Victor Refining Co. v. City Nat. Bank of Commerce

• Decision Date: 19 March 1924
• Docket Number: (No. 2284.)
• Citation: 263 S.W. 622
• Parties: VICTOR REFINING CO. et al. v. CITY NAT. BANK OF COMMERCE et al.
• Court: Texas Court of Appeals

263 S.W. 622

VICTOR REFINING CO. et al. v. CITY NAT. BANK OF COMMERCE et al.

(No. 2284.)

Court of Civil Appeals of Texas. Amarillo.

March 19, 1924.

Rehearing Denied June 18, 1924.

Appeal from District Court, Wichita County; P. A. Martin, Judge.

Suits by the City National Bank of Commerce and others against the Victor Refining Company and others, in which additional defendants were interpleaded. From judgments for plaintiffs against original defendants, and for latter against interpleaded defendants, all defendants appeal. Appeal of original defendants dismissed, and judgment against interpleaded defendants reversed and cause remanded as to them in part.

Taylor & Taylor and J. L. Lackey, all of Wichita Falls, for appellants.

Bullington, Boone & Humphrey, of Wichita Falls, for appellees H. Beach and others.

Carrigan, Montgomery, Britain Morgan & King, of Wichita Falls, for appellee City Nat. Bank of Commerce and others.

Weeks, Morrow & Francis, of Wichita Falls, for appellee J. I. Staley & Co.

Cox, Fulton & Myers, of Wichita Falls, for appellee Progressive Production Co.

John P. Marrs, of Wichita Falls, for appellee Reader.

Bonner, Bonner & Sanford, of Wichita Falls, for appellees Perham and others.

BOYCE, J.

Six separate suits were filed in the district court of Wichita county, by as many different plaintiffs, to wit: City National Bank of Commerce of Wichita Falls, the Progressive Production Company, alleged to be a foreign corporation, with permit to do business in Texas, and four others not necessary to name, against the Victor Refining Company, alleged to be a partnership organized as a joint-stock association. H. Beach and some 12 or 15 individuals were made defendants in these petitions, on allegations that they were members of the partnership and jointly and severally liable to the plaintiffs. The causes of action sued on in each case were separate and distinct. H. Beach and his individual codefendants, who will be hereinafter referred to as the original defendants, answered in these cases and interpleaded several hundred other persons on allegations that such persons were stockholders in said association, and, if there was any individual liability to the plaintiffs on the respective causes of action in suit, such liability was the common obligation of all such stockholders, and the original defendants would be entitled to contribution from the interpleaded defendants in the proportion to the respective amounts of stock owned by them. It was further alleged that the Victor Refining Company was insolvent and its assets in the hands of a receiver. Wherefore the original defendants prayed that, in the event the plaintiffs secured judgment in said suits, then an accounting be had as to the respective liability of the original defendants and of the interpleaded defendants inter sese, and judgment for contribution rendered accordingly. A great many of these interpleaded defendants answered. These answers made common cause with the answer of the original defendants as against the plaintiffs' suits, the defenses urged being: (1) Plea in abatement on account of the pendency in another court of receivership proceedings in which the assets of the Victor Refining Company were being administered; (2) that the defendants were not partners, and there was no individual liability against the holders of stock in the Victor Refining Company for its obligations; and (3) that the plaintiffs dealt with the Victor Refining Company, in the transactions on which their claims arose, with knowledge of the provisions of the trust agreement under which the Victor Refining Company was operated, exempting the shareholders from personal liability, and therefore could not hold them liable.

All these cases were consolidated and tried together, the trial resulting in judgments for the respective plaintiffs against the Victor Refining Company, and the original defendants, in various amounts aggregating about $85,000; and judgment in favor of the original defendants over against something over 300 of the interpleaded defendants, for contribution in proportion to the respective amounts of the capital stock of said association owned by said respective parties. It was ordered that the judgment be certified to the court in which the receivership was pending and execution stayed until the affairs of said association were fully administered in said court and the judgments credited with whatever amounts they were entitled to in the final distribution of the assets of said insolvent association.

