Hardy v. Carter

• Decision Date: 10 January 1914
• Citation: 163 S.W. 1003
• Parties: HARDY et al. v. CARTER et al.
• Court: Texas Court of Appeals

Page 1003

163 S.W. 1003

HARDY et al. v. CARTER et al.

Court of Civil Appeals of Texas. Amarillo.

January 10, 1914.

On Motion for Rehearing, February 21, 1914.

Appeal from District Court, Swisher County; L. S. Kinder, Judge.

Action by A. F. Carter against J. R. Hardy and others, with cross-action by defendants Q. E. Brown and others against the other defendants. Judgment for plaintiff against defendants, jointly and severally, and, as between defendants, judgments rendered against each in favor of each, and defendants J. R. Hardy and others appeal. Affirmed.

Martin & Zimmerman, of Tulia, and J. E. Daniel, of Silverton, for appellants. Mathes & Williams, R. C. Joiner, and Randolph & Randolph, all of Plainview, for appellees.

HALL, J.

On the 15th day of February, 1909, one Edward Kennedy, as a promoter, entered into a contract with certain of the citizens of Silverton, Tex., by the terms of which the said citizens, defendants in this suit, obligated themselves to pay the said Kennedy $70,000, one-seventh to be paid in cash, and the remainder upon the happening of certain contingencies not necessary to be set out here. In consideration of this undertaking, Kennedy agreed to build a railroad through Briscoe county and through the town of Silverton "within two years from said date, and as much sooner as may be possible." Among other stipulations contained in the written contract, we find this: "The parties of the second part do hereby agree to be collectively responsible for the performance of this contract." On April 14, 1909, the defendants in this suit, designating themselves the railway guarantee committee, drew up a constitution and set of by-laws, from which we quote the following:

"Preamble. We, the railroad guarantee committee of Briscoe county, Texas, consisting of the persons whose names hereinafter appear, in order to dispatch business, finance and meet the obligations we have assumed by the contract, with Edward Kennedy, do hereby bind ourselves, heirs, and executors to be governed by the following constitution and articles of agreement:

"Section 10. Powers of Board of Directors. The board of directors shall have power to pay out money on monthly estimates of the surveyor as per contract with Edward Kennedy or on interest and loans made by the railroad guarantee committee and recording and attorneys' fees. They shall have power to negotiate loans for said guarantee only upon order of the committee and the signatures of the president and secretary to a note so ordered shall bind the entire railroad guarantee committee of Briscoe county, Texas; also said board of directors shall prorate each assessment among the entire number of subscribers, according to their several amounts or cash subscribers."

On February 15, 1909, 29 of the 50 members constituting the guarantee committee including appellants Harris, Daniel, and Burson, executed to the First National Bank of Silverton three notes in the sum of $3,000 each, stipulating for 10 per cent. interest from date, and 10 per cent. attorneys' fees, all three being payable on demand. This money was borrowed to pay Kennedy the cash payment under the contract. On May 22, 1909, the directors, for the purpose of paying the balance due on this loan, borrowed $6,000 from the First National Bank of Tulia for six months. Thereafter, in the same way, money was borrowed from the Silverton Bank & Trust Company to pay the balance due the First National Bank of Tulia on the $6,000 note above mentioned, and this loan was renewed from time to time, resulting in the note here sued upon, dated March 4, 1911, for $2,524. This note is payable April 17, 1911, and contains this recital: "I, we, or either of us, jointly and severally, promise to pay to the order of the First State Bank & Trust Company, the sum of twenty-five hundred and twenty-four and no one hundred dollars." It provides for interest, at the rate of 10 per cent. from maturity, and 10 per cent. attorneys' fees, and is signed as follows: "Railroad Guarantee Committee of Briscoe county, Texas, J. Ed. Crawford, President, R. B. Braley, Secretary Treasurer"—and bears this indorsement: "Payable to the order of A. F. Carter, without recourse, previous indorsements guaranteed. The First State Bank & Trust Company, Silverton, Texas. A. F. Carter, Cashier. April 11, 1911."

