Wichita Falls Compress Co. v. W. L. Moody & Co.

• Decision Date: 05 February 1913
• Citation: 154 S.W. 1032
• Parties: WICHITA FALLS COMPRESS CO. et al. v. W. L. MOODY & CO.
• Court: Texas Court of Appeals

154 S.W. 1032

WICHITA FALLS COMPRESS CO. et al. v. W. L. MOODY & CO.

Court of Civil Appeals of Texas. San Antonio.

February 5, 1913.

Rehearing Denied March 12, 1913.

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Appeal from District Court, Dallas County; E. B. Muse, Judge.

Action by W. L. Moody & Company against the Wichita Falls Compress Company and others. Judgment for plaintiffs against the Wichita Falls Compress Company and others. From a judgment for plaintiffs against defendants City National Bank of Bowie, Tex., Wichita Falls Compress Company, and Missouri, Kansas & Texas Railway Company, they appeal. Affirmed as to the Compress Company and the Railroad Company, with judgment over in favor of the Railroad Company against the Compress Company, and reversed as to defendant bank.

Crane & Crane, A. S. Coke, A. H. McKnight, Thomas & Rhea, and Cockrell, Gray & Thomas, all of Dallas, J. W. Chancellor, of Bowie, and Montgomery & Britain, of Wichita Falls, for appellants. Speer & Weldon, of Bowie, Terry, Cavin & Mills, of Galveston, and Spence, Knight, Baker & Harris, of Dallas, for appellees.

MOURSUND, J.

This is a suit by W. L. Moody & Co. against Hudspeth, Alexander & Co., a firm composed of A. D. Hudspeth and G. Alexander, and against the members of said firm individually, the City National Bank of Bowie, Tex., hereinafter called "Bank," the Wichita Falls Compress Company, hereinafter called "Compress Company," the Missouri, Kansas & Texas Railway Company, hereinafter called "Railway Company."

The petition on which the case went to trial contained the following allegations:

That on or about March 7, 1910, Hudspeth, Alexander & Co., with intent to defraud plaintiffs out of large sums of money, proposed by telegraphic communications sent from Bowie, Tex., to plaintiffs at Galveston, Tex., to ship plaintiffs 800 bales of early cotton of average weight and grade, none below strict middling, to be sold by plaintiffs, as cotton factors and commission merchants, prior to May 1, 1910, on regular factors' terms, and to draw upon plaintiffs against said shipment of cotton, with bills of lading attached to drafts, the sum of $55 per bale, which proposition plaintiffs accepted. That, before accepting the proposition, plaintiffs, being informed that said G. Alexander was a customer of defendant Bank, communicated with said Bank by telephone, notifying it of the offer so made, and asked if its relations with Alexander had been satisfactory and if plaintiffs could safely rely upon his representations with reference to said cotton, to which the Bank replied that Alexander was its customer, and falsely and fraudulently replied that its relations with him had been satisfactory and that plaintiffs could rely upon his representations with regard to said cotton, and, but for said information thus given, plaintiffs would not have accepted said proposition. Further, that said Bank knew of the said Hudspeth, Alexander & Co.'s intention of defrauding plaintiffs, and gave said information to assist them in carrying out such intention, and conspired with them to accomplish such purpose. That the relations between Alexander and the Bank were not satisfactory, that the firm of which he was a member was heavily indebted to the Bank, and said Bank knew said firm was insolvent, and that plaintiffs could not safely rely upon Alexander's representations with reference to said cotton. That said firm owed the Bank a large overdraft which was the occasion of dissension in said Bank and for criticism of its active officers, by reason of which constant requests were made upon said firm to pay the Bank, but that none of said facts were communicated to plaintiffs. That, by all dealing in and handling cotton, "early cotton" means, and at all times alleged in the petition meant, cotton ginned and prepared for market early in the season, free from boll, leaf, and trash; and "average weight" means, and meant, that the average weight of a given number of bales of cotton shall be approximately 500 pounds per bale, and "bales" of cotton means and meant, packages or bales of the average weight of approximately 500 pounds, and plaintiffs and all the defendants at all the times mentioned in the petition well knew said meaning of said words.

