Hendricks v. Martin

• Decision Date: 26 November 1924
• Docket Number: (No. 2388.)
• Parties: HENDRICKS v. MARTIN et ux.
• Court: Texas Court of Appeals

267 S.W. 1047

HENDRICKS v. MARTIN et ux.

(No. 2388.)

Court of Civil Appeals of Texas. Amarillo.

November 26, 1924.

Rehearing Denied January 21, 1925.

Appeal from District Court, Hall County; R. L. Templeton, Judge.

Action by R. E. Martin and wife against A. C. Hendricks. Judgment for plaintiffs, and defendant appeals. Reversed and remanded.

Elliott & Moss, of Memphis, and Turner & Dooley, of Amarillo, for appellant.

Cole & Simpson, of Clarendon, for appellees.

HALL, C. J.

Martin and wife sued the appellant to rescind a sale of certain oil stock and to recover the consideration paid by them to appellant. They allege that they paid appellant $5,000 for certain shares of stock of the Southwestern Oil & Gas Company on or about the 1st day of April, 1920; that the said Oil & Gas Company was a joint-stock company, organized as a common-law trust association; that in order to induce the plaintiffs to purchase the stock Hendricks made fraudulent representations as to the amount which had been subscribed for stock by other purchasers, and as to the amount which the company had recently invested in oil and gas leases, and further misrepresented the facts as to the value of the property then owned by the company. They further allege that they had executed an additional note in about the sum of $800 which represented interest that had accrued on their original note for $5,000, and which was in the hands of the said Hendricks. There is the further allegation that, after the payment of the original note for stock and the execution of the interest note, the defendant, Hendricks, had delivered to them additional stock to the amount of $500, which they supposed and believed to represent a stock dividend. The prayer is that "the said stock be canceled or redelivered to the defendant, A. C. Hendricks, which stock is herewith tendered into open court for such purpose; that they have judgment against the defendant Hendricks for $4,000 and 8 per cent. interest thereon from July 21, 1919, to the 1st day of April, 1920, and for 6 per cent. interest thereafter; that Hendricks be required to produce the $800 interest note for cancellation, and that the same be canceled." The defendant, Hendricks, answered by general demurrer and special exceptions, general denial, a plea of accord and satisfaction, and further alleged that at the time of the settlement of the first note by the payment by plaintiff of $4,000 and the release by defendant of $1,000 thereon, and the execution of an interest note; that the plaintiff knew all the facts set out in his petition as constituting fraud; that they decided to hold the stock for speculation until a decline in the oil stock market; that they continued to hold it until the collapse came whereby values of oil property became, in a sense, worthless, etc., and, when he found himself unable to sell the stock, began to complain in the manner set out in his petition; that he knew all the facts which he alleges were misrepresented to him for more than two years prior to the filing of the petition, wherefore his action is barred by the statute of limitation. He declared upon the interest note, and prayed for judgment for the amount thereof. The case was submitted to the jury upon numerous issues, all of which were answered favorably to the plaintiffs, the appellees herein, and will be referred to only as it becomes necessary in the discussion of the propositions presented. Judgment was entered that the plaintiff recover $4,000, with interest from the date of payment; that the interest note be canceled, and defendant was denied a recovery by the court upon the interest note. It is further stated in the judgment that after the verdict was returned on March 14, 1924, that the plaintiffs on March 20th prepared and filed their motion for judgment, and the court decreed that Martin do have and recover of Hendricks provided "plaintiffs' tender into this court before the entry of this judgment said $6,500 par value of stock issued by the Southwestern Oil & Gas Company for delivery to the defendant A. C. Hendricks on this the 20th day of March, 1924, before the entry of this judgment in this cause and before the action of this court on the defendant's motion for a new trial." The judgment further recites that Martin and wife "have tendered on this date before the entry of the judgment stock certificates No. 127 to 139, both inclusive," "certificates No. 129 to 132 showing to have been issued to B. D. Carroll, and bearing the name of B. D. Carroll as indorser written thereon, the remaining shares having been issued and delivered to R. A. Martin"; "said stock is directed to be and is hereby delivered to the clerk of the court to be held by him subject to the call of defendant, Hendricks."

