Waggoner v. Herring-Showers Lumber Co.

• Decision Date: 10 June 1931
• Docket Number: No. 4747.,4747.
• Citation: 40 S.W.2d 1
• Parties: WAGGONER v. HERRING-SHOWERS LUMBER CO. et al.
• Court: Texas Supreme Court

Page 1

40 S.W.2d 1

WAGGONER v. HERRING-SHOWERS LUMBER CO. et al.

No. 4747.

Supreme Court of Texas.

June 10, 1931.

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

Suit by the Herring-Showers Lumber Company against R. M. Waggoner and others. To review decision of Court of Civil Appeals (288 S. W. 260), affirming judgment for plaintiff, defendant named brings error.

Reversed and remanded.

Weeks, Morrow, Francis & Hankerson, of Wichita Falls, for plaintiff in error.

Fischer & Fischer, of Wichita Falls, for defendants in error.

CURETON, C. J.

We refer to the opinion of the Court of Civil Appeals for a complete statement of this case. 288 S. W. 260.

Suit was brought by the Herring-Showers Lumber Company against the Burk-Waggoner Oil Company, a corporation, and R. M. Waggoner and Clois L. Greene, on a debt of the corporation. It was instituted against the two individual defendants by reason of transactions hereinafter described. R. M. Waggoner was the president of the corporation, and Clois L. Greene its general manager. Both were members of the board of directors, and with S. A. L. Morgan, vice president, V. D. Tennyson, secretary-treasurer, and W. R. Ferguson constituted the board. On September 27, 1920, the corporation was hopelessly insolvent, and had quit, or was about to quit, its corporate business. On that date it owed approximately $300,000, and had about $100,000 in assets, consisting of personal and real property. On the date named there was a regularly called meeting of the board of directors of the company, held at its office in Wichita Falls, at which were present all the directors above named. At this meeting certain transactions took place, a memorandum of which was incorporated in the minutes. Recitations from the minutes are as follows:

"The meeting was called to order by the President, R. M. Waggoner, who then proceeded to make a statement to the board of directors of the condition of the company's affairs, showing that the indebtedness of the company was approximately $300,000.00 and that the assets of the company amounted to less than $100,000.00, and that the company was without funds to proceed any further. He also stated that practically two-thirds of this indebtedness due by the company was due to R. M. Waggoner and Clois L. Greene, who had advanced various sums of money from time to time to the company.

"Clois L. Greene thereupon stated to the board of directors that it was his wish to keep the company from going into the hands of a receiver and that if it met with the approval of Mr. Waggoner he and R. M. Waggoner would take over the assets of the company, including all of its machinery, wildcat leases, and other property, and work out of these assets as much as they could and that they would assume the indebtedness to the end that the creditors of the company be paid in full, and the said R. M. Waggoner thereupon stated that the suggestion met with his approval.

"Thereupon director S. A. L. Morgan made a motion that the Board of Directors accept the proposition of Messrs. Greene and Waggoner to take over the property and assets of the company and assume all obligations of the company for the outstanding indebtedness, which motion was seconded by director W. R. Ferguson, and the motion was then put to the board of directors by S. A. L. Morgan, vice president, and all the directors voted in the affirmative.

"Director W. R. Ferguson thereupon made a motion, which was seconded by director Clois L. Greene, that S. A. L. Morgan, as vice president, and V. D. Tennyson, as secretary, prepare and execute all papers on behalf of the company necessary and proper to carry out the agreement between the company and the said R. M. Waggoner, and Clois L. Greene, which motion was carried by the unanimous vote of the board of directors.

"Director S. A. L. Morgan made a motion, which was seconded by director W. R. Ferguson, that the secretary be instructed to prepare a financial statement setting forth the company's financial condition and the disposition of its assets and indebtedness, and that a copy of the same be sent to all stockholders, which motion was carried by unanimous vote.

"No other business coming before the Board, the meeting was declared adjourned."

After this meeting of the board of directors the Burk-Waggoner Oil Company ceased to be a going concern, and transacted no further business.

In accordance with the minutes, Mr. Morgan, as vice president of the company, and Mr. Tennyson, as secretary, prepared and executed a conveyance of all the property, personal and real, of the corporation; but, instead of conveying it to Waggoner and Greene, conveyed it to Greene alone. This instrument reads as follows:

"The State of Texas County of Wichita.

