King v. Boerne State Bank

• Decision Date: 14 May 1913
• Citation: 159 S.W. 433
• Parties: KING v. BOERNE STATE BANK et al.
• Court: Texas Court of Appeals

159 S.W. 433

KING v. BOERNE STATE BANK et al.

Court of Civil Appeals of Texas. San Antonio.

May 14, 1913.

On Motion for Rehearing, June 28, 1913.

Appeal from District Court, Kendall County; R. H. Burney, Judge.

Action by L. W. King against the Boerne State Bank and another. Judgment for defendants, and plaintiff appeals. Reversed and remanded.

Appellant, on March 14, 1912, sued appellees, the Boerne State Bank and its president, C. J. Loe, for damages, charging such defendants with the conversion of 8,000 shares of the capital stock of the Boerne Electric Power & Manufacturing Company of the par value of $8,000, which had been pledged by plaintiff to said bank as collateral security on his note for $1,000, dated December 29, 1911, and due January 29, 1912.

Plaintiff alleged that on February 24, 1912, he had a conversation with said C. J. Loe in which he assured Loe that he was endeavoring to raise the money to pay the note, and would be able to pay same within a few days, but if the bank had to have the money and insisted upon it he would take 2,000 shares of his pledged stock and sell the same at a sacrifice of 50 cents on the dollar in order to pay the note immediately; that thereupon said Loe told plaintiff he hoped he would pay said note in a few days, and by this statement and Loe's conduct plaintiff was led to believe that it would be all right for him to let said note run for a few days, and would not have to sacrifice any of his stock, which was reasonably worth its par value; that, notwithstanding said agreement and conduct of the defendants, the bank wrongfully and maliciously, with intent to harass plaintiff and to oust him from said Boerne Electric Power & Manufacturing Company in which he was a director and one of the largest stockholders, fraudulently conspired with its president, C. J. Loe, and sold plaintiff's $8,000 worth of shares of stock to said Loe for the grossly inadequate sum of $100; that such sale was made about February 26, 1912, privately, without any notice to plaintiff and without any advertisement or publicity whatever, knowing that said stock was worth $8,000; that after receiving notice of such sale plaintiff went to the bank and tendered the amount due on his note and demanded his note and stock, but the bank refused to accept the money and to turn over to plaintiff the stock. Plaintiff further alleged that said stock was reasonably worth $8,000 and prayed that he recover $8,000 with 6 per cent. interest thereon from February 26, 1912, less whatever sum he may be found to owe the bank, and also prayed for recovery of $10,000 exemplary damages.

Defendants answered with general demurrer, special exceptions, general denial, and plea in the nature of a cross-action alleging the execution of the $1,000 note by plaintiff to the bank, the pledge of the stock, their authority to sell the stock upon default in the payment of the note, the failure of plaintiff to pay the same (and in this connection denied an agreement for forbearance set up in plaintiff's petition), the sale and delivery on February 26, 1912, of the stock to C. J. Loe for $100; that thereafter on February 26, 1912, the bank, for a valuable consideration, assigned and transferred, without recourse, the said note to the said C. J. Loe; that Loe thereby became and still was the legal and equitable owner and holder of said note; that plaintiff has failed and refused to pay the same; that upon the sale of the stock as aforesaid the bank credited the note with $100 paid it by Loe for said stock; that the stock was of no greater value than $100; that defendants are willing and ready to return said stock to plaintiff upon payment of the note, interest, and attorney's fees. Defendants prayed as follows: "Wherefore defendants pray that plaintiff take nothing by his said suit, and that defendant Loe be quieted in the title and possession of said shares of stock, and that he have judgment against plaintiff for the balance due on said note, or if for any reason they should be held not entitled to such relief, or the sale of said shares of stock should be held invalid, then defendants pray for judgment against plaintiff for the amount of said note, principal and interest, and attorney's fees, and for the foreclosure of said lien on said shares of stock, and for decree directing the sale of said shares of stock and satisfaction of such judgment; and they also pray judgment for costs, and for general relief."

Plaintiff filed a supplemental petition containing exceptions to defendants' answer.

The jury was instructed to return the following verdict: "We, the jury, find for the defendants against the plaintiff as to his action for conversion and damages, and we further find that the sale of the pledged shares of stock, to wit, 8,000 shares of stock in the Boerne Electric Power & Manufacturing Company, was invalid, and we further find for the defendant C. J. Loe against plaintiff on his cross-action on said note for the amount thereof, principal and interest, to wit, $1,058.33, and for the foreclosure of his lien on said shares of stock."

