Sealy Oil Mill & Mfg. Co. v. Bishop Mfg. Co.
| Decision Date | 14 December 1921 |
| Docket Number | (No. 271-3498.) |
| Citation | 235 S.W. 850 |
| Parties | SEALY OIL MILL & MFG. CO. v. BISHOP MFG. CO. |
| Court | Texas Supreme Court |
Action by the Sealy Oil Mill & Manufacturing Company against the Bishop Manufacturing Company. Judgment for plaintiff was reversed, and judgment was rendered for the defendant by the Court of Civil Appeals (220 S. W. 203), and plaintiff brings error. Judgment of Court of Civil Appeals reversed and that of district court affirmed.
C. G. Krueger, of Bellville, for plaintiff in error.
G. R. Scott, Boone & Pope and B. D. Tarlton, all of Corpus Christi, for defendant in error.
RANDOLPH. J.
The plaintiff, the Sealy Oil Mill & Manufacturing Company, sued the defendant, the Bishop Manufacturing Company, to recover damages for breach of a contract in which the defendant sold and agreed to deliver to plaintiff five cars of cotton seed. The plaintiff recovered judgment in the district court, which judgment the Honorable Court of Civil Appeals for the Fourth Supreme Judicial District reversed and rendered in favor of defendant, and plaintiff thereupon applied to the Supreme Court for a writ of error, which was granted. 220 S. W. 203.
The district court in his findings of fact material to this inquiry found as follows: That the contract sued on was entered into by plaintiff and defendant; that the contract was breached by defendant; that M. Nuckles was the secretary and general manager for defendant; that the board of directors held Nuckles out to the world as their general manager, and that he was such in fact; that the defendant operated a cotton gin at Bishop, Tex., and took cotton seed in exchange for its services rendered to the farmers, and paid the farmers the difference between the value of the cotton seed and the amount charged for its services, and that it had been engaged in buying cotton seed from farmers ever since its incorporation in 1913 up to the time of trial; that it had been customary and is the universal practice of all persons and corporations owning and operating cotton gins in this state to engage in the purchase of cotton seed and sell the same to oil mills and other parties, and that it was essential for the purposes of their incorporation business for cotton gin owners to do so, and also filed the following conclusions of law of like importance in the decision of this case: That M. Nuckles, as a matter of law, as secretary and general manager for defendant, had authority to make and enter into the contract and to bind the defendant; that the purchase and sale of cotton seed by the defendant was essential to the transaction of its authorized business and for the success of its business; that article 1121, section 72, of Revised Civil Statutes of Texas, under which defendant was incorporated, does not define its powers definitely, nor limit and restrict its powers and authority to any certain, definite, and specific purpose, and that therefore a corporation incorporated under said article and section has authority to do and transact such business and matters as are essential to the transaction of its authorized business, or as is customary and usually done by institutions of like character in furtherance of their business.
The honorable Court of Civil Appeals in reversing the case reversed the judgment of the district court and rendered same for plaintiff upon two controlling propositions: "Whether or not the contract was ultra vires;" and, second, "if it was not, did Nuckles have authority to make the same?" These two propositions are determined by the Court of Civil Appeals by their holding the contract ultra vires, and, further, while they did not consider the solution of that question necessary for the disposition of the case, they hold that the record wholly fails to show authority, actual or apparent, on the part of Nuckles to make the contract. 220 S. W. 203.
Was the contract sued on ultra vires? The evidence shows that the defendant was a corporation, with M. Nuckles as its secretary and general manager, and that it was in the ginning business, operating two gins. It also appears that it was and is customary for gins to contract with parties who have them to do their ginning to pay the toll by selling to the gin the cotton seed from the cotton ginned, and for the gin to pay for the seed in excess of the toll. It appears that Nuckles had been pursuing this course with the knowledge of its stockholders and directors. It is also shown that not only was it customary for gins to do this, but that it was an essential thing to do to secure business. It occurs to us that the direct contact of the ginning officials with the producers, the fact that the cotton and seed being delivered to them by the individual producers and by them separated from the lint, devolves on the gin officials a duty of furnishing a market for the seed so as to assist the producer in disposing of that part of his produce left in the hands of the ginner. In the early history of ginning the disposition of the cotton seed was a great problem for both farmer and ginner, but when it was discovered that the seed had a commercial value, then there grew up the custom of the farmer paying for his ginning by paying his toll in seed. As seed grew in value, it became and is yet customary for the gins to accept the seed to the extent of the toll for ginning, and pay money for the excess. This custom began with the individual ginner, and to limit it to individuals would be to limit the power of corporations engaged in the same business in such a way as to destroy their ability to secure business.
It is our opinion that a corporation in the transaction of its business, the business for which it was organized, has the same latitude as the individual in the same character of business in those things that are essential to the successful operation of that particular business.
The case of North Side Ry. Co. v. Worthington, 88 Tex. 562, 30 S. W. 1055, 53 Am. St. Rep. 778, cited by the honorable Court of Civil Appeals, in our opinion supports this view. In that case the Fort Worth City Company, a corporation organized for the purchase, subdivision, and sale of lands in cities, towns, and villages, owned about 1,400 acres of land lying north and northwest of the city of Fort Worth. This land was laid out in streets, alleys, blocks, and lots for the purpose of selling to settlers and of building it up as a suburb of Forth Worth. The North Side Railway Company was incorporated for the...
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