Shear Co. v. Wilson

• Decision Date: 02 March 1927
• Docket Number: (No. 735-4671.)
• Citation: 292 S.W. 531
• Parties: SHEAR CO. v. WILSON et al.<SMALL><SUP>*</SUP></SMALL>
• Court: Texas Supreme Court

292 S.W. 531

SHEAR CO. v. WILSON et al.^*

(No. 735-4671.)

Commission of Appeals of Texas, Section B.

March 2, 1927.

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

Suit by the Citizens' National Bank of Waco against the Shear Company, in which Mrs. Grace J. Witherspoon, T. C. Phillips, and Mrs. Nettie Wilson were interpleaded, and the two latter filed cross-actions. Judgment for plaintiff against T. C. Phillips and Mrs. Nettie Wilson, and for defendant the Shear Company against Mrs. Nettie Wilson, was affirmed in part and reversed and remanded in part by the Court of Civil Appeals (284 S. W. 654), and defendant and T. C. Phillips bring error. Affirmed in part, and reversed and remanded in part.

Williamson & McDonnell, of Waco, for plaintiffs in error.

Williams, Williams, McClellan & Lincoln, of Waco, for defendants in error.

SPEER, J.

The following statement by Justice Stanford of the Court of Civil Appeals is sufficient:

"This suit was filed by the Citizens' National Bank of Waco against the Shear Company as sole defendant, and, as set out in its amended pleading, alleged that on May 23, 1921, C. W. Wilson was the owner of certificate No. 16 for 25 shares of the capital stock of the Shear Company, and on said date, in order to secure a loan of $4,000 from said bank, pledged and delivered said certificate of stock to it; that the said C. W. Wilson failed to pay said loan when due, and said bank sold said certificate of stock under its collateral agreement with C. W. Wilson, and became itself the purchaser thereof; that it then presented said certificate of stock to the Shear Company for cancellation, and demanded that said company issue to it a certificate of stock for the same amount, which it refused to do. The Shear Company filed its original answer, which was, in effect, a bill of interpleader, in which it disclaimed any interest in said 25 shares of stock sued for, but alleged that T. C. Phillips and Mrs. Nettie L. Wilson were asserting claim to said stock, and prayed that T. C. Phillips and Mrs. Nettie L. Wilson, together with her husband, C. W. Wilson, be made parties to the suit, and that the rightful ownership of said stock be determined. T. C. Phillips answered by way of cross-action against the bank, the Shear Company, and Mrs. Wilson alleging that on about May 23, 1920, C. W. Wilson executed and delivered to him a note for $5,000, and, to secure same, pledged said certificate No. 16 for 25 shares of stock in the Shear Company, and that afterwards, without fault or negligence on his part, he lost the note and certificate of stock; that same being found was returned to C. W. Wilson; and that Wilson thereafter fraudulently and wrongfully negotiated the stock to plaintiff, the Citizens' National Bank, and he (Phillips) sought judgment establishing the priority of his title and lien to said certificate of stock. Mrs. Wilson answered in the suit by way of cross-action, and asserted title to the 25 shares of stock heretofore mentioned, and also to an additional 25 shares, the whole of which she alleged had been issued in lieu of old certificate No. 112 for 50 shares of stock in the Rotan Grocery Company (the predecessor of the Shear Company), which 50 shares of stock in the Rotan Grocery Company she had previously acquired as her separate property, and sought to recover against the Shear Company said stock or its value, with 6 per cent. interest from October 1, 1916. After the filing of the answer of Mrs. Wilson, the Shear Company interpleaded Mrs. Grace J. Witherspoon, Andrew J. Witherspoon, and R. O. Silvers, alleging they claimed an interest in the stock in question. Pending the suit, Mrs. Wilson was divorced from her husband, C. W. Wilson, and he was dismissed from the suit. There were other pleadings and supplemental pleadings, the case finally resolving itself into two cases, or two main issues, one between T. C Phillips and the Citizens' National Bank as to their respective rights to certificate No. 16 for 25 shares of stock in the Shear Company; the other was between Mrs. Wilson and the Shear Company, as to whether or not Mrs. Wilson was entitled to recover of the Shear Company certificate No. 112 for 50 shares of the Rotan Grocery Company, purchased in 1913, and alleged to have been her separate property, or the value of said shares.

"The issues and the facts bearing upon same will appear more fully in the course of our opinion. The court instructed a verdict in favor of Mrs. Grace Witherspoon, R. O. Silvers, T. C. Phillips, and the Citizens' National Bank as against Mrs. Wilson, and submitted the case on special issues as between T. C. Phillips and the Citizens' National Bank, and also as between Mrs. Wilson and the Shear Company. In view of the disposition we have decided must be made of the case as between T. C. Phillips and the Citizens' National Bank, it is unnecessary to set out the findings of the jury as between said parties.

