Case ID: sw_267/html/0291-01.html
Source: Caselaw Access Project
Author: {"author": "RANDOLPH, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

GRAY v. BLACK et al.
    (No. 2376.)
    
    (Court of Civil Appeals of Texas. Amarillo.
    Nov. 12, 1924.
    Rehearing Denied Dec. 17, 1924.
    Second Rehearing Denied Jan. 7, 1925.)
    1. Principal and agent <3=5161(2) — Remedies enumerated which owner, whose property has been sold without authority, may pursue.
    Where property has been sold without owner’s authority owner may sue to set aside contract of sale for fraud, or for want of authority, or bring an action for money had and received under any circumstances which show that in equity and in good conscience it belongs to him. ■
    2. Action <3=532 — No distinctions as to forms of actions are recognized. '
    Under Texas statutes intended to simplify rules of pleading, no distinctions as to forms of actions are recognized.
    3. Parties <§=o25 — Strictness of .pleading in regard to joinder of parties to causes of action does not prevail in Texas.
    Same strictness of pleading in regard to joinder of parties to causes of action does not prevail in Texas as in states where distinction between law and equity forms of action is recognized.
    4. Executors and administrators <3=5438(6)— Administrator held entitled to affirm unauthorized sale and lease and sue for conversion of money received without making buyers parties.
    Intervener, an administrator, who alleged the invalidity of a sale and lease of his deceased’s property to third persons, because unauthorized was entitled to affirm them and to seek recovery for conversion of the money received from the third persons without making them parties to suit.
    5. Banks and banking <3=5134(1) — Bank may apply customer’s money to his indebtedness to bank only when transaction is a deposit.
    A bank has the right to apply funds belonging to a customer to the liquidation of an indebtedness owing it by the customer only when transaction is a deposit.
    6. Banks and banking <®=> 119 — Relation of banker and depositor is voluntary, and general deposit ordinarily creates contractual relation.
    The relation of banker and depositor is a voluntary one, and a general deposit made with a bank is ordinarily a contractual relation.
    7. Banks and banking <3=5119 — Meeting of minds essential to creation of contractual relationship between bank and depositor.
    Meeting of minds is essential to creation of contractual relationship between bank and depositor.
    8. Banks and banking <s=5l 19 — Assent of both parties essential to create privity of contract between bank and depositor.
    The assent of both parties is essential to an ordinary deposit to create privity of contract between bank and depositor.
    9. Banks and banking <3=5119 — Title to money, does not pass to bank, and relation of creditor and debtor does not arise without knowledge and consent of owner.
    Title to money does not pass from the owner to the bank, and the relation of creditor and debtor does not arise between them as to money deposited without knowledge and consent of owner.
    10. Banks and banking <3=>l 19— Relation of creditor and d'ebtor cannot be created by one not authorized by owner of money to create such relation.
    The relation of creditor and debtor between owner of money and bank cannot be created by one not authorized by the owner to create such relation.
    II. Trover and conversion <3=510< — Person depositing other’s funds without authority guilty of conversion.
    Person depositing other’s funds without authority is guilty of conversion of such funds.
    12. Banks and banking <3=5131 — Bank receiving unauthorized deposit is guilty of conversion, if its relation to payee affects it with notice.
    A bank receiving an unauthorized deposit is guilty of conversion, if it is so related to the payee making the deposit as to affect it with notice.
    13. Husband and wife <3=522 — Husband’s au- . thority to wife to look after cattle held not to authorize her to dispose of his separate property.
    Husband’s authority to the wife to look after cattle on farm did not authorize her to represent him in leasing farm and selling crop, his separate property.
    14. Principal and agent <3=5100(2) — Authority to lease land to designated party did not authorize lease to different parties.
    Authority to lease land to designated party did not authorize lease to different parties.
    15. Appeal and error <3=5|0I0(!) — Findings of fact not supported by evidence will be set aside.
    Findings of fact not supported by evidence wiE be set aside.
    I6i Husband and wife <3=522 — Marriage reíation does not impliedly create agency with reference to separate property.
    The marriage relation does not create an implied agency in the wife to transact any business for husband with reference to bis separate property, or the disposition thereof.
    17. Husband and wife @=>23% — Afteney of wife is not presumed from fact of marital relationship.
    The agency of the wife for the husband is not presumed from the fact of marital relationship, but must be established as in any other agency.
    18. Husband: and wife @=>23% — Presumption of wife’s agency does not arise in absence of facts upon which to base it.
    While agency of the wife may be presumed from the actions and conduct of the parties, the presumption cannot arise, unless there are facts on which to base it.
    19. Husband and wife @=>22 — -Wife not authorized to dispose of or pledge separate property of husband in absence of due authority to so act-
    A wife is not authorized to dispose of or pledge the separate property of her husband, unless she acts as his agent duly authorized.
    On Second Motion for Rehearing.
    20. Executors and administrators @=>416 — Claims under first and second classes must be paid out of unincumbered assets notwithstanding insolvency of estate.
    As between the first and second class claims and unsecured claims against an estate of a decedent, within Vernon’s Sayles’ Ann. Civ. St. 1914, art. 3458, the claims under the first and second classes must be paid out of the unincumbered assets of the estate, notwithstanding insolvency of estate. '
    21. Executors and administrators @=>261 — Bank indebted to estate by reason of conversion of decedent’s funds held not entitled to set off claim against debt so created.
    A bank which became indebted tp an estate by reason of having converted decedent’s funds to pay its claim secured by a chattel mortgage had no lien on the funds so converted, and could not claim a right of set-off as against the first and second class claims against' the estate which Vernon’s Sayles’ Ann. Civ. St. 1914, art. 3458, requires to be paid first.
    Appeal from .Lipscomb County Court; M. L. Blankenship, Judge.
    Suit by Mrs. Irene Earr against T. H. Black and the Citizens’ National Sank of Higgins, in which E. C. Gray intervened as administrator of the estate of Clarence Farr, deceased. From an adverse judgment, inter-vener appeals.
    Reversed and rendered for intervener, but as between plaintiff and defendants affirmed.
    E. C. Gray, of Higgins, in pro. per.
    E. J. Pickens, of Canadian, for appellee ■ Irene Farr.
    W. H. Sewell, of Follett, and H. L. Adkins and Kimbrough & Kimbrough, all of Amarillo, for appellees T. H. Black and Citizens’ Nat. Bank.
    
