Texas Farm Bureau Cotton Ass'n v. Stovall

• Decision Date: 30 June 1923
• Docket Number: (No. 3972.)<SMALL><SUP>*</SUP></SMALL&gt
• Citation: 253 S.W. 1101
• Parties: TEXAS FARM BUREAU COTTON ASS'N v. STOVALL.
• Court: Texas Supreme Court

Page 1101

253 S.W. 1101

TEXAS FARM BUREAU COTTON ASS'N v. STOVALL.

(No. 3972.)^*

Supreme Court of Texas.

June 30, 1923.

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

Suit by the Texas Farm Bureau Cotton Association against J. C. Stovall. The Court of Civil Appeals affirmed a judgment dismissing the cause (248 S. W. 1109), and plaintiff brings error. Reversed and remanded, with instructions.

Aaron Sapiro, of San Francisco, Cal., C. K. Bullard, of Dallas, J. C. Lumpkin, of Waxahachie, and Etheridge, McCormick & Bromberg, of Dallas, for plaintiff in error.

Farrar & Kemble, of Waxahachie, Sharp & Tirey, of Ennis, and W. P. Hancock, of Waxahachie, for defendant in error.

CURETON, C. J.

This suit was instituted by the Texas Farm Bureau Cotton Association, a nonprofit co-operative agricultural association or corporation, organized under the Co-operative Marketing Act (Vernon's Texas Civil Statutes, 1922 Supplement, arts. 14½k to 14½yy). The purpose of the suit was to enjoin the defendant in error, Stovall, from delivering and selling his crop of cotton to parties other than the plaintiff in error, in violation of a contract alleged to have been made with the association, and to compel specific performance of this contract. On application for temporary injunction, the court after hearing the evidence sustained exceptions to the plaintiff in error's petition, and upon refusal to amend the cause was dismissed. An appeal was prosecuted to the Court of Civil Appeals for the Fifth district, which affirmed the judgment of the trial court. 248 S. W. 1109.

The plaintiff in error was organized by an organization committee, or "group of persons," composed of Mr. J. T. Orr and others, as contemplated by the statute (article 14½m). This committee issued and caused to be circulated over the state a document called the "Texas Farm Bureau Cotton Growers' Co-operative Marketing Association Agreement," which for convenience we will refer to as the "Grower's Application for Membership." This agreement was signed by some 20,000 cotton growers of the state, each grower signing a separate copy. Among others signing the instrument was the defendant in error, J. C. Stovall.

The agreement authorized the committee to obtain a charter when signatures thereto were obtained covering at least 500,000 bales of cotton. Signatures covering this number of bales were obtained. The committee then incorporated the plaintiff in error, mailed the defendant in error a certificate of membership, which was received and accepted, and he thereafter participated in the conduct of the association, to the extent at least of voting in the manner prescribed for by its board of directors. This agreement, signed by the defendant in error, contained as a part thereof the contract which will be hereafter set out, called the "Texas Farm Bureau Cotton Growers' Co-operative Association Marketing Agreement." The last-named portion of the instrument was incorporated in the body of the original document signed by the defendant in error, and as such was a part of his application for membership.

This application contained a provision to the effect that the acceptance of the application for membership and the marketing agreement by the Association should be conclusive upon the mailing of the notice by the Association. It also contained a provision to the effect that the subscriber agrees to execute, when requested by the Association, a marketing agreement substantially the same as that set forth in the agreement hereafter copied, or, at the option of the board of directors, be bound by the terms of the agreement embraced in the application for membership. The record shows that when the corporation was chartered it exercised the option to be bound by the association marketing agreement embraced in the original application, and that it notified defendant in error of this acceptance.

From the foregoing we conclude that defendant in error became a member of the Association, and the marketing agreement a contract between him and plaintiff in error. Belton Compress Co. v. Saunders, 70 Tex. 699, 6 S. W. 134; McCord v. Southwestern Sundries Co. (Tex. Civ. App.) 158 S. W. 226; Railway Co. v. Granger, 86 Tex. 350, 24 S. W. 795, 40 Am. St. Rep. 837; 10 Corpus Juris, §§ 753, 762, 766, 771, also §§ 289, 290, 291, 292, 296, 297.

