West Texas Utilities Co. v. Ellis

• Decision Date: 20 January 1937
• Docket Number: No. 8295.,8295.
• Citation: 102 S.W.2d 234
• Parties: WEST TEXAS UTILITIES CO. et al. v. ELLIS et al.
• Court: Texas Court of Appeals

102 S.W.2d 234

WEST TEXAS UTILITIES CO. et al. v. ELLIS et al.

No. 8295.

Court of Civil Appeals of Texas. Austin.

January 20, 1937.

Rehearing Denied March 3, 1937.

COPYRIGHT MATERIAL OMITTED

Appeal from District Court, Tom Green County; John F. Sutton, Judge.

Suit by Ruth M. Ellis and her husband against the West Texas Utilities Company and another, wherein Claude A. Heider and others intervened. From the judgment, the defendants appeal.

Affirmed.

Wagstaff, Harwell, Wagstaff & Douthit, of Abilene, Wright & Tupper, of San Angelo, and Jno. W. Stayton and Black & Graves, all of Austin, for appellants.

J. D. Burns, R. G. Hughes, and D. B. Hardeman, all of San Angelo, for appellees.

BLAIR, Justice.

Appellees, Ruth M. Ellis and her husband, J. W. Ellis, sued appellant West Texas Utilities Company, and Taylor Rowe, alleging that in March, 1930, they purchased from said corporation, through its agent, Taylor Rowe, 20 shares of its $6 cumulative preferred stock, without par or nominal value, paying therefor $96 per share, a total of $1,920. That the purchase was made upon express condition and agreement that appellant "would buy back and redeem any or all of said shares of stock at any time upon request or demand" of appellees, at the price paid therefor. That about January 1, 1933, appellees made demand upon appellant corporation to buy back and redeem 9 of such shares of stock in accordance with its agreement, but that it failed and refused to do so. That about February 28, 1933, because of "dire and necessitous circumstances," appellees sold 2 shares of said stock at $26 per share, and about April 12, 1933, sold 2 more shares at $25 per share; it being alleged that the sales price paid in each instance was the market value of each share sold; and that appellees were therefore entitled to recover $480 as the purchase price paid for the 5 remaining shares, which were tendered into court; and also $282 as the difference between the sales price of the 4 shares of stock sold and the agreed repurchase price thereof.

Appellant filed a general demurrer, special exceptions, a general denial, and several special pleas.

Claude A. Heider, O. N. Floyd, and J. L. Lockridge were permitted to intervene, and they alleged that they owned a large amount of the $6 cumulative preferred stock of appellant corporation, and were therefore interested in preserving the capital of said corporation. That for the two preceding years said corporation had paid only $3 per share on such $6 cumulative preferred stock, and that it was in arrears as to the cumulative dividends on such stock; that its earnings had not been sufficient to pay the $6 dividend, and that it did not have on hand sufficient money and surplus to pay such back dividends; and that any judgment appellees might recover on the repurchase of stock agreement would amount to a preference of their stock over that of interveners and other stockholders similarly situated.

In answer to the special issues submitted, the jury found upon sharply conflicting evidence that in making the sale of the stock to appellees, Taylor Rowe promised and represented to them that appellant corporation would buy back and redeem such stock at any time upon request or demand of appellees and at the price paid therefor; that such promises and representations were a material inducement to appellees to purchase the stock; and that appellees relied upon the promises and representations so made. With respect to the issue of exemplary damages as well as the individual liability of Taylor Rowe, the jury found that he did not "willfully" make such promises and representations; and that he did not make them with no intention of complying with them. The jury further found on practically undisputed evidence that the market value of the 2 shares of stock sold by appellees on February 28, 1933, was $26 per share, and the market value of the 2 shares sold on April 12, 1933, was $25 per share. And in accordance with these findings of the jury, judgment was rendered for defendant Taylor Rowe, and in favor of appellees against appellant West Texas Utilities Company as prayed for, in the sum of $762, with interest; and judgment was rendered against interveners on their plea of intervention.

This appeal involves only the rights of appellees under the repurchase of stock agreement as against the several attacks made by appellants West Texas Utilities Company and interveners. The utilities company will be referred to as appellant, and interveners as interveners.