      
      Writ of error granted February 18, 1925.
    
   RANDOLPH, J.

Mrs. Irene Farr brought this suit against T. H. Black and the Citizens’ National Bank of Higgins, Tex., to recover the sum of $987.09, the amount of a deposit in that bank, and also the value of a diamond ring, alleging substantially that the deposit was occasioned by the sale of certain crops to the amount of $400 and the lease of certain land by defendant Black, acting as agent for her, under the express agreement that he would deposit the same to her credit, subject to her check.

E. C. Gray, having been appointed administrator of the estate of Clarence Farr, deceased, intervened in this case and claimed the deposit as the property of the estate of said Farr. Defendants Black and the bank in their answer alleged that Black was the president of defendant bank, and whatever had been done by him in the matter complained of was done as the president of the bank and for its benefit, aúd not for the benefit of himself individually; that the land upon which the crop which was sold was grown, was the separate property of Clarence Farr, who was the husband of the plaintiff at the time of his death; that Mrs. Farr was acting as Farr’s agent in the lease of the land and the sale of the crops, duly authorized by him so to do. They denied that there was an agreement with plaintiff that the money realized from the lease of the land and sale of the crop was to be deposited subject to plaintiff’s cheek. They also alleged that Farr was in debt to the bank, which debt was evidenced by a note secured by chattel mortgage upon certain cattle, and that, prior to the death of Farr, the bank had matured this indebtedness under an accelerating clause in the mortgáge, and had appropriated such deposit to pay off and discharge such indebtedness, and placing a small balance to Farr’s credit.

Upon trial before the court without a jury, judgment was rendered in favor of defendant bank, and that plaintiff and intervener take nothing by their suit [except as to the diamond ring, which was returned to plaintiff in court].

The evidence discloses that Farr owned a section of land at the time of his marriage to plaintiff; that he was married to plaintiff in December, 1922. He became ill in the spring of 1923, from which illness he never recovered, but died in Ellis county, Okl. on the 8th day of October, 1923. During Farr’s sickness, and at his instance, his wife went out to the farm three or four times for the purpose of looking after the cattle, and to see that they were getting water and grass. It appears also that there was a 20-acre patch of wheat on the place, and that Farr, during his illness, and before he left the farm, had arranged with one Peterson to cut this wheat, thresh it, and haul it to market, which Peterson did, paying the expenses out of the

money received for it, and depositing the balance in a Canadian Texas bank to bis account. It seems that plaintiff checked this wheat money out; the deposit amounting to about $350. Out of this amount she paid $141 to the Federal Land Bank on a debt owing that bank by Farr. This action of hers in checking out the wheat money is not shown to have been known to Farr.