Judgment was entered in accordance with the verdict, and plaintiff appealed.

Summary of Evidence.

December 29, 1911, King gave the Boerne State Bank his note for $1,000, due January 29, 1912. The debt evidenced by the note had existed since the spring of 1911, and the original note had been renewed several times. Eight thousand dollars of the stock of the Boerne Electric Power & Manufacturing Company, a company of which Loe was president, had been pledged by King as collateral to secure the debt. When the note was renewed on December 29, 1911, Loe notified King that no further renewals would be made, and the note would have to be paid at maturity. On January 18, 1912, the bank mailed King notice that his note would mature on January 29, 1912, which notice was received by King two or three days before the note matured. King testified he saw Loe at once and asked him if he would extend the note, that Loe said he could not, that the bank did not wish to renew it, and that he was to endeavor to pay as soon as possible. This conversation is denied by Loe. The note was not paid. King also testified that on February 24, 1912, he told Loe he was endeavoring to raise the money to pay the note and hoped to do so in a few days and if necessary would sell the stock for $2,000, that he was pretty sure he could sell it for 50 cents on the dollar, and Mr. Loe told him he had better not sacrifice it, not to sell it below par, as the company had several thousand dollars worth of treasury stock which they wished to sell, and the sale of which might be prejudiced by a sale of other stock at a low price. Loe denied that this conversation occurred. On February 26, 1912, the bank wrote King as follows: "Boerne, Texas, February 26, 1912. Mr. L. W. King, City— Dear Sir: We have sold the collateral attached to your one thousand dollar note which matured nearly a month ago consisting of 8,000 shares of the Boerne Electric Power and Manufacturing Company stock to C. J. Loe for $100.00 and have applied the same as a credit upon your note. Yours truly, C. J. Loe, President." King also received a letter from Loe as follows: "Boerne, Texas, February 26, 1912. Mr. L. W. King—Dear Sir: I have bought from the Boerne State Bank 8,000 shares of the Boerne Electric Power & Manufacturing Company's stock issued in your name, for $100.00. I expect to make an effort to get the accounts of this company settled in some satisfactory manner within the next ten days, and if you will arrange to take care of the balance of your note to the bank of $900.00 and the money that I am spending in settling up accounts of the company within the next fifteen days, I will be glad to transfer the stock back to you. I will of course expect you to refund me what money I am out in this matter with interest from the date that I took it on. Yours very truly, C. J. Loe."

These letters were received by King either on February 26th or 27th. On March 9th King secured $1,200 from Gilleat to pay off his note to the bank. King saw Loe on February 10th at the bowling alley but did not mention the matter of taking up the note, giving as his reason for not mentioning the matter that it was Sunday and he did not talk business on Sunday. He said further, if there were any other reasons for his not mentioning the matter, they were personal reasons. Loe left for Asherton on February 10th, and King on February 11th, about 9:30 or 10 o'clock a. m., went to the bank knowing that Loe was not there, and tendered to Fred Loe and Mr. Fabra, assistant cashiers, the $1,200 and demanded his note and stock. Fred Loe produced the note, but was unable to find the stock, and King declined to pay the note unless the stock was delivered to him. Mr. Fabra told him that C. J. Loe was away and he would like to have time to communicate with him as all of King's business transactions had been with C. J. Loe. King said he would give him one hour, but called twice during the day, and finally gave Fabra until the evening to hear from C. J. Loe, but Fabra reported he had been unable to speak to Loe over the telephone. After C. J. Loe returned to Boerne, he called on King and offered to surrender the stock if King would pay the note. King said he could not accept it, as the matter was out of his hands and in the hands of his lawyers, to whom he referred Loe. Loe says this offer was made on Wednesday, the 13th. King first testified it was either Tuesday or Wednesday, but being recalled later said he was mistaken, that Loe called on him on Thursday, March 14th, after suit had been filed.

G. W. Calrow, a brother-in-law of plaintiff, testified that about a week before the sale of the stock he had a conversation with C. J. Loe about the King transaction, and after the sale, about March 4th or 5th, he had another conversation with C. J. Loe concerning which the witness testified: "I asked if...