Flint v. Culbertson

• Decision Date: 25 June 1958
• Docket Number: No. A-6749,A-6749
• Parties: Mrs. May Pearl FLINT, Joined Pro Forma by Her Husband, C. W. Flint, Jr., Petitioner, v. A. B. CULBERTSON, Receiver for Fraternal Bank & Trust Co., Respondent.
• Court: Texas Supreme Court

Page 690

319 S.W.2d 690

159 Tex. 243

Mrs. May Pearl FLINT, Joined Pro Forma by Her Husband, C. W Flint, Jr., Petitioner, v. A. B. CULBERTSON, Receiver for Fraternal Bank & Trust Co. Respondent.

No. A-6749.

Supreme Court of Texas.

June 25, 1958.

Rehearing Denied Dec. 10, 1958.

Tuchin & Mehl, and Milton J. Mehl, Stanley A. Freed, Fort Worth, for petitioner.

Alexander & Martin, Morgan & Shropshire, Cline & Cline, Fort Worth, J. L. Turner, Jr., Dallas, Sol Gordon, Fort Worth, Slagle & Hughes, Sherman, Richard Owens, L. Clifford Davis, Fort Worth, for respondent stockholders.

Ernest May, Fort Worth, for respondent A. B. Culbertson, receiver.

CULVER, Justice.

The Fraternal Bank & Trust Company was organized in 1911 as an unincorporated joint stock association and continued to carry on a banking business until 1957, when in a depositors' class suit it was adjudged insolvent. The receiver thereafter, in accord with Article 6137, Vernon's Annotated Civil Statutes, obtained service on some or all of the members or shareholders individually. The trial court declared these members so served to be liable as partners to the creditors of the insolvent bank. The petitioner, May Pearl Flint, appealed urging coverture as a defense, her disabilities in this respect not having been removed. The Court of Civil Appeals held that she was bound, nevertheless, and affirmed. 309 S.W.2d 269. We are of the opinion that the plea of coverture is good and operates to relieve the petitioner of personal liability.

The petitioner owns 102 shares inherited from her husband who died on July 4, 1950. Four months later she married her present husband. The certificates of ownership were not actually delivered to her and placed in her name until after her remarriage. She did receive one hundred or so dollars as dividends over the years, but none while she was a widow. After her remarriage she was elected and served as a director. The respondent, as we understand, does not rely one any theory of estoppel for holding petitioner liable nor is the trial court's judgment so predicated. Respondent says that, 'the simple issue is whether Mrs. Flint's coverture relieves her of the liability usually incidental to membership of an unincorporated company.'

(1) In this state the authorities are uniform that a married woman connot become a partner, at least in the ordinary partnership venture, and the marriage of a single woman will dissolve a partnership theretofore existing with another, even though the parties attempt to carry on the partnership business. Wallace v. Finberg, 46 Tex. 35; Brown & Company v. Chancellor, 61 Tex. 437; Purdom v. Boyd, 82 Tex. 130, 17 S.W. 606; Dillard v. Smith, 146 Tex. 227, 205 S.W.2d 366; Jung v. Dallas Tailor & Laundry Supply Co., Tex.Civ.App., 256 S.W.2d 703 (no writ history); King v. Matney, Tex.Civ.App., 259 S.W.2d 606 (writ refused n.r.e.).

(2) The Court of Civil Appeals held, however, and the respondent contends here, that this rule is not applicable principally because of the all-inclusive force of Article 6137, Vernon's Annotated Civil Statutes, as follows:

'In a suit against such company or association, in addition to service on the president, secretary, treasurer or general agent of such companies or association, service of citation may also be had on any and all of the stockholders or members of such companies or associations; and, in the event judgment shall be against such unincorporated company or association, it shall be equally binding upon the individual property of the stockholders or members so served, and executions may issue against the property of the individual stockholders or members, as well as against the joint property; but executions shall not issue against the individual property of the stockholders or members until execution against the joint property has been returned without satisfaction.'

