and admitted the execution of the note and pleaded payment in full thereof, setting out the several items of the alleged payment with the dates thereof. The defendant Rush also claimed ownership of the collateral notes and sought a judgment for their possession. On January 13, 1911, W. H. Fuqua intervened in the suit, and among other things alleged that in the year 1904 intervener and defendant Rush entered into a partnership for the purpose of buying and selling cattle; that under the terms of the partnership the intervener was to furnish the necessary money and the defendant Rush pasturage for the cattle, and also to give the business his personal attention; and that the intervener should first be reimbursed for the money advanced by him without interest, and all profits divided equally between the parties.

Intervener alleged that the cattle copartnership was in force on March 24, 1906, and that on that day the intervener and defendant entered into a copartnership agreement for the purchase and sale of a section of land in Swisher county, which contract was in writing, and was as follows:

"This memorandum of agreement, made and entered into by and between W. H. Fuqua of Potter county, Texas, and J. W. Rush of Swisher county, Texas, witnesseth:

"That the said J. W. Rush has purchased a certain section of land situated in Swisher county, Texas, and described as follows: Being section No. 27, block W-1 in Swisher county, Texas, being the section of land just east of the town of Tulia, Swisher county, Texas, for the consideration of $9,600 cash; and the said W. H. Fuqua has paid $9,600.00, being the purchase price of said land, for the said Rush.

"In consideration of the premises, the said Rush is to handle said section of land and to dispose of the same to the best advantage possible and is to pay the said Fuqua back the $9,600.00, so paid by him as above set out, without interest and is to further pay the said Fuqua two thirds of all the profits made on said section of land over and above the said $9,600.00 paid for same, as aforesaid; the said Rush to have and be entitled to the other one third of the profits made on said lands, if any.

"The said Fuqua hereby agrees not to charge any interest on the $9,600.00 advanced by him to the said Rush and invested in the above described lands, but is to have, when said lands are sold, the said $9,600.00 back together with two thirds of the profits on the same.

"We, the said W. H. Fuqua and J. W. Rush, hereby bind ourselves, our heirs, executors and administrators to carry out the terms of this contract.

"In testimony whereof we have signed our names, this the 24th day of March, 1906.

                                   "[Signed] W. H. Fuqua
                                             "J. W. Rush."
                

The intervener further alleged that, pursuant to this contract and before the execution thereof, the defendant Rush drew a check on the bank to pay 10 per cent. of the purchase money for said land, and the intervener, who was president and actively in charge of the affairs of the bank, procured said check to be cashed, and that after the execution of the contract the deed was made to defendant and by his direction sent to the bank, and that the intervener procured said bank to pay the balance due for said land. The total price for the land was $9,600.

Intervener further alleged that all the partnership business, both as to the land and the cattle, was conducted in the name of J. W. Rush and all the money for said partnership was furnished by the intervener by causing the bank to pay checks drawn by Rush on the bank, which checks were charged on the books of the bank to J. W. Rush, and that Rush knew all the facts and accepted the same as a compliance by intervener with his obligation to furnish the necessary funds. Intervener further alleged that as cattle were sold the proceeds of such sale were remitted to the bank and by Fuqua's direction deposited in an impersonal account called "Fuqua-Rush Cattle Account," and as the lands were sold the proceeds were deposited in the bank by the direction of Fuqua to "Fuqua-Rush Land Account."

The plea of intervention set out various sums of money alleged to have been furnished, as above specified, and also alleged the several sums deposited in the cattle account and the land account and set up various other matters connected with the two alleged partnerships for the purpose of showing the condition of said partnerships.

It was alleged that the collateral note upon which a foreclosure was sought was the property of the land partnership, and that the note sued on by plaintiff was a liability of the partnership, although executed in the name of J. W. Rush, and that the payments alleged by defendant Rush to have been made to the bank on the note sued on were partnership funds, and that same were not payments on the note sued on, and that said payments were properly applied to overdrafts which had been incurred by Rush drawing checks on the bank, and which were charged to his account. Intervener sought a dissolution of and winding up of the affairs of both partnerships, and prayed that Rush be required to pay the note sued on out of partnership assets alleged to be in his possession, and for other relief.

The defendant Rush replied to the plea of intervention by exceptions and general denial. He also alleged and claimed in substance that, after the execution of the contract for the purchase of the land, the intervener failed and refused to advance the money in payment for same, and that by mutual consent the contract was in fact abandoned and rescinded.

The bank by supplemental petition denied the allegations of the defendant's answer, and especially pleaded that the payments alleged to have been made by defendant were not applied on said note, and that there had been no direction to apply same on the note, and that the defendant at the time of making such payments gave no directions as to the application thereof, and that the said alleged payments were in fact deposited by plaintiff and Fuqua in the bank as cash deposits and by request of Fuqua were carried in impersonal accounts as pleaded by Fuqua, and that the bank received said funds to be held pending a settlement of the partnership affairs between Fuqua and Rush and subject to such disposition as they might agree upon or as might be directed by Fuqua and subject to its right to apply same to the discharge of any balance in its favor that might be standing on its books on the J. W. Rush account, except interest which Fuqua was to pay personally, and further alleged that some of the items on said account were for checks drawn by Rush for his individual business and not connected with the partnership business, and such items were to be charged to and paid by J. W. Rush. The bank further alleged: That by procurement of Fuqua, who was the owner of all its capital stock except director's shares, the defendant Rush was permitted to draw funds from the bank for the purpose of carrying on the land and cattle business, and that under such arrangement Rush drew various checks which it paid, and that some of the checks were for the personal use and benefit of Rush, of which, however, plaintiff had no notice at the time same were paid, and that at the time the notes sued on were executed there was a balance of overdrafts standing on its books against the defendant Rush for about $14,000, and it was expected and understood that Rush would continue to draw checks on the plaintiff and become indebted to it otherwise, and that the note was executed and delivered by the defendant and accepted by plaintiff to be credited to J. W. Rush on his account for the purpose of absorbing the overdraft, which then stood on plaintiff's books against Rush, and the balance charged against him on said account, except interest on the items incurred in behalf of said land and cattle business, which interest was to be paid by Fuqua personally. That the proceeds of said note passed to the credit of the account of Rush for the full amount of the face value thereof, and that Rush had the benefit thereof on the account, and that all of these facts were well known and understood by defendant Rush. That, after the execution of the note, Rush continued to draw checks and to incur the items of indebtedness which were charged upon said account, and that the checks and indebtedness so charged not only absorbed the note, but left a large overdraft...