The trial court found that the Association was duly organized, and after organization accepted defendant in error's application for membership, his association and marketing agreement, and duly notified him thereof; that he was producing cotton, refusing to deliver it to plaintiff in error, and selling and delivering it to others.

That court, however, as a matter of law, concluded the temporary injunction should be refused "because the contract executed by defendant is unilateral, uncertain in terms, and therefore not susceptible of specific performance, and is subject to the twelfth and fourteenth special exceptions of defendant's answer.

The Court of Civil Appeals states that the effect of the order of the trial court sustaining the exceptions was substantially to hold that the contract hereafter quoted was unilateral, uncertain, was not a contract for purchase and sale, and that it did not purport to be a contract between plaintiff in error and defendant in error.

The contract in question reads as follows:

"Texas Farm Bureau Cotton Growers' Cooperative Association Marketing Agreement.

"The Texas Farm Bureau Cotton Growers' Co-operative Marketing Association, a nonprofit Association, with its principal office at Dallas, Texas, hereinafter called the Association, first party, and the undersigned grower, second party, agree:

"1. The grower is a member of the Association and is helping to carry out the express aims of the Association for co-operative marketing, for minimizing speculation and waste and for stabilizing cotton markets in the interest of the grower and the public, through this and similar organizations undertaken by other growers.

"2. The Association agrees to buy and the grower agrees to sell and deliver to the Association all the cotton produced or acquired by or for him in Texas during the years 1921, 1922, 1923, 1924, and 1925.

"3. The grower expressly warrants that he has not heretofore contracted to sell, market or deliver any of his said cotton to any person, firm or corporation, except as noted at the end of this agreement. Any cotton covered by such existing contracts shall be excluded from the terms hereof for the period and to the extent noted.

"4. (a) All cotton shall be delivered at the earliest reasonable time after ginning, to the order of the Association, at the warehouse controlled by the Association, or at the nearest public warehouse, if the Association controls no warehouse in that immediate district; or by shipment as directed, to the Association and by delivery of the indorsed warehouse receipts or bills of lading properly directed.

"(b) Any deduction or allowance or loss that the Association may make or suffer on account of inferior grade, quality or condition at delivery, shall be charged against the grower individually.

"(c) The Association shall make rules and regulations and shall provide inspectors or graders or classifiers to standarize, grade and class the quality and method and manner of handling, pressing and shipping such cotton; and the grower agrees to observe and perform any such rules and regulations and to accept the grading established by the Association, which shall be in accordance with the official cotton standards of the United States.

"5a. The Association shall pool or mingle the cotton of the grower with cotton of a like variety, grade and staple delivered by other growers. The Association shall classify the cotton and its classification shall be conclusive. Each pool shall be for a full season.

"5b. The Association will endeavor to sell the cotton gradually as the spinning industry requires it at the best possible price before another crop is produced, but in case prices are not satisfactory or production is greater than consumption, or there are abnormal trade or financial conditions, the Association will, in its discretion, hold such part of the cotton as may not be sold at a satisfactory price, until there is a fair demand for it.

"6. The Association agrees to resell such cotton, together with cotton of like variety, grade and staple, delivered by other growers under similar contracts, at the best prices obtainable by it under market conditions; and to pay over the net amount received therefrom (less freight, insurance and interest), as payment in full to the grower and growers named in contracts similar hereto, according to the cotton delivered by each of them, after deducting therefrom, within the discretion of the Association, the costs of maintaining the Association, organization fee and annual membership dues to the Texas Farm Bureau Federation (unless otherwise paid), and costs of handling, grading and marketing such cotton: and of reserves for credits and other general purposes (said reserves not to exceed one per cent. of the gross resale price). The annual surplus from such deductions must be prorated among the growers delivering cotton in that year on the basis of deliveries.

"7. The grower agrees that the Association may handle, in its discretion, some of the cotton in one way and some in another; but the net proceeds of all cotton of like quality, grade and staple, less charge, costs and advances, shall be divided ratably among the growers in proportion to their deliveries to each pool, payments to be made from time to time until all the accounts of each pool are settled.

"8. The Association may sell the said cotton, within or without this state, directly to spinners or exporters or otherwise, at such time and upon such conditions and terms as it may deem profitable, fair and advantageous to the growers; and it may sell all or any part of...