General Bonding & Casualty Ins. Co. v. Mount

• Decision Date: 09 February 1916
• Docket Number: (No. 921.)<SMALL><SUP>*</SUP></SMALL&gt
• Citation: 183 S.W. 783
• Parties: GENERAL BONDING & CASUALTY INS. CO. et al. v. MOUNT.
• Court: Texas Court of Appeals

183 S.W. 783

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

(No. 921.)^*

Court of Civil Appeals of Texas. Amarillo.

February 9, 1916.

On Motion for Rehearing, March 8, 1916.

Error from District Court, Deaf Smith County; D. B. Hill, Judge.

Action by R. N. Mount against the General Bonding & Casualty Insurance Company and another. There was a judgment for plaintiff, and defendants bring error. Affirmed.

Locke & Locke, of Dallas, and Knight & Slaton, of Hereford, for plaintiffs in error. W. H. Russell and Gilliland & Estes, all of Hereford, for defendant in error.

HUFF, C. J.

This was an action, brought by defendant in error, Mount, against the General Bonding & Casualty Insurance Company and the Texas Surety & Casualty Organization Company. The cause of action was based on alleged fraudulent representations by Bell & Wright, agents for the Organization Company, in procuring a certain contract for stock in the proposed General Casualty Insurance Company. The Casualty Insurance Company was made a party alone for the purpose of canceling the contract so procured, and a judgment was asked for the sum of money paid to the Organization Company for its services performed and to be performed in the organization of the Casualty Company, which sum was $500 and interest thereon. The General Casualty Company disclaimed any interest in the contract, and the Organization Company, which was a partnership, setting out the partners, denied the fraud, etc. The trial court rendered judgment canceling the contract for stock in the proposed Casualty Insurance Company, and rendered a judgment against the Organization Company for the amount of money paid to it to organize the proposed corporation.

By the written contract, the defendant in error agreed to take 10 shares of the capital stock of the proposed company, of the par value of $100 each, and pay therefor the sum of $1,500, which was to pay for the capital stock and 12½ per cent. to surplus, and in addition $500 to the promoters. The defendant in error, Mount, testified:

"As to who solicited my subscription to the contract, will say the conversation I had was with Mr. Wright altogether. I did not have any talk with Mr. Bell. He came in about the wind-up of it. He didn't hear practically any. As to what was said between me and Mr. Wright with reference to any person or persons advancing or lending me money to pay for this stock, will say we had a right smart conversation about it, maybe two or three or four hours, and he went ahead and said that $500 was all I had to pay on it. Give him a note for $500, and he said he wouldn't send the note on in, but would hold that. He said: `They will take your note for $1,500, and charge you 7 per cent. interest, and you can put up your stock for collateral.' He said they were going to organize a new company, and he said: `If the new company won't carry it, the old one will. That is all you will have to put up, for five years at least.' Mr. Wright told me that this former company, the one that was organized, would advance the money to pay for this stock, and take my note in case the new company would not. Yes; it was the Organization Company, the one Bell & Wright were representing at that time. They were going to organize under a new name. He said: `If the new company won't take it, and carry it, the old company will.' I asked him if he would do that, and he said: `Yes; I heard Mr. Stephens make that proposition to Taylor yesterday, and I have the same authority he has.'"

He further testified:

"No, sir; I would not have entered into this subscription contract if Mr. Wright had not made these promises or statements to me. These promises that were made induced me to enter into the contract. I told him plainly I did not want to put any money into it, and he said: `You won't have to put only this $500.' He said the Organization Company would carry for five years anyway. He said this Organization Company would carry it, provided the new company did not take it. He said he had heard the conversation between Stephens and Taylor, and he said: `I have the same authority he has.' As to his statement with reference to his authority to make this kind of agreement, will say he said he was agent for the company and that anything he said would stand up."

The facts show that the Organization Company was composed of several members, who were acting as a partnership in the organization of the proposed Casualty Company, and that Bell & Wright had a contract with the Organization Company as soliciting agents. The contract in this case shows that Bell & Wright had no authority to make the agreement to take notes of the subscribers for stock in the proposed company, with 7 per cent. interest, secured by the stock in the company.

Wright testified:

"I had no authority from the Texas Surety & Casualty Organization Company to make arrangements for the extension of the time of deferred payments. In cases of irregular subscriptions, we made it a rule (I mean, Mr. Bell and myself made it a rule) to submit the agreements proposed to the company in writing for their approval. We had no authority to take regular subscriptions without referring them to the company for their approval and acceptance, and we never did make any regular subscription agreement without referring the same to the company for their approval and acceptance. No statement, promise, or condition regarding an extension of the majority of the deferred payments on the amount of subscription was embraced in writing or reported to the Texas Surety & Casualty Organization Company by me, or within my knowledge by Mr. Bell. I never made any. The subscription was regular and I did not deem it necessary. No statement, promise, or condition regarding extension of the maturity of the deferred payments was made a part of the contract or agreement of sale. If any statement was made at the time regarding any extension, it was merely that Mr. Mount might be able to obtain such extension through the company, as such extension had been granted in the case of Dr. Taylor. I do not remember any such statements being made at the time, however, by either Mr. Bell or myself."

The evidence shows that the subscription contract was upon...