Mars v. Missouri-Kansas-Texas R. Co.

• Decision Date: 05 October 1927
• Docket Number: (No. 991-4854.)<SMALL><SUP>*</SUP></SMALL&gt
• Citation: 298 S.W. 271
• Parties: MARS et al. v. MISSOURI-KANSAS-TEXAS R. CO. OF TEXAS.
• Court: Texas Supreme Court

298 S.W. 271

MARS et al. v. MISSOURI-KANSAS-TEXAS R. CO. OF TEXAS.

(No. 991-4854.)^*

Commission of Appeals of Texas, Section A.

October 5, 1927.

Error to Court of Civil Appeals of Second Supreme Judicial District.

Action by W. W. Mars and others against the Missouri-Kansas-Texas Railroad Company of Texas. Judgment for plaintiffs was reversed and remanded by the Court of Civil Appeals (294 S. W. 941), and plaintiffs bring error. Judgment of Court of Civil Appeals reversed, and that of District Court affirmed.

Templeton & Templeton, of Fort Worth, for plaintiffs in error.

Thompson & Barwise and Fred L. Wallace, all of Fort Worth, for defendant in error.

BISHOP, J.

This is a suit by plaintiffs in error W. W. Mars et al., against Missouri-Kansas-Texas Railroad Company of Texas, defendant in error, on an obligation imposed upon the property and franchises of the Missouri, Kansas & Texas Railway Company of Texas by the provisions of article 6422, Revised Civil Statutes 1925, to the effect that "in case of a sale of the property and franchises of a railroad company within this state" such "property and franchises so purchased shall be charged with and subject to the payment of" the character of obligation upon which this suit is based. In their petition they alleged that the property and franchises of the Missouri, Kansas & Texas Railway Company of Texas were in obedience to an order of a federal court sold by receiver to Francis F. Randolph and Hugo Blumenthal, who, together with others, applied for and secured a charter whereby a new corporation named and designated as Missouri-Kansas-Texas Railroad Company of Texas, defendant in error herein, was organized for the purpose of taking over and operating the lines of railway formerly owned by the Missouri, Kansas & Texas Railway Company of Texas, and that after defendant in error had been incorporated, the properties of said sold-out corporation were transferred and conveyed to it.

In the district court plaintiffs in error recovered judgment foreclosing lien on the property owned by the Missouri, Kansas & Texas Railway Company of Texas at the time of the sale to Randolph and Blumenthal. This judgment was by the Court of Civil Appeals reversed and the cause remanded, that court in a majority opinion holding that the petition of plaintiffs in error is insufficient and subject to general demurrer, for the reason that it does not allege that upon application of defendant in error and after investigation the Interstate Commerce Commission had by order authorized it to assume the obligation upon which this suit is based. Justice Buck, in a dissenting opinion, insists that the petition tenders issues presenting a cause of action, notwithstanding it fails to allege that defendant in error had applied for and been granted permission to assume this obligation. See majority and dissenting opinions of the Court of Civil Appeals, 294 S. W. pages 941 to 947.

Section 20a, subdivision 2, and section 20a, subdivision 11, of the Transportation Act of 1920 (49 USCA § 20a [U. S. Comp. St. § 8592a]), enacted by the Federal Congress, provide as follows:

Section 20a, subdivision (2): "From and after one hundred and twenty days after this section takes effect it shall be unlawful for any carrier to issue any share of capital stock or any bond or other evidence of interest in or indebtedness of the carrier (hereinafter in this section collectively termed `securities') or to assume any...