Wilson v. Shear Co.

• Court: Texas Court of Appeals
• Writing for the Court: Stanford
• Citation: Wilson v. Shear Co., 3 S.W.2d 849 (Tex. App. 1927)
• Decision Date: 20 October 1927
• Docket Number: (No. 302.)
• Parties: WILSON et al. v. SHEAR CO. et al.<SMALL><SUP>*</SUP></SMALL>

3 S.W.2d 849

WILSON et al. v. SHEAR CO. et al.^*

(No. 302.)

Court of Civil Appeals of Texas. Waco.

October 20, 1927.

Rehearing Denied December 15, 1927.

COPYRIGHT MATERIAL OMITTED

Appeal from District Court, McLennan County; Giles P. Lester, Judge.

Suit by the Citizens' National Bank of Waco against the Shear Company, in which Grace J. Witherspoon, T. C. Phillips, and Nettie L. Wilson were interpleaded, and the two latter filed cross-actions. From the judgment rendered, Nettie L. Wilson and others appealed. The Commission of Appeals (292 S. W. 531, 294 S. W. 843) affirmed the judgment of the Court of Civil Appeals (284 S. W. 654), in so far as it reversed the judgment of the trial court as between Nettie L. Wilson and the Shear Company, and reversed the judgment dismissing the appeal of T. C. Phillips from a judgment for plaintiff, and remanded that branch of the cause for disposition on the merits. Judgment for plaintiff affirmed on the merits.

Spivey & Spivey, of Waco, for appellants.

H. M. Richey, of Waco, for appellees.

STANFORD, J.

During a prior term of this court, the above cause as between Mrs. Nettie L. Wilson, Appellant, v. Shear Co., Appellee, was reversed and remanded. The appeal in said cause as between T. C. Phillips, Appellant, v. Citizens' National Bank, Appellee, was dismissed. The judgment of the trial court as to all other parties was affirmed. See Nettie L. Wilson et al. v. Shear Co. et. al., 284 S. W. 654. Separate applications for writ of error by Nettie L. Wilson and T. C. Phillips were granted by the Supreme Court, and on hearing in said court the judgment of this court reversing and remanding said cause as between Nettie L. Wilson and the Shear Company was affirmed, but the judgment of this court dismissing the appeal of T. C. Phillips, Appellant, v. Citizens' National Bank, Appellee, was reversed, and this branch of the case remanded to this court for disposition upon its merits. Shear Co. et al. v. Wilson (Tex. Com. App.) 292 S. W. 531. So we will now consider same upon its merits.

The controversy between appellant T. C. Phillips and appellee Citizens' National Bank was as to their respective rights to certificate No. 16 for 25 shares of stock in the Shear Company; appellant alleging that on about May 23, 1920, C. W. Wilson executed and delivered to him a note for $5,000, and, to secure same, pledged to him said certificate of stock in the Shear Company, and that afterwards, without fault or negligence on his part, he lost said certificate of stock, and that same, being found, was returned to C. W. Wilson, and that Wilson thereafter fraudulently and wrongfully negotiated said stock to the Citizens' National Bank, and he (Phillips) sought judgment establishing the priority of his title and lien to said certificate of stock. Appellee Citizens' National Bank alleged, in substance, that, by reason of the form and negotiable character of said certificate of stock, and by reason of the fact that it is a bona fide holder for value in due course of said certificate of stock, and without any notice of the claim of appellant or any one else to said stock, it has a superior right and title thereto against said Phillips or any other person claiming same. Other matters in reply to the pleading of appellant Phillips will be stated in the course of this opinion.

In answer to special issues submitted, the jury found:

(1) That T. C. Phillips did loan C. W. Wilson $5,000 on May 23, 1920, and took his note therefor, due six months after date.

(2) That C. W. Wilson did deliver to T. C. Phillips on May 23, 1920, certificate No. 16 issued by the Shear Company to C. W. Wilson, certifying that C. W. Wilson was the owner of 25 shares of the capital stock of the Shear Company, in pledge to secure T. C. Phillips in the payment of said $5,000 note.

(3) That T. C. Phillips did lose said certificate No. 16 out of his possession while holding it as a pledge for the payment of said note for $5,000.

(4) That T. C. Phillips did lose said stock certificate No. 16 around Easter Sunday, 1921.

(5) That T. C. Phillips, at the time of the loss of said certificate, did fail to exercise ordinary care in the safe-keeping in his possession of said certificate of stock.

(6) That the failure of T. C. Phillips to exercise ordinary care in the safe-keeping of said certificate of stock was negligence on his part, resulting in the loss by him of said certificate of stock.

