Metzler Bros. v. Johnson, 1116.

• Decision Date: 31 December 1931
• Docket Number: No. 1116.,1116.
• Citation: 45 S.W.2d 263
• Parties: METZLER BROS., Inc., v. JOHNSON.
• Court: Texas Court of Appeals

Page 263

45 S.W.2d 263

METZLER BROS., Inc., v. JOHNSON.

No. 1116.

Court of Civil Appeals of Texas. Waco.

December 31, 1931.

Rehearing Denied January 21, 1932.

Appeal from District Court, Dallas County; T. A. Work, Judge.

Suit by E. A. Johnson against Metzler Brothers, Incorporated, and another. Judgment for plaintiff against defendant named, and such defendant appeals.

Affirmed.

Coke & Coke and Zellner Eldridge, all of Dallas, for appellant.

John Davis, of Dallas, for appellee.

BARCUS, J.

In 1927, appellant Metzler Brothers desired to increase its capital stock from eighty to one hundred twenty-five thousand dollars. Appellee agreed to purchase from Dave A. Moses, president of said corporation, twenty-five shares of said increased stock for $2,500, and delivered his check for said amount to Mr. Moses, as president of said corporation, to be cashed and the money delivered to the corporation for said stock upon the condition that said check was not to be cashed, neither was the money to be delivered to appellant, until and unless the entire $45,000 proposed capital stock had been all subscribed and paid for in cash. Appellee's check was dated September 21, 1927, and, before all of said stock was subscribed and paid for in cash, Mr. Moses, in violation of the specific agreement and condition upon which same was left with him, cashed said check on October 19th and delivered the money to appellant. On January 6, 1928, the amended charter was obtained, and on January 27, 1928, appellant issued to appellee its certificate for twenty-five shares of stock. In April, 1929, appellee learned for the first time that at least $7,000 of the capital stock has not been paid for in cash, and he immediately called Mr. Moses' attention to the fact that his check was not to have been cashed until all of the stock was paid for, and Mr. Moses at that time stated he would collect the unpaid subscriptions. On September 14, 1929, appellee wrote Mr. Moses to ascertain whether all of the stock had been paid for in cash, but received no reply. On September 30, at the regular stockholders' meeting, appellee testified that he learned that about $19,000 of the increased capital stock had not been paid for. He was elected a director of the corporation at said time. The day following said stockholders' meeting, he wrote Mr. Moses, as president of appellant, demanding a return to him of the $2,500 he had left with Mr. Moses which was used to pay for his stock. This being refused, he promptly instituted this suit to recover said $2,500 on the theory that the condition on which he agreed to and did purchase the stock was never complied with, and that appellant had converted said money to its own use and benefit. Appellee tendered into court the certificate of stock.

Appellant answered by general demurrer and a general denial, and specially pleaded that appellee had waived any and all condition attached to his subscription for stock, and that by having knowledge of the fact that all of the stock had not been paid for in cash, and having attended a stockholders' meeting and suffered himself to be elected a director, he was thereby estopped from claiming that he was not a stockholder, and from recovering any portion of the money paid by him.

In answer to special issues, the jury found that Mr. Moses, as a representative for Metzler Brothers, made a contract with appellee Johnson, whereby Johnson purchased the $2,500 worth of stock and delivered his check to Mr. Moses with the understanding and agreement that the check would not be deposited or the money collected thereon by Metzler Brothers until the entire $45,000 increased capital stock had been subscribed and paid for in cash. It further found that appellee did not intend to waive his claim against appellant for the return of the $2,500 by anything he said or did. It further found that appellee did not know at the time he purchased the stock that only a part of the increased capital stock was to be paid for in cash. The trial court entered judgment for appellee against Metzler Brothers, and denied him any recovery against Mr. Moses. Metzler Brothers alone appeal.

Appellant assigns a large number of errors and presents thereunder four propositions. Its first contention is that its general demurrer to appellee's petition should have been sustained because appellee's suit was based on fraud growing out of a transaction relating to the sale and purchase of stock in a corporation, and that its recovery, if any, was therefore limited to the measure of damage as prescribed by article 4004 of the Revised Statutes. We overrule this contention. Appellee did not seek to recover damage by reason of fraud. His allegation is that he purchased the stock only on condition that the entire stock would be paid for in cash, and that, since that condition never happened, he did not, therefore, in law become a purchaser of stock; and that since appellant appropriated his money to its use and benefit before and without the condition having happened, which would have made his stock subscription binding, he was entitled to recover the money so appropriated as money wrongfully converted, or as money had and received without any contract on his part to purchase the stock, and without any consideration having been paid by appellant therefor.

If, as a matter of fact, appellee's purchase of the stock was conditional and the conditions were never complied with, he was entitled to recover the amount he had paid therefor unless he had waived said conditions, or unless by his actions and conduct he had estopped himself from insisting thereon. 14 C. J. 558; Fletcher Ency. Corporations, vol. 2,...