By amended petition, plaintiff, Carter, appellee herein, made each of the signers of the contract with Kennedy parties defendant. In the trial of the case, the defendants seem to have been divided into two clans. The defendants Q. E. Brown, R. L. McMurtry, J. H. Burson, and J. M. Harris and J. E. Daniel answered by general denial and plea of non est factum. They further alleged that, if they were liable on said note at all, then all the other defendants were jointly and severally liable on said note with them and prayed that if plaintiff recovered anything against them, that they recover against the other defendants herein such amounts over and above the pro rata part of the indebtedness which the said defendants would have to pay. By cross-action they allege that their liability, if any, on said notes grew out of the constitution of the guarantee committee and of the contract made with Kennedy by said committee, and that November 6, 1909, an assessment of 35 per cent. of all subscriptions was levied, which was sufficient to include and pay up everything due by the guarantee committee at that date; that these defendants have paid said 35 per cent. assessment, and that the note in controversy was made necessary by the failure of other subscribers to pay their part of said assessment, and, had the amounts paid on said assessment been credited on said notes and not used for other purposes, there was sufficient paid in to have paid off said note in full; but that said money was used for other purposes; that defendants Fred Biffle, R. B. Braley, Bruce Gerdes, K. E. Baine, J. L. Francis, A. P. Donald, J. Ed. Crawford, M. P. Stone, and J. B. Porter were the officers of said association and authorized to spend the money of same only in accordance with the terms and conditions of the constitution and by-laws, and that they collected on said 35 per cent. assessment enough to pay off said notes, but did not apply the same thereon, but paid it out to other and different parties than Edward Kennedy on said note, and to whom they were not authorized to pay the same, and that by reason thereof said defendants were individually liable on said note. They prayed that if plaintiff recover against them, that they have judgment against said Biffle and the other officers and directors mentioned above. The answer of appellant J. R. Hardy was the same, except that, in addition thereto, he pleaded that, at the time of the delivery and execution of the note, he was not a member of the guarantee committee, having on June 4, 1909, especially repudiated all further liability under the constitution of said committee and withdrew from any connection therewith.

Defendants Biffle, Braley, and others mentioned above, constituting the directors and officers of the association, together with other members of the committee, answered by general denial and specially that they and all of the other defendants associated themselves together as a railroad guarantee committee and executed the contract hereinbefore set out, which said agreement was placed of record in Briscoe county; that said railroad committee authorized and empowered the executive officers, among other things, to secure a sum of money necessary to assist them in the pursuance of said enterprise and in the payment of the bonus due Kennedy, and that the money borrowed from the First State Bank & Trust Company was borrowed by said officers from the First National Bank of Silverton to pay the same; and that other moneys were borrowed, until finally the note herein sued upon was executed and delivered for the purpose of paying off said original loan; that the liability of all the defendants was joint and several.

In reply to the cross-action of the defendants J. R. Hardy, Q. E. Brown, J. H. Burson, and others, they alleged that on the 11th day of April, 1909, Edward Kennedy turned over to the Texas Construction Company his contract entered into with the committee, and that such transfer was made by and with the consent of said railroad committee, and executed by said committee, and that said Construction Company and said committee did, in all things and in good faith, attempt to carry out the terms of said original contract, and that the moneys thereafter paid out were paid by reason of all the obligations named and by reason of said transfer.

A jury was impaneled, and, after the evidence closed, the court gave the special charge No. 1, requested by J. Ed. Crawford and others, peremptorily instructing the jury to return a verdict in favor of plaintiff against all the defendants jointly and severally for the sum of $3,336.08, which should be paid by the defendants in the amounts set opposite their names. The verdict is in part as follows: "We, the jury, return a verdict in favor of plaintiff in this cause, as against the defendants, as charged by the court, jointly and severally except John A. Baine, for the sum of $3,336.08, which judgment, as between the defendants herein, shall be paid by the defendants named below in the amounts set opposite their names, the original members of the guarantee committee who have died, having their heirs substituted in their stead as follows, to wit." Then follows a detailed statement of the amounts found against each member of the guarantee committee, and the verdict concludes: "And we hereby return a verdict against all the defendants on all other cross-actions herein filed."

Upon this verdict, the court entered judgment in favor of plaintiff, A. F. Carter, against the members of the guarantee committee jointly and severally, and provided as follows:

"And it is further ordered,...