Grove v. Keeling

• Decision Date: 03 April 1915
• Docket Number: (No. 8143.)
• Citation: 176 S.W. 822
• Parties: GROVE et al. v. KEELING et al.
• Court: Texas Court of Appeals

176 S.W. 822

GROVE et al. v. KEELING et al.

(No. 8143.)

Court of Civil Appeals of Texas. Ft. Worth.

April 3, 1915.

Rehearing Denied May 1, 1915.

Appeal from District Court, Tarrant County; J. W. Swayne, Judge.

Action by G. W. Keeling and others against W. H. Grove and another. From a judgment for plaintiffs, defendants appeal. Affirmed.

A. H. Kirby, Geo. M. Conner, R. C. Fuller, and Theo. Mack, all of Ft. Worth, for appellants. Flournoy, Smith & Storer, of Ft. Worth, for appellees.

BUCK, J.

Suit was instituted by G. W. Keeling and others, Leroy A. Smith, trustee, and the firm of Flournoy, Smith & Storer, against W. H. Grove, Ben O. Smith, and others, alleging, among other things, that the defendant W. H. Grove, in connection with L. B. Ward and others, organized a private bank in Springtown, Parker county, Tex., known as the Farmers' Exchange Bank of Springtown, Tex., and that all of the plaintiffs, except Flournoy, Smith & Storer, deposited with said bank large sums of money; that not long after the organization of the bank, and while the same was being operated by the partnership of which the defendant Grove and others, except Ben O. Smith, were members, the bank suspended business and failed and refused to pay its depositors the amount of deposits made therein; that thereafter, at a public meeting, a committee composed of C. C. Kidd and others was appointed by the depositors and empowered to enter into negotiations with the said Grove with the view of having him pay off the demands of said depositors, the persons so appointed being designated by the pleadings as "the committee," and thereafter, on the 23d day of February, 1912, the said committee, with the assistance of the attorneys, Flournoy, Smith & Storer, procured to be executed and made by and between the said committee, for the depositors, and W. H. Grove, a certain contract in writing, a copy of which was attached to the petition of plaintiffs, and marked "Exhibit B." It was alleged that by the terms of said contract Grove agreed, at his own expense, to liquidate and wind up the affairs of the said bank for the benefit of the depositors, agreeing to pay over for the said depositors and creditors, to the extent of their bona fide claims, such sums as should be realized from the assets of said bank, paying such creditors and depositors pro rata out of said funds; that, at the time of the execution of the contract, the assets of the said bank were in the hands of a receiver, Dan E. Lydick, appointed by the district court of Parker county, Tex.; that it was agreed in said contract, however, that, if the said Grove deemed it expedient, he had the right to permit the said property to remain in the hands of said receiver, he agreeing to pay the cost and expense thereof, and that after the execution of the contract he deemed it expedient and allowed the said property to remain in the hands of the receiver, and permitted and requested that the same be done, and the assets of said bank were administered by the receiver with the consent and approval of the said Grove, and were paid out pro rato and properly distributed among the depositors and creditors of said bank; that the said Grove further agreed to personally assume the liability of the said bank to all of its depositors, and in said contract agreed to satisfy each of such depositors' bona fide claim, with interest thereon, whereby said Grove became liable to the plaintiffs for the amount of their deposits made in said bank, together with interest; that it was further agreed in said contract that the depositors in said bank, through the said committee, would procure to be executed to Leroy A. Smith, as trustee, good and bankable notes, bearing 6 per cent. interest from the date of said contract, to the extent of $2,500 and it was also agreed that said notes, when executed, should be credited to their face value pro rata on the obligations of the said bank to its depositors. It was alleged that by a supplemental written contract, duly executed by all of the parties to the original contract and approved by the defendant Ben O. Smith, dated February 27, 1912, a copy of which was attached to the pleading and marked Exhibit D, it was agreed that the execution and delivery of the said $2,500 worth of notes should be a full release of the said partners in said business who resided at Springtown, and designated in the contract as stockholders, from all further liabilities of the debts of said bank to its depositors and from any claim for contribution from them on the part of said Grove; that, in compliance with the said contract and supplemental agreement, the depositors, through the said committee, procured to be executed by the partners in said banking concern good and bankable notes to the amount of $2,500, and that, under the terms of said contract, the defendant Grove was entitled to a credit upon the obligation to the extent of $2,500 by reason of the execution of said notes. It was provided in said contract that Grove should make distribution of funds coming into his hands from the assets of said bank to those entitled thereto under certain circumstances, the materiality of which is not necessary to be stated in this connection. And it was further agreed in said contract that Grove was to execute a good and sufficient bond in the sum of $4,000, payable to Leroy A. Smith, trustee, conditioned that he (Grove) would, according to the terms of said contract, satisfy and pay in full all of said depositors' claims against said bank; and it was further provided in said contract that the liability of the sureties on said bond should be limited to $4,000; and in accordance with said agreement the said defendant W. H. Grove, as principal, and Ben O. Smith, as surety, made, executed, and delivered to Leroy A. Smith, as trustee, a bond and obligation in writing in accordance with the allegations last aforesaid, which bond was attached to plaintiffs' petition, marked "Exhibit E," and by reason of which the said Grove became liable to pay the plaintiffs the full amount, and the defendant Ben O. Smith, as surety on said bond, became liable to the extent of $4,000 toward the liquidation of the indebtedness to plaintiffs, as alleged. It was alleged that Grove made no payments whatever upon said obligations to the depositors in said bank, and that by reason thereof he was liable upon said contract and bond, and the defendant Ben O. Smith was liable as surety to the extent of $4,000. The claims of the plaintiffs were set out in detail in Exhibit A, attached to the petition, which exhibit included the names of more than 200 depositors and the amounts of their several deposits ranging from one cent to more than $1,000, for which judgment was prayed.