By the first proposition it is contended that the evidence established, as a matter of law, that appellees failed to exercise their alleged option to resell the shares of stock to appellant within a reasonable time, under the rule that it is the essence of every such agreement that the option must be exercised within the time named, or, if no time is named, then within a reasonable time.

The rule of law stated is correct, but it has no application here because the evidence raised a question of fact as to whether appellees failed to exercise their option to resell the stock within a reasonable time. No request was made to submit this defense to the jury, and it must be held to have been waived unless the evidence showed, as a matter of law, that appellees failed to exercise the option within a reasonable time. Citizens' National Bank v. Texas Compress Company (Tex. Civ.App.) 294 S.W. 331 (error refused); Article 2190, R.S.1925, as amended by Acts 1931, c. 78, § 1 (Vernon's Ann.Civ.St. art. 2190). This the evidence did not do.

What constitutes a reasonable time in which to exercise an option or any obligation where no specific time has been fixed is usually a question of fact. Szanto v. Pagel (Tex.Civ.App.) 47 S.W.(2d) 632, error dismissed; Hatt v. Walker (Tex.Civ. App.) 33 S.W.(2d) 489.

Appellees purchased 20 shares of stock in March, 1930, at $96 per share, a total of $1,920, which was paid in cash. The certificates representing these shares were redelivered to appellant in 1931, and according to the evidence of appellees the appellant purchased 11 shares of such stock, paying therefor $96 per share, each payment being made by the check of appellant. The evidence of appellant was to the effect that the stock was redelivered to appellant for the purposes of resale to others, which service it rendered to all of its stockholders as an accommodation. That on January 3, 1931, appellant sold 5 shares to a party named and issued its own check to appellees in payment thereof; that on June 6, 1932, appellant sold 5 more shares to parties named, and issued its own check to appellees in payment thereof; and that on October 20, 1932, it sold 1 more share to a party named, and issued its own check to appellees in payment thereof; and that each of these 11 shares was sold for $96. That appellant then reissued 9 shares of stock to appellees. Appellees were not informed as to when any stock was sold and never transferred it to any one except to appellant in the manner stated. They sold 4 of the 9 shares of reissued stock (date of certificates not shown) in February and April, 1933, as above stated. A certificate for the five remaining shares was issued to appellees February 17, 1933, which certificate was tendered into court on the trial. This evidence strongly supports the claim of appellees that appellant agreed to repurchase the stock, because the undisputed evidence showed that the market value of such stock was far below $96 when the 6 shares were sold in 1932. A strong presumption arises that appellant would not sell stock to its customers at a much higher price than it was selling for in the open market. The same presumption arises that a purchaser would not buy such stock at a much higher price than it was selling for in the open market. The last purchase made by appellant was on October 20, 1932, and appellees demanded that appellant repurchase the stock in January, 1933, and by letter in September, 1933, requested that it repurchase the 5 remaining shares. Thus only a few months elapsed after appellant purchased the last share until appellees requested and demanded that it purchase the remainder of such stock in accordance with its agreement. Under such evidence, the question of whether appellees exercised their option of resale of the stock within a reasonable time was one of fact, and since appellant failed to request the submission of such defense to the jury, it must be held to have waived same.

Nor do we sustain the second proposition that the trial court erred in admitting parol testimony to show the alleged oral agreement to repurchase the stock, because it added to or varied the terms of the written contract to purchase the stock as evidenced by the subscription contract, signed by both parties, and the stock certificates issued to and accepted by appellees.

The material portions of the subscription contract read as follows:

"I hereby agree to purchase 20 shares of West Texas Utilities Company $6.00 Cumulative Preferred Stock, at $96.00 per share.

"I wish to pay for this stock in full, and attach check for $1920.00. * * *

"Stock to be made out to Mrs. Ruth M. Ellis."

This contract was signed by appellant's agent and Mrs. Ellis. The contemporaneous oral contract relied upon by appellees provided that appellant "would buy back and redeem any or all of such stock at any time upon request or demand" of appellees, at the price paid therefor. This verbal agreement to repurchase the stock at appellees' option does not modify or vary any term or condition of the written subscription contract. It did not provide any term or condition as to the purchase of the stock, except that it be paid for in full by the check attached, and that the stock certificates be issued to Mrs. Ellis. The contemporaneous oral agreement of appellant to repurchase such stock related to an entirely separate and independent matter, not mentioned in any manner in the...