Planters' Oil Co. v. Gresham

• Decision Date: 27 February 1918
• Docket Number: (No. 1295.)
• Citation: Planters' Oil Co. v. Gresham, 202 S.W. 145 (Tex. App. 1918)
• Parties: PLANTERS' OIL CO. et al. v. GRESHAM.
• Court: Texas Court of Appeals

202 S.W. 145

PLANTERS' OIL CO. et al. v. GRESHAM.

(No. 1295.)

Court of Civil Appeals of Texas. Amarillo.

February 27, 1918.

Rehearing Denied March 20, 1918.

Appeal from District Court, Grayson County; C. T. Freeman, Judge.

Suit by O. S. Gresham, trustee in bankruptcy of the Sherman Cotton Oil Provision Company, against the Planters' Oil Company and others, wherein the Magnolia Cotton Oil Company intervened. Judgment for plaintiff, and defendants appeal. Reformed and affirmed.

Fiset, McClendon & Shelley, of Austin, for appellants. Wood, Jones & Hassell, of Sherman, for appellee.

HUFF, C. J.

The appellee accepts the statement of the case as made by appellants in their briefs, except to supplement the same by the statement that appellee in his petition not only alleged that there was a contract measure of damage, but also alleged the common-law measure of damage for the breach of the contract. The following statement so made by appellants we shall adopt, in connection with the above statement made by appellee:

"The appellee, O. S. Gresham (who will be referred to for convenience as trustee), in his capacity as trustee in bankruptcy of the Sherman Cotton Oil Provision Company (which will hereafter be referred to as the Sherman Company), a private corporation, which had been adjudged a bankrupt in the United States District Court for the Northern District of Texas, sitting at Sherman, brought this suit against the appellant Planters' Oil Company (which will hereafter be called the Planters' Company), in the district court, fifteenth judicial district, of Grayson county, Tex., for alleged damages for breach of two certain contracts for the delivery of prime crude cotton seed oil. The trustee alleged the execution of two contracts, dated the 14th day of September, 1915, made through a broker, whereby under the first contract the Planters' Company sold and agreed to deliver to the Sherman Company five tanks (160 barrels) of prime crude cotton seed oil, at 38 cents per gallon, f. o. b. Texas common points, subject to the rules of the Texas Cotton Seed Crushers' Association, for November shipment, 1915. The second contract was in all respects the same as the first, except that it provided for December, 1915, shipment. The trustee alleged that subsequent to the making of the contracts the Sherman Company had been adjudged a bankrupt, and the plaintiff was made trustee in bankruptcy; that the trustee had in all things complied with the rules and regulations of the Texas Cotton Seed Crushers' Association with regard to giving notice and matters of that sort; that the Planters' Company failed and refused to make the deliveries, and the trustee had, in compliance with the rules of said association, purchased other oil at an advance in price, and had been compelled to pay certain commissions and expenses. The amount sued for was the difference between the contract price and the price at which the trustee was alleged to have purchased the oil, plus interest, commissions, and expenses.

"The Planters' Company answered by general demurrer and general denial, and by special answer, setting up: (a) Waiver on the part of the receiver and trustee of the Sherman Company of any rights under the contracts by reason of failure on their part to elect within a reasonable time to affirm the same. (b) A denial of the right to recover commissions and expenses on the ground that no oil was actually bought by the trustee as alleged. (c) That the Magnolia Cotton Oil Company (which will hereafter be called the Magnolia Company) had purchased under two like contracts the same amount and character of oil for delivery in the same territory and during the same months at 37½ cents per gallon, said contracts being made subject to the rules of the Interstate Cotton Seed Crushers' Association, which were in all respects substantially the same as those of the Texas Association; that the Sherman Company, the Planters' Company, and the Magnolia Company were all members of both associations; that, under the customs existing among members of said associations and dealers in said product, generally throughout the state, the Magnolia Company and the Planters' Company had always been regarded and treated as one concern, having the same president and practically the same stockholders, and that, under said customs and usages, wherever purchases and sales had been made in such a way as not to require actual delivery of the product in order to carry out the terms of the contracts, no delivery was made, under a system of what was called `washing out,' or `matching out'; that these customs were a part of said contracts, and thereunder the right existed to offset the Magnolia purchase from the Sherman Company against the Sherman Company's purchase from the Planters' Company. The Planters' Company also asked leave to make the Magnolia Company a party defendant, and to have the said contracts offset one against the other. The Magnolia Company voluntarily appeared, asked leave to intervene as a party defendant, and adopted that portion of the Planters' Company's answer claiming said right of set-offs. The trustee excepted to that portion of the answer of the Planters' Company claiming the right of offset and praying to have the Magnolia Company impleaded, and objected to the Magnolia Company being allowed to make itself a party to the suit. The court granted leave to the Magnolia Company to file said answer and plea of intervention, and it was thereupon agreed in open court by all the parties that the exceptions addressed to the answer of the Planters' Company, asserting the right of set-off and the right to have the Magnolia Company impleaded, should be also considered as addressed to the answer and plea of intervention of the Magnolia Company. Upon hearing said exceptions, the court sustained same, both as to said pleading of the Planters' Company and that of the Magnolia Company, and the Magnolia Company was thereupon dismissed out of the suit, having declined to amend. This action was excepted to by both the Planters' and Magnolia Companies.