The appellee insists that the propositions urged are not referable to the assignments referred to under the propositions. It appears that in preparing the motion for new trial counsel prefaced the several errors urged, with this statement:

"Because the court erred in failing and refusing to grant defendant's motion for an instructed verdict in favor of defendant, etc."

Inspection of the assignments themselves shows, however, that the remainder of the several assignments as copied from the motion for new trial specifically call to the court's attention the identical errors complained of by the first two propositions.

It is insisted under the first proposition that it was the duty of the plaintiffs, seeking to rescind a sale of stock, to make offer of restitution of such property and to produce the certificates of stock upon the trial of the cause, and that such an offer made for the first time, after the verdict had been rendered and the jury discharged, comes too late. Under the second proposition it is insisted that, because the certificates of stock included four for ten shares each of the aggregate par value of $1,000 standing in the name of B. D. Carroll, and because no proof was offered to show that plaintiffs had acquired title thereto, or had any authority or right to make disposition of the same, the tender of restitution was insufficient for want of capacity on their part to fully restore the property to the defendant.

The bill of exceptions upon which these contentions are based shows that no tender of the certificates of stock was made, aside from the pleading above quoted, until the day after the verdict was returned and the jury discharged; that on that day Martin's counsel brought four certificates of stock for $250 each to the trial judge, and, without the knowledge of defendant or his counsel, submitted the same to the court's order and disposition; that the court announced he would take the matter under advisement until the hearing of plaintiff's motion for judgment; that the motion was heard five days later, when, for the first time, in the presence of defendant and his counsel, plaintiff proffered certain certificates of stock of the Southwestern Oil & Gas Company of the total par value of $6,500, among them being the four certificates mentioned above for ten shares each. The certificates recite that they are owned by B. D. Carroll, and are transferable only on the books of the company, only by the owners thereof in person or by duly authorized attorney, and that the certificates are held subject to the declaration of trust. On the back of each of the four last mentioned certificates was a printed form of assignment, the blank had not been filled out nor dated, but the name of B. D. Carroll was signed thereto. The bill of exceptions further shows that Martin and wife did not at that time, nor any other time, prove or offer to prove that the name signed to the transfer was the genuine signature of B. D. Carroll, or that plaintiffs had acquired title to the certificates from Carroll and were the owners thereof with power of disposition; that no other evidence was offered at that time with reference to the status or ownership of the certificates. The defendant objected to the tender upon the ground that it came too late, and because plaintiffs did not support the tender by showing the authority of plaintiffs to dispose of said certificates standing in the name of Carroll, and that plaintiffs did not show legal ability to make valid restitution co-extensive with the purported tender. These objections were overruled. The testimony of the plaintiffs was, according to their allegations, with the exception that Martin himself testified first, to the purchase of $5,000 in stock on or about July 21, 1919, and later disclosed that in January, 1921, they had received additional stock of the par value of $1,500, being $1,000 more stock than the petition mentions. It further appears that they gave the defendant a note for $5,000 for the stock originally, and that they had paid $1,000 in February, 1920, and $3,000 in January, 1921, and that the remaining $1,000 due on the note was remitted by the defendant. There is no testimony tending to show that the stock was worthless. This was not a condition precedent to plaintiff's right to rescind. Edmonds v. White (Tex. Civ. App.) 247 S. W. 585.

All interest of Mrs. Martin was disposed of by the judgment.

In recognition of the rule that a purchaser seeking to rescind a sale must restore, or in good faith proffer a restoration of, all the property which he acquired under the contract (Continental Trust Co. v. Cowart [Tex. Civ. App.] 173 S. W. 588), plaintiffs delivered — but to the court after the jury had been discharged — certain certificates of stock which they say were received from the defendant, with the request that they be held for the defendant's acceptance. The burden rested upon them to show that such certificates were the identical ones which they had purchased, or that they were both the legal and equitable owners thereof as against the corporation. No question is made as to the identity of the certificates, except as to the four certificates issued to...