Gardner v. Planters' Nat. Bank

• Court: Texas Court of Appeals
• Writing for the Court: Levy
• Citation: Gardner v. Planters' Nat. Bank, 118 S.W. 1146, 54 Tex. Civ. App. 572 (Tex. App. 1909)
• Decision Date: 25 March 1909
• Petition History: writ ref'd
• Parties: GARDNER et al. v. PLANTERS' NAT. BANK OF HONEY GROVE.<SMALL><SUP>†</SUP></SMALL>

118 S.W. 1146

GARDNER et al. v. PLANTERS' NAT. BANK OF HONEY GROVE.^†

Court of Civil Appeals of Texas.

March 25, 1909.

Rehearing Denied April 15, 1909.

Appeal from District Court, Fannin County; Ben H. Denton, Judge.

Action by the Planters' National Bank of Honey Grove against S. H. Gardner and others. Judgment for plaintiff, and defendants appeal. Affirmed.

Appellee, as claimant of $1,000.77, the net proceeds of the sale of certain cattle, and for recovery of the same and to have the rights of each of the parties growing out of the transaction settled and adjusted, brought the suit in the district court of Fannin county, Tex., against the appellants Davis & Hamm and S. H. Gardner as trustee of the estate of G. F. Newberry, bankrupt. The petition alleged that on August 21, 1907, said Davis & Hamm, a partnership and doing business as commission merchants in Tarrant county, Tex., as agents of G. F. Newberry, sold a certain lot of cattle which had been shipped and consigned by Newberry to them for sale on commission, the property of Newberry, and, after deducting freight, commissions, and other expenses, there remained in their hands the sum of $1,000.77, the net proceeds of such sales; that the said net proceeds was the property and money of the appellee; that appellee had theretofore advanced said Newberry the money with which to buy said cattle under a contract entered into between it and Newberry, by the terms of which it was agreed, for a valuable consideration, that all cattle purchased by Newberry with the money advanced by appellee should stand as security for the repayment of such money, and that the net proceeds of all sales of such cattle should be paid directly to appellee to be applied in payment of the debt owing by Newberry on account of money advanced by appellee; "that Davis & Hamm knew of such agreement between plaintiff and Newberry on August 21, 1907, at the time they received the proceeds of such sales from the purchasers of said cattle, and they knew of the existing agreement between plaintiff and Newberry to the effect that such proceeds should be paid by Davis & Hamm to plaintiff, and not to Newberry;" that thereafter, on September 21, 1907, said Newberry was duly adjudged a bankrupt in the District Court of the United States for the Eastern District of Texas, and on October 8, 1907, said Gardner was duly appointed or elected trustee of said bankrupt's estate and qualified as such, "and afterwards, on October 15, 1907, said Gardner represented to said Davis & Hamm that said bankrupt court had ordered them to turn over said $1,000.77 to him as trustee aforesaid, and on or about the same day Davis & Hamm, without the knowledge or consent of plaintiff, paid said money to said Gardner, trustee, who still has it in his custody as such trustee, claiming that same belongs to said bankrupt's estate, and denies the right of plaintiff thereto." It was alleged that the bankrupt court had no such order nor was appellee in any way a party to said bankrupt proceedings, but that Davis & Hamm relied upon said representation of said Gardner in making such payment, and, in fact, did not know to the contrary. Appellant Gardner pleaded to the jurisdiction of the court, and Davis & Hamm filed a plea of privilege, each of which pleas was overruled by the court, and they defended by general denial and special defenses.

