First Nat. Bank v. Rush

• Citation: 246 S.W. 349
• Decision Date: 20 December 1922
• Docket Number: (No. 303-3618.)<SMALL><SUP>*</SUP></SMALL&gt
• Parties: FIRST NAT. BANK OF AMARILLO et al. v. RUSH.
• Court: Supreme Court of Texas

246 S.W. 349

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

(No. 303-3618.)^*

Commission of Appeals of Texas, Section B.

December 20, 1922.

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

Suit by the First National Bank of Amarillo against J. W. Rush, Mamie Rush, as administratrix, being substituted as defendant, wherein W. H. Fuqua intervened. Judgment for defendant administratrix against plaintiff bank and in her favor against the intervener was by the Court of Civil Appeals affirmed in part and reversed and remanded in part (227 S. W. 378), and the Bank and intervener bring error. Judgment of the Court of Civil Appeals and District Court affirmed in part, reversed and rendered in part, and reversed and remanded in part.

W. D. Wilson, of Spur, Madden, Trulove, Ryburn & Pipkin, and Kimbrough, Underwood & Jackson, all of Amarillo, Wm. F. Ramsey, of Dallas, and Chas. L. Black, of Austin, for plaintiffs in error.

Reeder & Reeder and Miller & Guleke, all of Amarillo, for plaintiff in error Fuqua.

H. H. Cooper, of Houston, J. A. Stanford, of Waco, and Veale & Lumpkin, of Amarillo, for defendant in error.

McCLENDON, P. J.

This is the second appeal of this case. Upon the former appeal a writ of error was granted by the Supreme Court, and the cause was referred to this section of the Commission. The issues made by the pleadings and evidence upon the former appeal are substantially the same as those presented by the present record, with the exception of the issue of limitation as applied to that portion of plaintiff's action which seeks recovery against defendant on account of overdraft of J. W. Rush. The record is quite voluminous; and in view of the very full and careful analysis of the pleadings and evidence, in so far as they control the questions now presented for decision, contained in the former opinion of the Commission written by Presiding Judge Montgomery, we deem it necessary only to refer to that opinion in this regard. 210 S. W. 521. The two opinions delivered by the Court of Civil Appeals upon the former appeal are reported in 160 S. W. 319 and 609. For the opinion of that court upon the present appeal, see 227 S. W. 378.

We think it will serve to a clear understanding of the questions now at issue to give an outline in chronological sequence, and as briefly as we may, of the transactions out of which the controversy arose.

In November, 1904, the First National Bank of Amarillo, plaintiff below, which we will refer to for convenience as the bank, and of which W. H. Fuqua, intervener, was the president and virtual owner (he owning all the stock except sufficient to qualify the necessary directors), held a mortgage on a herd of cattle to secure a loan of $2,000. Fuqua at that time entered into an agreement with J. W. Rush, original defendant below, by the terms of which Rush acquired the cattle, and Rush and Fuqua became partners in the cattle business. Under this arrangement Rush was to look after the cattle and provide forage and pasturage. Fuqua was to furnish the necessary money for the business without interest; and the net profits were to be divided equally between the two. Rush upon making sales was to turn over the proceeds whether cash or notes to Fuqua, who was to collect the notes and hold the proceeds until the contract was terminated. An account was carried on the books of the bank in the name of Rush, and upon this account he drew checks from time to time properly chargeable to the partnership account. The proceeds of sales of the partnership cattle were turned over to Fuqua, and he credited them as of the dates of their receipt to two impersonal accounts with the bank, one called "Fuqua-Rush cattle account" and the other "Fuqua-Rush bull account." In an audit of the books of the bank for the purposes of the trial of this case, these two accounts are treated as one. It may be noted that Fuqua credited only the face of notes received by him to this account, the notes being treated as cash, and the interest after it was collected not being accounted for on the books of the bank. It also appears that Rush was charged interest on daily balances, as for overdraft on his personal account. In addition to the partnership checks Rush also drew on his general account at the bank checks which were his own personal obligations.