That at said time Hudspeth, Alexander & Co. had or procured 400 bales of cotton, gathered late in the season and of inferior grade, and delivered said cotton to the Compress Company and procured it to split said bales of cotton each into two bales and to prepare same so as to make each half bale appear to be a full compressed bale, and to assist it in shipping same as full bales, and to procure bills of lading as for full bales, to the end that it would be made to appear that they had bills of lading for 800 instead of 400 bales of cotton. That said Compress Company delivered said cotton to Railway Company as full bales, certifying to it that same were bales of cotton. That, in order to procure the assistance of the Compress Company in this matter, they agreed to pay a compensation beyond that company's ordinary charges for compression. That said company knew of the fraudulent designs of said Hudspeth, Alexander & Co. to swindle plaintiffs or others and the purchasers of all bills of lading which might be issued in pursuance of such design. That the Compress Company failed to compress said cotton to the density required by custom between railroad and compress companies and by the regulations of the Railroad Commission. That, if Compress Company did not in fact know of the fraudulent intention and design of Hudspeth, Alexander & Co., the requests made to them were so unusual and extraordinary that they were put upon notice of the fraudulent purposes of Hudspeth, Alexander & Co. and negligently participated therein so as to make themselves liable. That 485 bales of said cotton were loaded by the Compress Company for the Railroad Company in pursuance of prearrangement, custom, and course of dealing between it and Railroad Company, and Compress Company issued a certificate that 485 bales of cotton of given marks and brands had been received from G. Alexander for shipment, via Missouri, Kansas & Texas Railway Company of Texas to Galveston, and said parties applied to Railway Company for bill of lading for full bales of cotton, and Railway Company assented to such request, accepted said certificate, waived its rules, which provide that, in case of shippers permanently located at said stations, it should be furnished an affidavit once each week covering shippers' weights to be inserted in bills of lading, and contrary to its rules and custom, and the general rule and custom of the trade, accepted said packages as bales of cotton and issued bill of lading for 485 bales of cotton, by which it recited and represented that it had received that number of bales consigned to shipper's order, notify W. L. Moody & Co., Galveston, Tex., and by which it bound itself to deliver 485 bales of cotton at Galveston, Tex. That thereby it contracted with said other parties to the suit, or some of them, that it had received and was transporting said number of bales of cotton, but failed to put the dealers in said bill of lading on notice that it had received only half bales.

That all the defendants knew it was the custom among shippers of cotton to attach the bills of lading to drafts drawn against banks, purchasers, or other consignees of cotton, in favor of themselves, bearers, or other payees, or order, and would place same in the bank where the bills of lading would be accepted as importing that the Railway Company had received the merchandise and was transporting same as set forth in such bills of lading. That Railway Company knew, or by the exercise of reasonable diligence could have known, that said packages of cotton were not bales of cotton, but half bales, but recklessly and negligently, in pursuance of the plans proposed by the other defendants and adopted by it, accepted said packages as being bales of cotton and issued its bill of lading, knowing it would be used to obtain funds from some person upon the strength of their belief in the recitation therein contained that said packages were bales of cotton, and also with notice and knowledge that the other defendants intended to use said bill of lading in some business transaction with W. L. Moody & Co. That under the regulations imposed by the Railroad Commission the Railway Company was required to take charge of and receipt for said cotton on the platform of the Compress Company in the same manner as if tendered at its depot. That at or about the time of the issuance of said bill of lading Compress Company, or another, made inquiry of said Railway Company, its agents or employés, whether it would issue and deliver bill of lading for said cotton without stating in same the weights of the cotton, by which it was further put upon notice of the fraudulent designs of the shippers and those acting in collusion with them. Further, that Railway Company issued said bills of lading without stating therein the weights of the cotton, but wrote in the column provided for weights the abbreviation "est.," meaning thereby estimated, but in fact no estimate was made, although said Railway Company knew that when the weight was stated in the manner aforesaid it was understood by all in the business of operating railroads and compresses, and in the business of banking and the business of cotton buyers and factors and commission merchants, to mean that such cotton had not been weighed, but that the weights had been carefully, fairly, and honestly estimated by the carrier issuing such bill of lading, and that it was estimated to weigh an average of approximately 500 to 560 pounds per bale.

That said Compress Company marked said packages of cotton with marks necessary to represent full bales, and issued and delivered to said Railway Company a written, or partly written and partly...