Security Trust Co. of Austin v. Lipscomb County, A-13.

• Decision Date: 12 April 1944
• Docket Number: No. A-13.,A-13.
• Citation: 180 S.W.2d 151
• Parties: SECURITY TRUST CO. OF AUSTIN et al. v. LIPSCOMB COUNTY et al.
• Court: Texas Supreme Court

180 S.W.2d 151

SECURITY TRUST CO. OF AUSTIN et al. v. LIPSCOMB COUNTY et al.

No. A-13.

Supreme Court of Texas.

April 12, 1944.

Rehearing Denied May 24, 1944.

Error from Court of Civil Appeals for the First District, Travis County.

Action by Lipscomb County and others against the Security Trust Company of Austin, Tex., a dissolved corporation, and certain individuals as directors and stockholders of the corporation, to recover judgment on separate claims of indebtedness. A judgment dismissing the suit was reversed by the Court of Civil Appeals, and the cause was remanded, 175 S.W.2d 723, and defendants bring error.

Judgment of Court of Civil Appeals reversed and that of district court affirmed except in so far as they related to certain claims and as to such claims judgment of district court reversed and that of Court of Civil Appeals affirmed.

Black, Graves & Stayton, Charles L. Black, Hart & Brown, W. D. Hart, Dan Moody, and Coleman Gay, all of Austin, for petitioners.

White, Taylor & Chandler, Ike D. White, and H. Grady Chandler, all of Austin, for all respondent counties.

Roy Sansing, of Higgins, for Lipscomb County.

Maurice R. Bullock, of Fort Stockton, for Pecos County.

W. A. Griffis, of Seagraves, and Alton Freeman, of Seminole, for Gaines County.

J. E. Webb, of Madisonville, for Madison County.

Frank Hartgraves, of Menard, and E. H. Swaim, of Eden, for Concho County.

Homer Moss, of Wheeler, and Lewis M. Goodrich, of Shamrock, for Wheeler County.

J. E. Wheat, of Woodville, for Tyler County.

Ben H. Powell, of Austin, amicus curiae.

SMEDLEY, Commissioner.

Respondents, Lipscomb County and six other counties of the State of Texas, sued petitioners, Security Trust Company of Austin, Texas, a dissolved corporation, and several individuals who are directors and stockholders of the dissolved corporation, to recover judgment on separate claims of indebtedness aggregating about $500,000. The trial court sustained a number of exceptions to the second amended original petition and when respondents declined to amend, dismissed the suit. That judgment was reversed by the Court of Civil Appeals and the cause was remanded. 175 S.W.2d 723.

Exceptions sustained by the trial court to the counties' first amended petition had the effect of requiring them in their second amended petition to allege the substance of certain proceedings in a prior suit brought by the State of Texas against Security Trust Company of Austin, Texas, in which a receiver of the properties of that corporation was appointed. These allegations appear in a paragraph introduced by the statement that they are made "in the alternative and only if the same be necessary", and copies of applications and orders in that suit are attached as exhibits. The action of the trial court in requiring the amendment was correct. In their first petition the counties had alleged that a receiver for the trust company was appointed, that he took possession of all of the property of that company, that the counties made contracts with the receiver whereby it was agreed that the receiver would assign and deliver to the counties in absolute title securities that the trust company had pledged to secure deposits made by the counties with it, the counties, in consideration therefor to release all claims that they had against the trust company by reason of the deposits, and that the securities were delivered to the counties and accepted and sold by them. The suit attacks the validity of the contracts. In the absence of allegations that the acts of the receiver were not authorized by the court, the necessary implication from the allegations made was that the contracts made by the receiver and his action under them were authorized or approved by the court. Neither the validity of the contracts nor the right of respondents to question their validity in this suit could be determined without information as to what was done by the court or in the court with respect to the contracts. Chapman v. Guaranty State Bank, Tex. Com.App., 267 S.W. 690, 695; Kneeland v. American Loan & Trust Co., 136 U.S. 89, 10 S.Ct. 950, 34 L.Ed. 379. We shall, therefore, in passing upon the sufficiency of the second amended petition, consider all of its allegations, including the added paragraph relating to the proceedings in the receivership suit. The substance of the material allegations in that petition follows. We state the facts alleged in support of Lipscomb County's claim, since the facts as to the claims of the other counties, except in amounts and dates and in other respects hereinafter mentioned, are substantially the same.