(7) That T. C. Phillips, after he had information that said certificate of stock No. 16 had been found and returned to C. W. Wilson, through agreement with C. W. Wilson did accept from C. W. Wilson his note for $5,000, dated May 23, 1920, in lieu of and in extinguishment of the duplicate note of C. W. Wilson for that amount, in consideration that C. W. Wilson would execute a deed of trust in favor of T. C. Phillips on land in Young county, Tex., as security for said duplicate note.

(8) That the execution by C. W. Wilson of the note delivered by him to A. D. Rogers at San Antonio, Tex., was intended by T. C. Phillips and C. W. Wilson to be a novation of the original indebtedness as evidenced by the note of C. W. Wilson in the sum of $5,000 executed at the time T. C. Phillips loaned to him said sum of money.

(19) The negligence of T. C. Phillips in losing said stock certificate No. 16 was a proximate cause for the same, having been pledged by C. W. Wilson to the Citizens' National Bank.

(20) The Citizens' National Bank of Waco, on or about May 23, 1921, did receive from C. W. Wilson, in pledge, stock certificate No. 16 issued by the Shear Company to C. W. Wilson, as owner of 25 shares of stock, to secure the payment of a loan at that time made by the bank to C. W. Wilson, without notice or knowledge on the part of said bank that T. C. Phillips was then claiming said certificate of stock and the right of possession thereto by virtue of the same having theretofore been pledged to him by C. W. Wilson as a security for an indebtedness claimed to be due said Phillips by C. W. Wilson.

In response to a peremptory instruction, the jury found that the Citizens' National Bank of Waco is the owner of stock certificate No. 16 issued by the defendant the Shear Company, as against the defendant Nettie L. Wilson. Upon the above findings of the jury and such additional findings as the court was authorized to make under the pleadings and evidence, the court entered judgment for appellee Citizens' National Bank for the title and possession of the stock in controversy as against appellant T. C. Phillips and all other parties to said suit. T. C. Phillips alone appealed from this judgment. The statement of the case in Wilson et al. v. Shear Co. et al. (Tex. Civ. App.) 284 S. W. 654, will assist in understanding the issues in this branch of the case.

Under his twelfth assignment, appellant contends the trial court erred in refusing to instruct a verdict in his favor. The face of said certificate of stock was as follows:

"This certifies that C. W. Wilson is the owner of twenty-five shares of the capital stock of the Shear Company, transferable on the books of the corporation in person or by attorney on surrender of this certificate.

                  "H. H. Shear, President
                                  "Harold Shear, Secretary."
                

On the back of said certificate was the following:

"For value received, ____ hereby assign and transfer unto ____, ____ shares of the capital stock represented by the certificate on the reverse hereof, and do hereby appoint ____ attorney, irrevocable, to transfer the said stock on the books of the corporation, this ____ day of ____ A. D. 19__.

                   "[Signed] C. W. Wilson."
                

On May 23, 1920, C. W. Wilson borrowed $5,000 from T. C. Phillips, executing a note therefor, and at the same time indorsed in blank the above transfer on the back of stock certificate No. 16 and pledged same with Phillips to secure the payment of said note. About March 26, 27, or 28 (Easter Sunday), 1921, T. C. Phillips lost said certificate of stock and note out of his coat pocket in Hillsboro, Tex. Said certificate was found by an interurban employee in or about the interurban station and was afterwards mailed from Hillsboro to C. W. Wilson, at Waco. On May 25, 1921, C. W. Wilson borrowed $4,000 from appellee the Citizens' National Bank, giving his note therefor, and at the same time delivered said certificate of stock as a pledge under a collateral contract to secure the payment of said note. The Citizens' National Bank, at the time it accepted said certificate as a pledge and loaned C. W. Wilson $4,000 thereon, had no notice that any one else had any right to or interest in said certificate. C. W. Wilson failed to pay said $4,000 note and the Citizens' National Bank foreclosed its pledgee's lien on said stock as per the terms of its collateral contract with C. W. Wilson, and bought said stock at such sale, thereby acquiring title to same. There being no question but that Phillips held the certificate only as pledge, it necessarily follows that at least a qualified title to said certificate of stock remained in the pledgor, C. W. Wilson. 31 Cyc. p. 787, and cases there cited. The general property right in stock pledged remains in the pledgor, subject to the pledgee's lien, until the stock is sold under foreclosure by the pledgee. 14 C. J. p. 731, and cases there cited. Undoubtedly, from the very nature of the transaction between C. W. Wilson and T. C. Phillips, Wilson, after the pledge, continued to own a beneficial interest in the certificate of stock and had the general property right therein. There is no contention that Phillips lost possession of the certificate of stock otherwise than by his own act of losing same while carrying it about in his coat pocket while at Hillsboro. So it must be conceded that the person who came into possession of the certificate after its loss by Phillips did so as an innocent finder of it. There being no indicia of...