Some time before the contract in controversy herein was executed Mrs. Farr testifies that she and her brother had a conversation with Farr about leasing the land to one Rudy, and that, after the crops were sold to Rudy and the land leased to him, he was to cut up the crop that was then growing on the place, but no trade was made with Rudy. In the meantime Black had been consulting Mrs. Farr about leasing the land apd selling the crop to Henry and Gertrude Schwab, and on the 26th of September, 1923, Black went to Ellis county, Okl., to see Mrs. Farr, and presented to her the following written instrument for her approval and signature, to wit:

“Higgins, Tex., Sept. 26, 1923.
“This lease contract, made and entered into by and between Mrs. Clarence Farr, through her agent, T. L. Black, known in this contract as the party of the first part, and Mrs. 'Gertrude Schwab and Henry Schwab, known in this contract as the parties of the second part, witnesseth:
“The party of the first part hereby agrees to lease her section of land. No. 323 Blk.- No. 43, all in Lipscomb county, Tex., for a term dating from the 27th day of September, 1923, to March 1, 1925. The party of the first part also agrees to sell all crop now growing on said land for a consideration as follows: A total of $800 this day paid, the receipt of which is hereby acknowledged.
“The party agrees to give possession of all the land as of the 27th inst., but is not to give possession of any of the house, cellar, or any portion of the yard until October 15, 1923.
“The party of the first part also agrees to sell to the party of the second part 52 heifer yearlings, all branded on left thigh and now located about one mile southeast of said section for a total of $1,456, or $28 per head for each and every head of heifers he or she can deliver, not to exceed 52 in number.
“The party of the first part also hereby acknowledges payment in full for the above-mentioned 52 head of heifers, or the sum of $1,-456.
“The party of the second part hereby agrees to the foregoing contract, and further agrees to allow all horses and cattle yet belonging to the said party of the first part to run on said section above mentioned until the 15th of October, 1923.
“The parties of the second part hereby agrees to beep said place in as good repair as it is in at this time, the party of the first part furnishing what material as deemed by her as necessary.
“Witness our hands this the 26th day of September, 1923. T. H. Black, Party of the First Part. Henry Schwab, Gertrude Schwab, Parties of the Second Part.
“I hereby consent and agree to the above contract. Mrs. Clarence Farr.”

Plaintiff signed this instrument without consultation with Farr and without his knowledge or consent. Mrs. Farr testified that, at the time of the signing of this instrument, Farr was very sick, and had been sick since March, 1923, and was very weak. Sometimes he understood what was said and sometimes would not. That-for a good portion of the time he was out of his head, and had been that way for some time before his death.

The evidence shows that the bank had declared its indebtedness due; that this was done on the 26th of September, 1923, the day the contract with the Schwabs was signed, under the accelerating clause of the mortgage given by Farr to secure the note thus matured, but the exact date when the amount on deposit was set off against this note is not shown.

We will not discuss the appellant’s propositions or the appellees’ counter propositions in the order in which they come, hut our discussion will be of those questions which we consider paramount and controlling in our decision of the case. We are met at the threshold of the case with appellees’ contention, with reference to intervener’s petition attacking the sale and lease to the Schwabs, that “a party will not be permitted to recognize the validity of a contract for one purpose, and at the same time deny its validity for another purpose.”

It is true the intervener attacks the validity of the sale and lease and sets out that each and both were executed without authority from Farr, and that the money was wrongfully received by the defendant bank, and that the defendants conspired together to do said wrongful acts, and charges their wrongful conversion, not of the lease and crops, but of the money received therefrom, and prays for judgment for the sum of the amount of the deposit.

Where property of a party has been sold without authority from the owner, the owner may sue to set aside the contract of sale for fraud, or for want of authority, pr bring an action for money had and received under any circumstances which show that in equity and in good conscience it belongs to such owner. First National Bank v. Pickens, 7 Ind. T. 725, 104 S. W. 947.

Under the statutes of Texas intended -to simplify the rules of pleading, no distinctions as to forms of actions are recognized. Chevalier v. Rusk, Hallara, 611; Goldman v. Blum, 58 Tex. 630. The same strictness of pleading in regard to joinder of parties to causes of action does not prevail in Texas as is observed in states where the distinction between law and equity forms of action is recognized. Craddock v. Goodwin, 54 Tex. 578; Galveston, etc., Ry. Co. v. Heard (Tex. Civ. App.) 91 S. W. 371.

It may be that, if tbe intervener was bringing suit to set aside tbe lease and tbe sale of tbe crop, tbe Scbwabs should bave been made parties, yet be bad tbe right, by charging tbe invalidity of tbe sale and lease at tbe same time, to recognize tbe fact of tbe execution of such lease and tbe making of such sale, and alleging tbe conversion of tbe proceeds without making tbe Scbwabs parties to tbe action, and sue for the money converted by the bank.. Tbe evidence established tbe sale and lease as a fact, and in part was offered by tbe defendants under this very pleading, and was, to say tbe least, admissible upon that phase of tbe case which we will now discuss.