Lipscomb County voted and sold road bonds and deposited the proceeds of the sale with Security Trust Company as the designated depository for the county, the balance of the deposit due and owing to Lipscomb County on May 31, 1933, being $66,423.48. As security for the payment of the funds so deposited with it the trust company placed in the possession of American National Bank of Austin, Texas, securities of the total face value of $68,419, being bonds and warrants issued by various cities, counties and districts. On November 27, 1933, the commissioners court of Lipscomb County entered into an agreement with the receiver of Security Trust Company, evidenced by an order duly recorded in the minutes of the commissioners court and signed by the county judge and all of the commissioners, whereby it was agreed that the receiver would "transfer, assign and deliver in absolute title to Lipscomb County" all of the securities that had been placed in the American National Bank of Austin to secure the payment of the county's deposit with the trust company, and that upon the delivery of the securities to it the county would release and discharge the trust company and its receiver from all claims and demands of every kind by reason of or arising out of the deposit.

Thereupon the receiver filed in the district court of Travis County, where the receivership proceedings were pending, an application to the court, setting out fully the facts as to the deposit of Lipscomb County and the pledging of the bonds and warrants to secure its payment and the agreement that he had made with the county, and prayed the court, after hearing testimony on the application, to enter its order, if the facts warranted it, authorizing him to perform the agreement and to transfer and deliver the securities to Lipscomb County and to demand and receive from the county such receipts and releases as would evidence the transaction and would be a complete release from Lipscomb County of its deposit.

The district court, on December 4, 1933, made and entered its order, reciting that after having heard the application and testimony thereon it was of the opinion that the material allegations of the application were true, many of which, including a description of the securities and the substance of the contract between the county and the receiver, were set out in the order, granting the application, and authorizing the receiver to transfer and deliver to Lipscomb County in absolute property and title all of the securities and ordering and adjudging that by accepting the securities the county would release the trust company and the receiver from all claims and demands that it might have by reason of its deposit and indebtedness.

The securities were delivered to Lipscomb County and accepted by it and thereafter, the date not being alleged, it sold the securities and received for them the total sum of $34,314.78, which was their reasonable market value and their highest market value at any time after the securities were delivered to it.

On October 2, 1939, the district court entered an order requiring all creditors of Security Trust Company to file their claims with the receiver on or before December 31, 1939, and providing that all claims not filed on or before that date would be forever barred; and on January 2, 1940, the final order was made and entered, discharging the receiver, barring all claims of creditors not theretofore filed, and directing the receiver to deliver all of the assets of the trust company remaining in his hands to the board of directors of that company.

The receiver delivered to the directors of the trust company assets and properties of the approximate total value of $800,000 together with other property described in the petition, the value of which is unknown. On January 4 and 31, 1940, the directors and stockholders of Security Trust Company caused the corporation to be dissolved, and the directors are now in possession of the assets and property of the company that were delivered to them, for the purpose of liquidation.

Each of the counties alleges that the agreement made with the receiver to accept the securities in payment and satisfaction of the balance of its deposit with the trust company was wholly void and of no effect, because "the reasonable market value or cash value" of the securities which it agreed to accept and did accept was substantially less than the amount of its debt or claim against the trust company, and that the agreement was therefore a release of a debt owing the county and an agreement to compromise and settle the claim of the county against the trust company, in violation of law. Each alleges that after the agreement was made and regardless of the terms thereof, the trust company remained bound and liable to pay the county the full amount of its claim or deposit, less the benefits that the county received, that is, less the amount that it received from its sale of the securities.

The allegations with respect to the proceedings in the receivership suit, whereby the court approved the agreements made by the receiver and the counties and directed the receiver to surrender the securities to the counties in full satisfaction of their claims, are: That the orders were void and of no effect as to the counties, because the court was without jurisdiction to...