General Bonding & Casualty Ins. Co. v. Moseley

• Decision Date: 05 May 1920
• Docket Number: (No. 2834.)
• Citation: 222 S.W. 961
• Parties: GENERAL BONDING & CASUALTY INS. CO. et al. v. MOSELEY et al.
• Court: Texas Supreme Court

Page 961

222 S.W. 961

GENERAL BONDING & CASUALTY INS. CO. et al. v. MOSELEY et al.

(No. 2834.)

Supreme Court of Texas.

May 5, 1920.

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

Action by A. Moseley and another against the General Bonding & Casualty Insurance Company and others. To review the judgment for plaintiffs, defendants brought error in the Court of Civil Appeals, which affirmed (174 S. W. 1031), and defendants bring error. Judgment of the district court and Court of Civil Appeals reversed, and cause remanded to the district court.

Locke & Locke, of Dallas, for plaintiffs in error.

M. M. Harkins, of Quanah (Jno. W. Veale, of Amarillo, of counsel), for defendants in error.

PHILLIPS, C. J.

The suit was one for the cancellation of a note and deed of trust upon land to secure its payment, given by the plaintiffs for shares of stock in the defendant corporation, upon the ground of fraud in the procurement of the plaintiffs' subscription agreement, and because, as is claimed, the note and mortgage were not "property" within the meaning of Section 6 of Article 12 of the Constitution, and hence could not be accepted in payment for the stock.

It is undisputed that the mortgage was a first mortgage upon the land; that the title of the plaintiffs to the land was valid; and that the value of the land was double the amount of the note, a policy of fire insurance for $3,000.00 covering the buildings on the property having been delivered to the corporation with loss payable to it.

The corporation was organized under Section 62 of the Act of 1909. By the provisions of that act its capital could consist of first mortgages upon unincumbered real estate in this state, the title to which was valid and whose market value was double the amount loaned thereon exclusive of buildings, unless the buildings were insured in some responsible company and the policy or policies were transferred to the corporation. Article 4711, Revised Statutes.

The question in the case is whether the subscribers' note and first mortgage upon the land constituted "property actually received" by the corporation, within the meaning of Section 6 of Article 12 of the Constitution.

We held in Washer v. Smyer, 109 Tex. ___, 211 S. W. 985, 4 A. L. R. 1320, that the naked note of a subscriber to the capital stock of a corporation given in payment of his subscription was not property within the intendment of the Constitution, since it was simply his promise to pay...