State v. Collins & Burford Drug Co.

• Decision Date: 10 June 1938
• Docket Number: No. 13776.,13776.
• Parties: STATE et al. v. COLLINS & BURFORD DRUG CO. et al. (STREET, Intervener).
• Court: Texas Court of Appeals

Page 965

118 S.W.2d 965

STATE et al. v. COLLINS & BURFORD DRUG CO. et al. (STREET, Intervener).

No. 13776.

Court of Civil Appeals of Texas. Fort Worth.

June 10, 1938.

Rehearing Denied July 15, 1938.

Error from District Court, Tarrant County; Frank P. Culver, Jr., Judge.

Action by the State and others against Collins & Burford Drug Company and others to collect taxes allegedly due from the named defendants as wholesale liquor dealers, wherein Guy O. Street intervened. Judgment for intervener for $8,700 as against all parties, and plaintiffs bring error.

Affirmed.

William McCraw, Atty. Gen., and M. C. Martin and Lloyd Davidson, Jr., Assts. Atty. Gen., for plaintiff in error State of Texas.

Raymond E. Buck, of Fort Worth, for plaintiff in error Commercial Standard Ins. Co.

Massingill & Belew, of Fort Worth, for defendant in error Guy O. Street.

DUNKLIN, Chief Justice.

The State of Texas, acting by and through its Attorney General, instituted this suit against C. G. Collins, individually, C. O. Burford, individually, C. G. Collins and C. O. Burford, formerly doing business as Collins & Burford Drug Company, a partnership; Collins-Burford Company, Inc., a corporation; and Commercial Standard Insurance Company, to collect taxes claimed to be due the State by the defendant Collins & Burford Drug Company, as wholesale liquor dealers. Judgment was also sought against the Commercial Standard Insurance Company, the surety on the bond executed by Collins-Burford Company, Inc., given in order to procure the permit to engage in that business.

According to allegations in plaintiff's petition, the sheriff of Tarrant County, acting under an order of the Texas Liquor Control Board, seized and confiscated certain liquors formerly belonging to the partnership firm of Collins & Burford Drug Company, and the individuals composing the same, for failure of those dealers to have tax stamps attached thereto. After such seizure the sheriff, on the 5th day of August, 1936, advertised such liquors for sale. On the 15th day of August, 1936, the sheriff offered such liquors for sale, and Collins-Burford Company, Inc., bid therefor the sum of $10,600, and that amount was immediately paid in cash to the sheriff. After the sheriff had made delivery to the buyer of 424 cases of the liquors, which had a reasonable market value of $6,360, the Texas Liquor Control Board, on or about the 1st of September, 1936, entered an order declaring the sale void, in that prior notice thereof was not posted for the length of time required by the statute, and for the further reason that the liquor was not properly confiscated. According to further allegations, the Liquor Control Board still has in its possession the $10,600 so paid for the entire stock, and plaintiff offered in its pleadings to give credit for that amount on the total amount of taxes sued for.

The suit was instituted on February 20th, 1937. On May 8th, 1937, the defendants C. G. Collins and C. O. Burford, in their individual capacity and as co-partners, formerly doing business as Collins & Burford Drug Company and Collins-Burford Company, Inc., filed an answer to the petition, consisting of a general demurrer, numerous special exceptions, a general denial and a special answer in which it was alleged that the liquor for which taxes were claimed was stored in the Douglass Guardian Warehouse, in Fort Worth, Texas, which was a liquor warehouse, bonded and operating as such under the rules and regulations of the Texas Liquor Control Board, and under the Liquor Laws of the State of Texas, affecting warehouse companies. That under the rules and regulations of the Liquor Control Board no tax was required to be paid on liquor stored with such warehouse company, and having a permit as such. There were further allegations that the liquors so stored in the warehouse were not owned by those defendants, but were on consignment by various distilleries throughout the country, who held warehouse receipts therefor from said warehouse company, which showed the ownership of the liquors to be vested in said distilleries and not in the defendants. According to further allegations, the defendants had paid all taxes due on liquors that had not been stored with the warehouse company.

Guy O. Street, by leave of the court, filed a plea of intervention, alleging the seizure and sale of the liquor, as alleged by the plaintiff; the purchase of the same by Collins-Burford Company; the payment therefor by them of $10,600; and the holding of the same by the Texas Liquor Control Board, after its repudiation of the sale, all as alleged in plaintiff's petition. According to further allegations, just prior to that sale, the defendants Collins and Burford, individually and as members of the partnership, Collins & Burford Drug Company, entered into an agreement with the intervener, by the terms of which the latter agreed to advance to them, individually and as partners, money in the sum of $8,700, to enable them to buy in the liquors at said sale, said money to be used for that purpose and to satisfy taxes assessed against the same, with the further distinctive agreement and understanding that said money was to be advanced by the intervener on condition that the sale be consummated and the stock of liquor delivered to said Collins and Burford, free of all tax liens and claims asserted by the Board; and that as soon as said purchasers, Collins and Burford, made such purchase, they would give to the intervener a valid prior chattel mortgage lien on the liquor so purchased, to secure the payment of the money so advanced, and that if such sale was not consummated and the stock of liquor so delivered to the purchasers, and intervener did not obtain a valid prior super lien thereon, in the manner aforesaid, that the money so advanced by the intervener should be at once returned to him. It was further alleged that the intervener advanced said money, under the aforesaid agreement with Collins and Burford, in reliance upon the action of the Board in seizing and selling the liquor and upon representations of Collins and Burford that the sale was lawful and valid, and that the liquor would be delivered to them when the sale was consummated, and upon the agreement of Collins and Burford that they would immediately upon the consummation of the sale carry out their agreement with him, as above noted; that notwithstanding the repudiation of the sale by the Board, the State has retained the $10,600 claiming the right to apply the same upon the taxes due and owing by Collins and Burford, as wholesale liquor dealers. It was further alleged that after the election of the State and the Board to hold said $10,600, intervener and Collins and Burford agreed to rescind the contract theretofore made between them before the sale of the liquor, on condition that said money so advanced by intervener, to wit, $8,700, should be at once returned to him; that thereupon intervener and Collins and Burford gave notice to the Board and to the plaintiff of the exact facts as heretofore alleged, and that the money so advanced by intervener, which was a part of the $10,600 paid by Collins and Burford for the purchase of the liquor under the sheriff's sale, belonged to the intervener, but that plaintiff and the Board refused to return the money...