It was substantially proved in the record that about January 1, 1907, the appellee bank and G. F. Newberry made an agreement, which was, in substance, that the appellee would furnish him money with which to buy cattle and hogs, and that he would ship out and sell the same along as he would accumulate small lots, and that the live stock so bought would stand for the money so advanced, and, as sales should be made the net proceeds from the sales should be paid to the appellee, and not to Newberry, and which money should belong to the appellee to the extent necessary to cover the advances; that the appellee would advance the money by paying Newberry's checks, thus making an overdraft at the bank. This arrangement between them was to continue as long as agreeable to Newberry and the bank. It did continue until the appellee's rights asserted in this case accrued. Newberry was insolvent when the agreement was made, and with no property subject to execution, and so continued thereafter; but he adhered strictly to his agreement with the appellee bank. As further security, and as evidenced by this agreement, Newberry gave the bank a mortgage on all his cattle and hogs and on those to be bought with the appellee's money on March 2, 1907. About June 10, 1907, the bank released this mortgage for the sole purpose of allowing the appellant Davis & Hamm to obtain a mortgage on the cattle that Newberry then owned to secure a loan they were then making him, with the agreement with Newberry that it would not change his arrangement with the appellee bank, and immediately Newberry gave the appellee bank a new mortgage on all the cattle to be purchased with the money furnished by it. The money loaned by the appellant Davis & Hamm paid Newberry's debt to this appellee bank; and soon thereafter Newberry began to buy more cattle with the appellee bank's money, and on August 19, 1907, Newberry shipped a lot of cattle to the market at Ft. Worth, Tex., consigned to appellant Davis & Hamm, which Davis & Hamm sold on the open market on August 21, 1907, and the net proceeds of that part of the cattle which Newberry had bought with the appellee bank's money since June 10, 1907, amounted to the net sum of $1,000.77, and was in the possession of appellant Davis & Hamm on August 21, 1907, and at which time T. W. Trout sued Newberry for a debt and garnished the appellant Davis & Hamm, who refused to turn this money over to the appellee bank on their demand, but who were informed that appellee bank claimed and owned this money, and that Newberry claimed no part of it, as the appellee bank's advances to him exceeded these particular proceeds. Previous to this time, also during that year, Newberry had informed appellant Davis & Hamm of his arrangement with the appellee bank. On the 15th of September, 1907, Newberry filed his petition in the District Court of the United States for the Eastern District of Texas, and was adjudged by that court a bankrupt on September 17, 1907; and on October 7, 1907, the appellant Gardner was appointed trustee of the estate of said bankrupt, and qualified immediately thereafter. In October, 1907, Gardner as trustee demanded of Davis & Hamm the $1,000.77, and they sent him their check in payment thereof. Gardner, trustee, and Trout, at the time and previous thereto, each knew of the bank's claim to the said particular proceeds. Trout had dismissed his garnishment. There appears in the record, as offered by the appellant, the following ex parte order of the referee in bankruptcy: "In the District Court of the United States for the Eastern District of Texas. In the matter of G. F. Newberry, bankrupt, in bankruptcy, at Sherman, in said district, on the 8th of October, 1907. It appearing to the court that Davis & Hamm Commission Company of Fort Worth, Texas, have in their possession a large sum of money belonging to said bankrupt's estate, to wit, $1,000.77, it is therefore ordered that said S. H. Gardner, trustee in said bankruptcy, demand of said Davis & Hamm Commission Company said sum of money." The trial was by jury, and upon their answers to the special issues submitted judgment was entered by the court. The judgment as entered on the findings of the jury, omitting formal parts, is: "It is adjudged by the court that plaintiff, the Planters' National Bank of Honey Grove, Tex., a corporation, recover of the defendants W. D. Davis and A. B. Hamm (composing the partnership Davis & Hamm) and S. H. Gardner, trustee of the estate of G. F. Newberry, bankrupt, jointly and severally, $1,000.77, and that said plaintiff recover of said Davis & Hamm the further sum of $20, being 6 per cent. per annum interest on $1,000 from November 16, 1907, up to the present time, and that plaintiff recover of said Davis & Hamm all costs of this suit, and that execution issue against said Davis & Hamm for said recoveries against them, but that no execution issue against said Gardner, trustee, but, in lieu thereof, it is decreed by the court that plaintiff is the owner of the $1,000.77 paid by Davis & Hamm to Gardner, trustee, aforesaid, and that said Gardner, trustee, is not entitled to said money, and that plaintiff may present this judgment to the United States District Court for the Eastern District of Texas in the cause therein pending entitled `In the Matter of the Estate of G. F. Newberry, Bankrupt, in Bankruptcy,' where said money is on deposit, as authority for said bankrupt court to pay over said money to plaintiff. It is further decreed that, should...