Appellant Grove answered, urging a misjoinder of parties plaintiff, a misjoinder of causes of action, and a misjoinder of parties defendant, as well as other demurrers not material to this appeal. He denied that he was a partner in said bank, that there was any consideration for the execution of the alleged contract or the alleged bond, and further pleaded that the consideration therefor, if any had theretofore existed, had failed, in that no assignment of the interests of the stockholders in said bank, who lived in Parker county, was ever procured and delivered to the defendant, as required and provided in said contract, designated as "Exhibit B." The defendant Ben O. Smith adopted as his own answer the answer of his codefendant W. H. Grove. The answer of defendant L. B. Ward is not material on this appeal.

Supplemental pleadings were filed by both plaintiffs and defendants, but we do not deem it necessary to give the substance thereof in this statement, inasmuch as in the only question raised on this appeal supplemental pleadings become immaterial in the main, and will not be noticed, except as hereinafter stated.

By a petition of intervention, K. M. Van Zandt, trustee for the different depositors, adopted all of the pleadings directed against the defendants Grove and Ben O. Smith as his own and asked for judgment in his favor, as trustee, for the amounts prayed for in plaintiffs' pleadings, for the persons provided for in said contract. The contract designated in plaintiffs' petition as Exhibit B, and for the breach of which plaintiffs sued, provided, among other things, in paragraph 9 thereof, the following:

"The depositors of said bank, through the said committee, hereby agree to procure to be executed to Leroy A. Smith, as trustee, good and bankable notes to be approved by the said committee, bearing 6 per cent. interest from date of this contract, and maturing 40 per cent. on or before 12 months from date hereof, and 60 per cent. on or before 2 years from date hereof, to the extent of $2,500 obtained from the stockholders (or partners) of said bank residing at or near Springtown, Tex., which notes shall, when executed, be credited to their face value pro rata on the obligations of said bank to its depositors and shall be used by the said Smith as trustee hereunder, in payment of said deposits pro rata when collected, less attorneys' fees, as hereinbefore provided. They further agree to procure an assignment to said Grove by the stockholders (or partners) living in Parker county, Tex., of all of their interest in the affairs of said bank and its property."

Exhibit E attached to the plaintiffs' petition, by which the liability of appellant Ben O. Smith is claimed, is, in substance and effect, a bond executed by Grove, as principal, and said Smith, as surety, approved by Leroy A. Smith, dated February 23, 1912, and by the...