Respondent's position is that the phrase 'any and all of the stockholders or members of such companies or associations' means exactly which it says and encompasses married women as well as all others. If this contention is sound it must also include minors who inherit or otherwise come into ownership of certificates of interest and make them and their estates personally liable. And this in spite of the general rule that, absent fraud or other elements of estoppel, a minor is not to be held liable on his contracts against the plea of minority. We agree with the pronouncement in the early case of DeLeon v. Owen, 3 Tex. 153, that the courts are not to engraft exceptions upon a statute when the lawmaking power has not done so. But we are equally of the opinion that it is not within the scope of the court's authority to broaden a statute by implication, or interpret it as affecting matters that were clearly not within the intention of the lawmaking body. That the Legislature, when it used the term 'any and all of the stockholders or members' meant those persons that would in the normal course of business dealings be liable and did not intend to create new obligations or additional classes of obligees is shown by the remainder of the Act, Article 6138, setting out that the provisions of the chapter should be construed as cumulative merely of other remedies then existing under the law. We think the statute was correctly evaluated in Mayhew & Isbell Lumber Co. v. Valley Wells Truck Growers' Ass'n, 216 S.W. 225, 229 as follows:

'* * * The statute which permits an unincorporated association to sue or be sued in its association name merely furnishes a convenient method of conducting suits, without undertaking to change the legal status of the association or in any way affect the law in so far as it relates to contracts. * * *.'

Respondent supports his construction and application of the statute by Spears v. City of San Antonio, 110 Tex. 618, 223 S.W. 166, 169. In that case the Court held that the plea of coverture did not exclude a married woman from the operation of an act imposing personal liability upon the owner of exempt real estate for paving assessments, but the Court carefully pointed out:

'* * * The latter (the act adopted by city charter) imposed a charge regardless of any contractual power or contractual obligation on the part of the owner whose property was enhanced by a necessary public improvement. In order to be enforceable, the charge had to be validly imposed regardless of the assent or consent of the owner. * * *'

Under this holding, no doubt, such a charge could be validly assessed and collected from the estate of a minor or an insane person. The imposition of the liability follows ownership on the theory that the value of the property has been enhanced by the paving improvement. On the other hand liability as a partner flows from a contractual obligation. Speer's Law of Marital Rights, 3rd Ed. §§ 291-292.

More to the point, we think, is the later decision of Harris v. Prince, 132 Tex. 231, 121 S.W.2d 983. In that case a married woman had signed articles of association in 'Lloyds of Texas' and had taken other steps to comply with the Lloyds Plan, Article 18.01 et seq., Insurance Code, V.A.T.S. (formerly Article 5013 et seq., Vernon's Annotated Civil Statutes) as an underwriter. On insolvency of this concern, the receiver sought a personal judgment against the married woman and her husband. Judgments of the district court and Court of Civil Appeals in favor of the receiver were reversed and rendered by this Court, holding that no provision of law permits a married woman to execute contracts of insurance and bind herself and her separate estate, at least in the absence of removal of the disability of coverture.

The language of Article 18.17 of the Lloyds Plan in fixing personal liability is just as broad and comprehensive as that of Article 6137. It provides that suit on any insurance policy may be brought against the attorney for the underwriters and the underwriters or any of them and that a judgment against the attorney or any of the underwriters shall be equally binding upon 'each and all of the underwriters as their several liabilities may appear.' This Court did not consider, evidently, despite its broad terms, that this statute has the effect of holding a married woman liable. True enough Mrs. Harris was an underwriter and not a stockholders. But if the term 'all underwriters' in the statute was not sufficient to include married women who purported to act as underwriters neither would the term 'all members' in Article 6137 serve to embrace married women and subject them to personal liability. Respondent further argues that while Mrs. Harris became an underwriter by virtue of a contract, Mrs. Flint did not contract to become a shareholder of Fraternal Bank & Trust Company because she got her shares by legacy. We think the distinction is somewhat strained. The manner of acquisition is relatively unimportant. Mrs. Flint could have refused to accept the legacy, but by acceptance she impliedly contracted just as effectively as if she had purchased the certificates. Surely there would not be a difference in the liability of a married woman who purchases and a married woman who inherits, and particularly so under the contention that the statute placing liability on all shareholders includes all married women alike.

We do not regard the ruling in Chapman v. Pettus, Tex.Civ.App., 269 S.W. 268, 269, namely, that married women stockholders in a bank are personally liable for an assessment in the event of the bank's insolvency, as controlling in the situation before us. At that time Section 16, Article 16 of the Texas Constitution, Vernon's Ann.St., provided in substance that each shareholder should be personally liable for all debts of the banking corporation to the amount of the par value of the shares of stock so owned. The Court, observing that no constitutional or statutory provisions expressly fixed that liability upon married women, did not rest its decision alone upon the...