Two separate motions for new trial were filed, the original defendants joining in one motion and 38 interpleaded defendants in the other. The two motions, however, were identical in terms. The original defendants perfected appeal by cost bond, payable to the plaintiffs alone. On the day after this appeal bond was filed, the interpleaded defendants filed their appeal bond for costs, payable to the original defendants alone.

The original defendants have not briefed the case, but file a motion to dismiss the appeal, stating in this motion that all matters in dispute, as between them and the plaintiffs, have been settled. These original defendants insist that the assignments of the interpleaded defendants attack only the judgment for plaintiffs and do not in any way attack the judgment of the original defendants over against the interpleaded defendants, and that since the bond of the interpleaded defendants was not payable to the plaintiffs, such defendants have no right to attack that part of the judgment, so that there is left nothing for this court to consider. The several plaintiffs in the court below, "appearing as amicus curiæ," also move to dismiss the appeal, stating that a settlement has been made between them and the original defendants. The interpleaded defendants have briefed the case and insist that they have the right to have their assignments determined. They say that the original defendants have, since such alleged settlement, begun to levy executions on their property to enforce the judgment for contribution against them.

From the foregoing statement it will be seen that the first question to be disposed of concerns the questions of the effect of the motion made by the original defendants to dismiss their appeal. In this connection it is pertinent to state the nature of the questions raised by the assignments of the interpleaded defendants. One of these, presented as fundamental error, is that the judgment in favor of the Progressive Production Company is erroneous because there is no proof that said corporation had a permit to do business in Texas. The others present, in various ways, question as to whether the court committed error in the following matters: (1) In refusing to admit evidence to show that the various plaintiffs had knowledge, before the obligations of the Victor Refining Company to them were incurred, of the provisions of the trust agreement under which the said company was organized, to the effect that the shareholders thereon would not be individually liable for the obligations of the association. (2) In holding the several defendants liable as partners, it being contended that since the articles of agreement, creating the Victor Refining Company, expressly prohibited the trustees, agents, or representatives of said company from creating any personal liability against the several shareholders, any attempted acts on the part of such trustees or agents of the Victor Refining Company to do so would be unenforceable because of lack of authority on the part of such persons to bind the shareholders, by such act. (3) In overruling the plea in abatement.

The right of contribution exists only on compulsory payment of the debt by the one claiming the right. Glasscock v. Hamilton, 62 Tex. 143, 151; 13 C. J. p. 823, § 6. It follows that when one is sued for contribution, he may show that the other party was not legally bound to pay the debt, and consequently is without right of contribution. A judgment against one seeking contribution is not conclusive if the one against whom contribution is sought was not a party to the suit, or notified of its pendency and given opportunity of defending. Glasscock v. Hamilton, supra. The original defendants defended in the trial court, claiming that there was no liability on their part for the payment of plaintiffs' claims against the Victor Refining Company. The plaintiffs sought no judgment against the interpleaded defendants, but such defendants, in answering the suit of the original defendants as against them, pleaded the same facts as did the original defendants in answer to plaintiffs' claim, to show that there was no liability, joint or several, on the part of any of the defendants, personally, for the payment of the obligation sued on by the plaintiffs. The interpleaded defendants unquestionably had the right to have these issues tried out, both in the trial and appellate courts. They were seeking, in a proper way under the circumstances to have determined the question of common liability as a basis for the claim of the original defendants for contribution. If by taking advantage of their position in the suit in its relation to the plaintiffs the original defendants should deprive the interpleaded defendants of the opportunity of litigating an issue of common liability to the plaintiffs, then they would be in no position to insist that the judgment against them was conclusive as to the interpleaded defendants. But we think the interpleaded defendants have such interest in the defense against the plaintiffs' suit that they are entitled to present any assignments that question the right of plaintiffs to the judgments rendered, in so far as it affects them. Therefore the appeal of the original defendants from the judgment as to them will be dismissed, but without prejudice to the right of the interpleaded defendants to question on this appeal the correctness of said...