"Know all men by these presents: That Burk-Waggoner Oil Company, a corporation, for and in consideration of the sum of ten dollars and other valuable considerations paid by Clois L. Greene, and the further consideration that the said Clois L. Greene has assumed and by these presents does assume all the outstanding debts, liabilities, and obligations of said corporation wherever located and whatever kind and character, has granted, bargained, sold, conveyed, assigned, and delivered and by these presents does grant, bargain, sell, convey, assign, and deliver unto the said Clois L. Greene all of the property and assets of Burk-Waggoner Oil Company of whatever kind and character and wherever located, including all oil and gas leases and leasehold estates in Wichita, Wilbarger, and Wise Counties, Texas, together with all machinery, lease houses, and other equipment of whatever kind and character located thereon, including the following, to-wit:

1 Packard truck, complete with trailer;

1 Rotary rig, complete with drill pipe and boiler;

1 Rotary rig, dismantled;

3 Standard rigs, complete, with all extra and fishing tools, boilers, and other equipment;

3 Strings big hole pipe, each string approximately 3000 feet in length;

1 Jones roadster automobile;

1 Buick 5 passenger automobile;

"Together with any debts and obligations that may be due the company from other parties, it being the intention by this instrument to transfer and assign to the said Clois L. Greene all the assets of said Burk-Waggoner Oil Company of every kind and character whether real or personal or mixed in consideration of his paying off and discharging the debts and obligations of the company.

"To have and to hold unto the said Clois L. Greene, his heirs and assigns, forever.

"Witness Burk-Waggoner Oil Company, this 6 day of October, A. D. 1920. "[Signed] Burk-Waggoner Oil Company,

                           By S. A. L. Morgan, Vice President
                

"Attest: V. D. Tennyson, Secretary."

Waggoner denied making the oral agreement, in so far as he was concerned, evidenced by the minutes. Morgan and Ferguson testified positively to the agreement shown in the minutes.

The case was submitted to a jury, and the jury found, in response to special issues, that Waggoner did agree at the directors' meeting that he would take over the corporation assets along with Greene and pay the corporation's debts; but that, before the execution of the instrument conveying the property of the corporation to Greene, Waggoner told the latter, and also Morgan and Tennyson, the vice president and secretary respectively of the corporation, that he would not take over the corporation assets and agree to pay its debts. In other words, the jury found that Waggoner informed the officers and directors named, after the adjournment of the directors' meeting, but prior to the date of the transfer of the property to Greene, that he (Waggoner) would not go into the deal with Greene, and would not take over the assets and agree to pay the debts of the Burk-Waggoner Oil Company. Morgan denied that Waggoner made any such statement to him, but did say that the latter requested him to have the conveyance made to Clois L. Greene, instead of to both Greene and Waggoner, and that for this reason alone the conveyance was made to Greene instead of to Greene and Waggoner.

Upon the verdict of the jury, the trial court entered a judgment in favor of the Herring-Showers Lumber Company and against the Oil Company and Waggoner. The suit was dismissed as to Greene, who had previously been adjudged a bankrupt. The Court of Civil Appeals affirmed the judgment of the trial court.

Against the oral contract of assumption evidenced by the record, Waggoner urged the statute of frauds. The Court of Civil Appeals overruled the contention, saying: "The contract of Waggoner and Greene with the board of directors that they would pay the debts of the oil company in consideration of the transfer to them of all the company's property, real and personal, was not within the terms of the statute of frauds, and is therefore not governed by the provisions of that act requiring such contract to be in writing. By their assumption it made the debt their own, and they became the principal obligors to the creditors of the company."

But for the fact that the contract of assumption on the part of Waggoner and Greene embraced real estate, we would be in accord with this holding.

The agreement of one party with another to pay the debts of the latter to a third party, upon a valuable consideration, is not within, and therefore not prohibited by, the statute of frauds (Rev. St. 1925, art. 3995). Bank of Garvin v. Freeman, 107 Tex. 523, 181 S. W. 187; Spann v. Cochran, 63 Tex. 243; Turnbow Lumber Co. v. Eastham (Tex. Civ. App.) 221 S. W. 667; Mullin v. Nash-El Paso Motor Co. (Tex. Civ. App.) 250 S. W. 472; Atkinson v. Jackson Bros. (Tex. Civ. App.) 259 S. W. 280.

However, the contract involved in the instant case is not a simple contract of assumption upon a valuable consideration. The consideration moving from the corporation to Waggoner and Greene was not only the transfer of the personal property of the corporation, but the conveyance of...