West v. Carlisle

• Decision Date: 24 May 1922
• Docket Number: (No. 3161.)
• Citation: 241 S.W. 471
• Parties: WEST et al. v. CARLISLE.
• Court: Texas Supreme Court

Page 471

241 S.W. 471

WEST et al. v. CARLISLE.

(No. 3161.)

Supreme Court of Texas.

May 24, 1922.

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

Action by J. M. West and another against William Carlisle, in which the defendant filed a cross-action. The judgment for defendant on the cross-action was modified by the Court of Civil Appeals (199 S. W. 515), and plaintiffs bring error. Affirmed.

Baker, Botts, Parker & Garwood, of Houston, for plaintiffs in error.

Edward A. Haid, of St. Louis, Mo., and Wilson, Dabney & King, of Houston, for defendant in error.

GREENWOOD, J.

For the determination of the single question properly presented for decision by this court in this case, we adopt the statement of plaintiffs in error, viz.:

"William Carlisle was the owner of the stock of the Beaumont & Great Northern Railroad Company. He also owned all of the first mortgage bonds issued by said railroad company. He made a contract on the 20th day of May, 1912, to sell these stocks and bonds to West and Duff. There were details to be carried out which delayed the consummation of the sale until the 30th day of the following September. The contract contained the following clause: `Owner contracts and agrees that, effective as of date on which the railroad securities are to be paid for and delivered to the purchasers, or their assigns, the railroad shall be delivered to them clear of debt or any incumbrance, except the first mortgage above referred to, which is to say that the current bills and accounts receivable shall suffice to discharge the bills and accounts payable, and, in the event of the failure so to do, the difference shall be made good by the owner, and, if there is any excess of cash resulting therefrom, then such excess is to be retained by the owner.'

"When a final settlement came to be had, and the bills and accounts receivable were balanced against the bills and accounts payable, Carlisle claimed a credit for $7,868.29 which the railroad company had on deposit in a certain bank, and $598.52 cash in the hands of agents in transit at the time the property was turned over.

"West and Duff declined to allow him this credit, and claimed there was a deficit in the bills receivable. They filed a suit for the deficit. Carlisle filed a cross-action claiming a credit for this cash. The trial court sustained his cross-action, giving him credit for the cash and rendering a judgment in his favor for a balance."

The Court of Civil Appeals entered a judgment which gave Carlisle credit for the cash on hand, though diminishing the trial court's judgment in favor of Carlisle by the amount of certain taxes and moneys paid out in settlement of claims against the Railroad Company.

Plaintiffs in error complain that the judgments of the trial court and of the Court of Civil Appeals are erroneous because the words "bills receivable" and "accounts receivable" do not include cash on deposit in a bank nor cash in the hands of agents in transit.

Regardless of the meaning of the phrases "bills receivable" and "accounts receivable," when standing alone, we are convinced that the entire paragraph of the contract in which these phrases occur entitled Carlisle to receive from West and Duff the excess of the proceeds of the current obligations owned by the railroad company, and customarily and readily convertible into cash, on September 30, 1912, including cash on deposit in bank and cash in the hands of its agents over and above the company's indebtedness, except first mortgage bonds. According to the contract, there was to be no delivery of the railroad or change in its continued operation, under the control of Carlisle as owner of the company's capital stock, until the stock and bonds were paid for. It is patent therefore, that Carlisle had the lawful right to have the railroad company apply its bank deposit or agents' balances in discharge of its debts other than its first mortgage bonds at any time prior to September 30th. It is inconceivable that West and Duff would have signed a contract authorizing such application of the cash assets of the company, unless it was intended that Carlisle should have the benefit thereof in the adjustment provided for in paragraph 4.

In our opinion, the parties were careful to provide simply that the corporation, whose stock was to pass to West and Duff, was to be out of debt, except for its first mortgage bonds, when the change in stock ownership should take place, Carlisle supplying any money required to meet the indebtedness to be discharged in so far as same could not be met with the company's cash...