"To the issues submitted as between Mrs. Wilson and the Shear Company the jury made the following findings:

"`(9) The defendant Mrs. Nettie L. Wilson did, on or about February 3, 1913, or subsequently thereto, acquire as her separate property 50 shares of stock in the Rotan Grocery Company, evidenced by certificate No. 112 in said corporation.

"`(10) Said stock at the time of the alleged sale was owned by H. H. Shear.

"`(11) Did the Shear Company, at the date of the issuance to C. W. Wilson of certificates Nos. 13 to 16, inclusive, in the Shear Company, through its president, H. H. Shear, or its other officers, have knowledge or notice that the stock evidenced by certificate No. 112 in the Rotan Grocery Company was the separate property of the defendant Mrs. Nettie L. Wilson?' (Not answered.)

"`(12) At the time of the purchase of the stock evidenced by certificate No. 112, Mrs. Nettie L. Wilson did request Mr. H. H. Shear, as president, to enter said defendant Mrs. Nettie L. Wilson's name as holder and owner of said shares of the capital stock in said Rotan Grocery Company on the books of said company.

"`(13) The failure or refusal of said company to enter the name of Mrs. Nettie L. Wilson as a holder and owner of the 50 shares of capital stock on the books of said company was not a proximate cause for C. W. Wilson's disposing of same.

"`(14) Mrs. Nellie L. Wilson, defendant, at the time of the purchase of said stock evidenced by certificate No. 112, did request the said H. H. Shear, as president, to issue said certificate in her name.

"`(15) Such failure or refusal to issue said certificate in the name of Mrs. Nettie L. Wilson was not a proximate cause of the disposal of said stock by C. W. Wilson.

"`(16) The reasonable market value per share of the capital stock of the Rotan Grocery Company on February 3, 1913, was $300 per share.

"`(17) The reasonable market value per share of the capital stock of the Shear Company on October 1, 1916, was about $300.

"`(18) The reasonable market value per share of the capital stock of the Shear Company on October 21, 1916, was about $300.

"`Special issue No. 7, requested by the Shear Company: Did the Shear Company, at the time it issued certificates Nos. 13 to 16, inclusive, to C. W. Wilson, know, or did it have notice, that C. W. Wilson was not entitled to have certificate No. 112 of the Rotan Grocery Company canceled, and said new certificates of stock in the Shear Company issued in his name in lieu thereof?' (Not answered.)

"`Special issue No. 9, requested by the Shear Company: Mrs. Nettie L. Wilson was negligent in the exercise of control and possession of certificate No. 112 of the Rotan Grocery Company, and also such negligence was the proximate cause of the issuance of new certificates in the Shear Company in lieu of certificate No. 112 of the Rotan Grocery Company to C. W. Wilson.'

"The court entered judgment in favor of the Citizens' National Bank and against T. C. Phillips and Mrs. Wilson, and also in favor of the Shear Company against Mrs. Wilson."

The Court of Civil Appeals dismissed the appeal of T. C. Phillips, reversed and remanded the cause as between Mrs. Nettie L. Wilson and the Shear Company, but as to all other parties the judgment of the trial court was affirmed. 284 S. W. 654.

Writs have been granted to both T. C. Phillips and the Shear Company, the latter having been granted "because of the various dissents shown in the several opinions of the Court of Civil Appeals."

We will first dispose of the case between the Shear Company and Mrs. Nettie L. Wilson. We agree with the conclusions reached by the Court of Civil Appeals through the concurring opinion of Chief Justice Gallagher and Justice Barcus. We, too, think that the controlling issues to be determined are whether the shares of stock in the Rotan Grocery Company evidenced by certificate No. 112 were the separate property of Mrs. Wilson, and whether the corporation had knowledge or notice of such fact at the time it accepted the surrender of said certificate No. 112 and issued new certificates in lieu thereof in its changed corporate name, to C. W. Wilson.

The verdict found the first of these issues in Mrs. Wilson's favor, and it is by no means clear it did not likewise find the other issue in her favor. It does find that at the time of the purchase of the stock Mrs. Wilson did request Shear as president to enter her name as holder and owner of the shares on the books of the company, and did, at the time, request Shear as president to issue said certificate in her name. Unless there is some forbidding reason, and we shall notice this question later, notice to the president of the company will be imputed to the company. But we cannot decide this matter, since the judgment of the Court of Civil Appeals against Mrs. Wilson as to a rendition upon the verdict is not before us upon any application for a writ by her. The judgment in this respect, therefore, must stand.

A brief discussion of the general...