On March 24, 1906, Rush and Fuqua entered into an agreement, which for our present purposes we will treat as a partnership contract, by the terms of which it was recited: That Rush had purchased a section of land in Swisher county, being section 27, block W-1, sometimes referred to as the Adair section; that Fuqua had paid the purchase money for the land amounting to $9,600; that Rush was to handle this section and dispose of it to the best advantage and pay Fuqua the $9,600 so paid by him without interest and two-thirds of all profits derived from the sale of the land; and that Rush was to be entitled to one-third of the profits, if any.

At about the time this contract was entered into the Rush general account at the bank showed an overdraft exclusive of interest amounting to some $14,000. By crediting this account, however, with the proceeds of all cattle transactions which had been delivered by Rush to Fuqua, the net amount of this overdraft without interest was about $3,900. Of this amount Rush had drawn for his personal account approximately $2,500, and the balance was properly chargeable to the cattle partnership. On the same day that this land partnership contract was executed Rush and wife executed to the bank their promissory note for $12,000 payable on demand and bearing interest at the rate of 10 per cent. per annum, and to secure this note Rush and wife executed a deed of trust in favor of the bank with Fuqua as trustee conveying the Adair section of land and also an adjoining section, which was the separate property of Mrs. Rush. The proceeds of this note were credited to Rush's general account on the books of the bank. Prior to the time this contract and note were executed, Rush had negotiations with the owner of the Adair section for its purchase, and those negotiations were completed shortly thereafter, and the land was paid for by checks drawn by Rush upon his general account at the bank. In addition to the purchase price of the land there was an expense bill for surveying amounting to $120, which was also paid out of Rush's general account. As the lands were sold Rush turned over the proceeds to Fuqua, who credited them to another impersonal account, which he had opened in the name of "Rush-Fuqua land account." The items credited to this account up to December 8, 1906, amounted to $12,750, which was $155.77 more than was necessary to discharge the note and interest, if the several amounts credited to this account are credited upon the note as of the dates of their respective payments. There remained in the section 200 acres, which was sold to one Jowell for $20,000; Jowell giving his notes for that amount secured by lien on the land and by deed of trust upon other lands owned by him upon which there was a prior lien. The Jowell notes were turned over to Fuqua. The last item of debit on the Rush account was made on February 15, 1908, and the last deposit item November 15, 1908. Rush's final overdraft represented by his personal checks which the bank had honored amounted to about $10,000 exclusive of interest.

This suit was filed by the bank against Rush and wife on March 16, 1910, on the $12,000 note alone and to foreclose the bank's lien on the Jowell notes. No further recovery was sought by the bank. Rush and wife plead payment of the notes, setting up the several items which had been received from sale of the lands, and which had been credited to the impersonal Rush-Fuqua land account. Later Fuqua intervened and set up the two partnerships and asked for an accounting with Rush.

Upon the first trial of the case the court upon a directed verdict entered judgment to the effect that Fuqua and Rush were partners in the land transaction. This judgment was reversed upon appeal, and the cause was remanded for further proceedings in accordance with the opinion of the Commission.

Rush and wife both died while the first appeal was pending, and Mamie Rush was appointed administratrix of their estates, and as such was substituted as party defendant. Prior to the first appeal the only pleading of the bank referring to the Rush overdraft was a supplemental petition filed in 1911. It was said in the former opinion of the Commission:

"As we construe the bank's pleading, its suit was against Rush to recover on the note, and not for any balance due on open account."

After the cause was remanded the bank amended its pleadings and sought recovery on the Rush overdraft as well as on the note. Mamie Rush, in addition to adopting the former pleadings of defendant J. W. Rush, pleaded the two-year statute of limitations to the Rush overdraft.

While the first appeal was pending the Jowell notes were defaulted in, and it became necessary to institute suit upon them. This was done under an agreement among all parties to the suit by which the lands securing the Jowell notes were bought in by a trustee, who holds them subject to final adjudication of the rights therein of the parties to this suit. The last trial of the case was had before a jury, and the verdict was upon special issues. Those issues and the answers of the jury were as follows:

"Special issue No. 1: Did intervener, W. H. Fuqua, pay or on his individual responsibility procure the First National Bank of Amarillo to pay the entire $9,600 purchase price paid for section No. 27,...