Industrial Lumber Co. v. Texas Pine Land Ass'n.

• Decision Date: 05 February 1903
• Citation: 72 S.W. 875
• Parties: INDUSTRIAL LUMBER CO. v. TEXAS PINE LAND ASS'N.<SMALL><SUP>*</SUP></SMALL>
• Court: Texas Court of Appeals

72 S.W. 875

INDUSTRIAL LUMBER CO. v. TEXAS PINE LAND ASS'N.^*

Court of Civil Appeals of Texas.

February 5, 1903.

Appeal from District Court, Hardin County; L. B. Hightower, Judge.

Action by the Industrial Lumber Company against the Texas Pine Land Association. From a judgment for defendant, plaintiff appeals. Affirmed.

John Broughton, Cruse & Nall, and Smith, Crawford & Sonfield, for appellant. Lanier & Martin, for appellee.

GILL, J.

This is an appeal from a judgment sustaining demurrers to the plaintiff's amended original petition. The pleading is very lengthy, and it is not deemed necessary to set it out in full. In view of the conclusion reached by us, a statement of its substance will be sufficient for the purposes of this opinion.

It was averred that plaintiff, the Industrial Lumber Company, a Texas corporation, entered into a written contract with the Texas Pine Land Association, by which the last-named concern leased to plaintiff a certain sawmill at Liberty, Tex., and certain land on which it was situated, for the term of two years from April 1, 1898, and bound itself, among other things, to cut and furnish at the sawmill for a named price a sufficient number of logs to enable the mill to be operated at its full capacity during the full term of the lease; that plaintiff took possession of the mill and operated it during the term, but the defendant association failed to furnish a sufficient number of logs to enable plaintiff to run the mill at its full capacity, whereby much time was lost, to plaintiff's damage, for which judgment is asked. It is further averred that, a short time before the expiration of the lease, plaintiff procured a two-years extension of the contract according to its terms, whereby both plaintiff and defendant association were bound as before; that, as required in the first instance, plaintiff deposited with the association the sum of $5,000 to secure it against default on the part of plaintiff, said sum to be returned to plaintiff at the expiration of the lease or extension, in case plaintiff had complied with its obligations; that, in pursuance of the agreement of extension, plaintiff, with the full knowledge and acquiescence of defendant association, put into the sawmill and upon the property covered by the lease certain necessary improvements and repairs, permanent in their nature, at the reasonable cost of over $15,000, and for this plaintiff also prays judgment by reason of the facts hereinafter set out. It is further averred that on the ____ day of ____, 18__, after the expiration of the original lease, the defendant association sold and conveyed to John H. Kirby and to the Kirby Lumber Company and the Houston Oil Company (two Texas corporations) all its holdings in Texas, including the property leased to plaintiff, and all the lands from which the association expected to get logs to be furnished for the operation of the mill; that the vendees ousted plaintiff from its holdings, and the association, by reason of such sale, ceased to be a going concern, and by that act has rendered it impossible for the association to comply with the terms of the lease. Large damages are averred to have resulted from this breach by the association growing out of the failure to furnish logs for the two-years extension of the lease, and for this plaintiff prays damages also. John H. Kirby and the two Texas corporations above named were made parties defendant for the purpose of foreclosing an asserted lien upon all the property conveyed by the association to them, and plaintiff also sought, by injunction, to hold in the hands of Kirby, the Houston Oil Company, and the Kirby Lumber Company all the consideration for the purchase from the association which had not theretofore passed. A lien, as before stated, was asserted against all the property purchased, and was averred to exist by reason of the following facts: That the Texas Pine Land Association was a voluntary association or joint-stock company, the membership of which is very numerous, and the names of all the members are unknown to plaintiff, and all are alleged to be nonresidents of this state; that the membership is so large it is impracticable, if not impossible, to make each and all of them parties to this suit; that the Texas Pine Land Association was organized for the purpose of and was engaged in the investment of capital in pine and other timber lands in Texas, and in cutting and selling logs, and operating sawmills, trams, and booms, and operating a general lumber and timber business; that the business of the association had been intrusted by its members to Thomas L. Nelson, Francis Peabody, Jr., and Noah W. Jordan (residents of Boston, Mass.), as trustees, who were fully empowered to transact all the business of the association, and to make all necessary contracts, sales, and bargains in furtherance of the purposes of the association. But the power of these trustees was specifically limited by the following stipulation, embodied in the written instrument, denominated "Declaration of Trust," which was the source of their authority: "Art. 13. The trustees shall have no power to bind the shareholders personally, and, in every written contract they shall enter into, reference shall be made to this declaration of trust. And the person or corporation so contracting with the trustees shall look only to the funds and property of the trust for the payment under such contract, or for the payment of any debt or damage, judgment or decree, or of any money that may otherwise become due and payable, by reason of the failure on the part of the trustees to perform such contract in whole or in part, so that neither the trustees nor the shareholders, present or future, in this trust shall be personally liable therefor." That in pursuance of this clause there was incorporated in the original lease contract the following clause: "It is further distinctly understood that the party of the first part is a joint-stock association without personal liability of its stockholders, and that for any debt, demand, or damage arising under this instrument against the party of the first part the party of the second part, or other party in whose behalf such demand may arise, shall look exclusively to the trust property in the hands of the trustees of the party of the first part, and upon no account and in no event shall there be any individual liability of the shareholders, party of the first part, or its trustees." The large amount of lands and other property in Texas owned by the association is specifically set out and described in the petition. It is alleged that the association owned all the lands for miles around the sawmill site, so that in no event could plaintiff have operated the sawmill after the sale of its property by the association; that, as above stated, plaintiff had agreed in set terms not to hold the members of the association personally liable, but to look alone to the trust property for the satisfaction of its demands, and that as a result it has no remedy except against the property and funds of the concern; that the contract of lease itself evinces a purpose on the part of the parties thereto to charge the property with a lien, and that if that does not do so an equitable lien clearly arises in favor of plaintiff by reason of the declaration of trust, the terms of the lease, and the attendant facts averred. It is further alleged that Kirby and the two defendant corporations had actual notice of all the facts and the existence of plaintiff's demands, and that same were secured by a lien at the time of and before the purchase by defendants. A foreclosure of the asserted lien is prayed for against the trust property in the hands of the defendants.

The Kirby Lumber Company and the association interposed an exception to that portion of the petition which seeks to foreclose a lien upon land not leased to plaintiff in 1898, and, further, that the land had been conveyed before the beginning of this suit, and therefore no lien existed.

These exceptions were sustained by the court, whereupon plaintiff filed the following motion: "And now comes the plaintiff and dismisses all that part of its cause of action seeking a recovery against the Houston Oil Company, the Kirby Lumber Company, or any one else, for the moneys, stocks, and bonds or other things of value alleged to be the consideration passing to said Texas Pine Land Association for the lands described, as sold to the said oil company and lumber company of date July 31, 1901, because it now alleges that all of said consideration passed to said association before the filing of this suit, and has been removed from this state in the shape of money, and is beyond the reach of plaintiff; and plaintiff says that all the property of said association had been removed from this state before the institution of this suit, except the land herein involved, and that it is the only source through which it can collect any judgment that may be rendered. And plaintiff does not seek to recover any money judgment against said association as an individual, or any of the trustees as members, but only such judgment as may be a charge upon...