Thompson v. Harmon

• Decision Date: 27 December 1912
• Citation: 152 S.W. 1161
• Parties: THOMPSON et al. v. HARMON.
• Court: Texas Court of Appeals

152 S.W. 1161

THOMPSON et al. v. HARMON.

Court of Civil Appeals of Texas. Texarkana.

December 27, 1912.

Rehearing Denied January 16, 1913.

Appeal from District Court, Tarrant County; W. T. Simmons, Judge.

Action by M. H. Harmon against W. R. Thompson and another. From a judgment for plaintiff, defendants appeal. Reformed and affirmed.

Sidney L. Samuels, Geo. Thompson, and Theodore Mack, all of Ft. Worth, for appellants. W. P. McLean and R. L. Carlock, both of Ft. Worth, for appellee.

LEVY, J.

On December 23, 1905, W. R. Thompson, W. A. Green, and J. Z. Carter entered into a written contract to organize and operate a bank at Newark, Tex., as a private partnership; all of the partners being equal, and Green to be cashier and have immediate charge and be the active manager of the bank. These parties began business at Newark on March 1, 1906, in the name of the Citizens' Bank of Newark, Unincorporated, with W. R. Thompson president, J. Z. Carter vice president, and W. A. Green cashier. W. R. Thompson prior to the organization of the bank visited Newark and talked to a number of citizens, informing them of the contemplated organization of the bank and of his connection therewith, and desiring them to give to the bank their business. The following circular letter, known to each partner, was mailed out broadcast throughout the community of Newark: "W. R. Thompson, President. J. Z. Carter, Vice President. W. A. Green, Cashier. The Citizens' Bank (Unincorporated). Newark, Texas, March 1, 1906. Dear Sir: We desire to announce that the Citizens' Bank of Newark, Texas, opened for business Thursday, March 1, 1906. The individual responsibility of the bank is over one hundred thousand dollars, giving us ample capital to conduct an up-to-date banking business. We have spared no pains in our equipment, which is first class in every respect, and consists of a substantial new brick building, elegant vault, fire and burglar proof safe. Our customers will be protected against loss by a full line of burglar insurance. We solicit the business of Newark and surrounding territory, with the assurance that every courtesy consistent with good sound banking principles will be extended to our patrons. Call in to see us when in Newark. Very truly, The Citizens' Bank, W. A. Green, Cashier." These letters were received by numerous members of the community, and gave general publicity to the bank and its partners in that community. W. R. Thompson was the strong financial member of the firm. He at that time was interested in two or three other banks, and had been for several years. He was a physician in Ft. Worth, where he had practiced for many years and enjoyed a lucrative practice. He admitted on the trial that he was worth at the time the bank was organized between $50,000 and $75,000. J. Z. Carter was cashier of a private bank in Paradise, 12 or 15 miles from Newark, and was worth from $5,000 to $6,000. Green, it appears, was a man of small means. W. R. Thompson's reputation for solvency and financial responsibility was well known in the Newark community; several of the patrons of the bank understanding, it appears, that his wealth amounted to above $100,000. The stationery used by the bank from its beginning was the same as that used in the circular letter. The notices sent out with regard to collection of notes, and other stationery used by the bank, all carried the superscription: "Citizens' Bank of Newark, Unincorporated. W. R. Thompson, President. J. Z. Carter, Vice President. W. A. Green, Cashier." W. A. Green was in active charge of the bank and was invested with its whole control and management, so far as the community at large had dealings with the bank. A lot was purchased in Newark and a deed made thereto to the partnership, and a substantial building was erected on the lot. As a matter of fact, it appears only a thousand dollars apiece had been put into the bank by each of the partners.

In October, 1907, during the severe financial panic at that time prevailing generally, it appears that an arrangement was made between W. R. Thompson and J. Z. Carter and W. A. Green whereby Thompson and Carter sold out their interest in the banking business to W. A. Green. The appellee contended that this sale was simply a collusive or pretended sale of the partnership, and was not one made in good faith. The appellants claim that the sale was a bona fide sale. In view of the verdict of the jury there is involved a finding on this question in favor of the appellants, and it becomes unnecessary for the purposes of this appeal to set out the testimony on this phase of the case. The bank continued to do business from the date of the alleged sale by the two partners until January 13, 1911, when it finally suspended business, in the same name and in the same bank building and with W. A. Green as cashier in active charge and management of the same. The same stationery was used without change during the entire period, carrying the names of W. R. Thompson, president, J. Z. Carter, vice president, and W. A. Green, cashier, at the top of each letter head and business notice. It was used freely and at all times in carrying on business of the bank. No notice of any kind was given by either Thompson, or Carter, or Green, of the asserted dissolution of the partnership, to any customer or depositor of the bank, or to any member of the business community in Newark. Newark is a town of 200 or 300 people, and had some 5 or 6 stores, and was about 18 miles distant from Ft. Worth. After the alleged dissolution Carter was in Newark a number of times. It does appear that W. R. Thompson was not in Newark after the dissolution. The only change ever made about the bank was by adding a glass sign in front reading: "Citizens' Bank. Deposits Guaranteed." W. R. Thompson admitted that he did not give any notice to the people at Newark that he and Carter had sold out their interest. His testimony was: "I did not give any notice to the people at Newark that were doing business with this bank that Carter and I had sold out. I did not post any notice on the door of the bank saying that we had disposed of our interest in it and Green was the sole owner. I did not advertise in any newspaper that Carter and I had parted with our interest in that bank. I did not write a single customer a single letter or postal card advising them of that fact. I did not consider it necessary. I depended upon Green most implicitly, and relied upon him. I did not take any steps whatever to get on the train and go to that community and tell the people there that Thompson and Carter had severed their connection with the bank. I did not invest in a postage stamp to that effect. I did not know that the community up there had put their money in the bank largely upon the faith of my being behind the bank. I supposed that had influenced them. I was the responsible man of the three men. They were not as responsible as I was." It was shown that the general opinion prevailed in the community of Newark that W. R. Thompson was a member of the bank, as was also Carter, up to the date of its suspension. At the time the bank closed its doors in January, 1911, it owed 149 depositors an aggregate of $20,008.47. These depositors assigned their claims to appellee, Harmon, himself a depositor.

Acting for the bank in the ordinary course of its business, W. A. Green assumed in September, 1908, the Oatis vendor's lien note sued on.

The evidence sustains the finding of the jury, as involved in their verdict, that W. R. Thompson and J. Z. Carter failed to give any notice, to those who had previously dealt with the bank partnership, of the alleged dissolution; that they did not give any publicity of their withdrawal to the public; and that W. A. Green continued to run the business under the name of the Citizens' Bank of Newark, and held out to the public that Thompson and Carter were still partners in the business; that...