"The cause thereupon proceeded to trial before a jury, and, after all the evidence was introduced, the court peremptorily instructed the jury to return a verdict in favor of the plaintiff for the amount of the difference between the contract price and the price for which the trustee had purchased other oil, with interest thereon, and for brokerage charges, and the jury under said instructions returned a verdict for $14,046.46. Judgment was accordingly entered by the court for the amount of said verdict, with interest thereon from the 31st day of January, 1917, at the rate of 6 per cent., and for all costs of suit. Both the Planters' and Magnolia Companies seasonably moved for a new trial, and, with leave of the court, filed an amended motion for new trial. This motion was overruled on the 26th day of March, 1917, to which action both the Planters' and Magnolia Companies excepted, and gave notice of appeal, and seasonably perfected said appeal."

Assignments from 1 to 11, inclusive, are based on the action of the court in sustaining exception C, presented by the appellee, to subdivision C, paragraph 3, of the Planters' Oil Company's answer, and in also sustaining exception D to paragraph 4, impleading the Magnolia Cotton Oil Company, and in rendering judgment sustaining the exception and striking out that portion of the Planters' answer, and dismissing the intervention of the Magnolia Cotton Oil Company.

By the fourth paragraph of the answer the defendant impleaded the Magnolia Company, and for cross-action against said company referred to subdivision C of paragraph 3 of the answer of appellant Planters' Company. It was agreed in the court below that the exception contained in the supplemental petition of the Sherman Company should be considered as addressed to the plea of intervention by the Magnolia Company. Exception C was to the effect that subdivision C in paragraph 3 of the answer constituted no defense to plaintiff's cause of action, in that the custom or agreement of "washing out" is not alleged to have been part of the contract or that the plaintiff had agreed to such method; that the Planters' and Magnolia Companies were alleged and shown to be separate corporations, and, under the statute governing bankruptcy, there could be no set-off made as a defense to the cause of action on account of indebtedness to the Magnolia Company; that such answer shows that they were not mutual debts and credits and not in the same right, and were forbidden by the law to be set off, one against the other; that defendant can urge no defense against the bankrupt estate by alleging that it is indebted to another corporation. Exception D was urged against paragraph 4 of the answer, wherein it was sought to implead the Magnolia Company, for the reason that the allegations do not show that the Magnolia Company had any interest in the subject-matter of the suit, or that the defendant had any claim against the Magnolia Company by reason of the suit. The two contracts sued on are set out in the petition and are identical in form and terms except one is for delivery in November and the other for December, and are to the tenor and effect following:

            "Houston, Texas, Sept. 14, 1915
                

"Contract No. S-30-a.

"Planters' Oil Company, Hearne, Texas—Dear Sirs: Referring to telephone and wire messages exchanged to-day, we have sold for your account to Sherman Cotton Oil Provision Company, Sherman, Texas, five tanks (160 barrels) prime crude cotton seed oil, at 38c per gallon, f. o. b. Texas common points.

"Loose in buyer's tanks (to be loaded to capacity) f. o. b. your station; seller guaranteeing weights and quality at destination.

"Terms: Demand draft on the buyer with bill of lading attached, full amount of invoice, seller paying commissions 10c per bbl. of 50 gallons.

"Subject to the rules of the Texas C. S. Crushers'...