We recognize tbe rule that a bank has tbe right to apply funds in a general deposit, belonging to a customer to' tbe liquidation of an indebtedness owing it by its customer, and that too after tbe .death of tbe customer, and even though tbe debt bad not matured. Traders’ National Bank v. Cresson, 75 Tex. 298, 12 S. W. 819. But this rule is effective only where the transaction is a deposit. Tbe relation of banker and depositor is a voluntary one, and a general deposit made with a bank is ordinarily a contractual relation. 3 R. C. L. § 145, p. 516; First National Bank v. Greenville National Bank, 84 Tex. 40, 19 S. W. 334; Van Winkle Gin Co. v. Citizens’ Bank, 89 Tex. 147-153, 33 S. W. 862.

In order that this contractual relation shall exist it is necessary that there shall be a meeting of tbe minds assenting to such relationship, and the assent of both parties is essential to an ordinary deposit to create a privity of contract between the bank and tbe depositor. Title to money does not pass from tbe legal owner to the bank, and tbe relation of creditor and debtor does not arise between them as to money deposited without the knowledge and consent of tbe depositor. No one can create this relation between the owner of money and the bank ■without authority from tbe owner. In such case, tbe person who bolds tbe depositor’s money, and who deposits it without authority, is guilty of conversion of tbe funds, and a bank receiving it is likewise guilty of conversion, at all events, if it is so related to tbe payee making tbe deposit as to affect it with notice. 2 Michies, Bank and Banking, § 121, pp. 897, 898; Winslow v. Harriman Iron Co. (Tenn. Ch. App.) 42 S. W. 698; Union Stock Yards National Bank v. Campbell, 2 Neb. Unoff. 72, 96 N. W. 608; Burtnett, Administrator v. First National Bank of Corunna, 38 Mich. 631; Patek v. Patek, 166 Mich. 446, 131 N. W. 1101, 35 L. R. A. (N. S.) 461.

In tbe Patek Case last cited the wife, without tbe knowledge and consent of tbe bus-band, and without any authority, caused tbe money to be delivered to tbe bank. She bad no title or interest in this money. Tbe Supreme Court of Michigan held upon these facts:

“If the complainant is able to establish these facts, we think he is right in his contention that title to the money never passed from him to the bank, and that the relation of creditor and debtor never existed between them as to said fund. * * * And the rule is the same, even though the depositary had no notice or knowledge at the time the deposit was made that it was the money of another.”

Such being tbe nature and character of tbe deposit, then it naturally follows that a deposit, made without tbe knowledge or consent of the owner of money, and without authority from him, does not create such contractual relation. In the case at bar tbe question as to whether or not such contractual relation existed depends upon tbe authority of Mrs. Farr and Black, not only to make such deposit, but upon their authority, also, to make tbe sale of tbe crops, and to lease tbe land, for there is no pretense that Farr ever authorized the deposit in tbe bank of tbe money received from tbe sale and lease.

Did Mrs. Farr bave the authority to make tbe sale and lease, or to authorize Black to make such lease and sale? Tbe answer to this is no. Tbe trips made to the farm by Mrs. Farr at tbe instance of Farr, to look' after the cattle, and see that they bad grass and water, was such work as any hired band could have performed, and does not evince any such special trust reposed in bis wife by Farr as would in tbe least degree establish her agency to represent him in tbe disposition of bis separate property.

There is one other instance testified to by Mrs. Farr, and relied on to establish such agency. In tbe conversation she and her brother bad with Farr, with reference to tbe lease of the land to Rudy, it might be understood that she was authorized to lease tbe land to Rudy, but she did not make this lease. She substituted her own judgment that tbe Schwab lease was tbe best lease, and set aside her instructions to lease to Rudy, and leased it to Schwab and wife. .

As there is no evidence to support tbe trial court’s findings that, notwithstanding Clarence Farr did not expressly confer authority upon tbe plaintiff, bis wife, to make the sale and lease that was made, she became bis agent to dispose of said crops and lease said land, and on account of said Clarence Farr’s weakened physical and mental condition, and bis ' subsequent incapability to transact business, his wife, tbe plaintiff, became bis agent by implication of law, to sell said crops and lease said land as she did, we set aside such findings of fact.

There is no implied agency in tbe wife, by virtue of tbe marriage relation, to transact any business for tbe busband witb reference to bis separate property, or tbe disposition thereof. Sbe is not disqualified from acting as tbe agent of ber busband. Crutcher v. Sligar (Tex. Civ. App.) 224 S. W. 227. But sueb agency must, be established as in any other agency, and is not to be presumed because of tbe marital relationship. We also recognize tbe rule that agency, in tbe case of tbe wife, may be presumed from tbe actions and conduct of tbe parties. Lilly v. Yeary (Tex. Civ. App.) 152 S. W. 823; Holmes v. Tyner (Tex. Civ. App.) 179 S. W. 889. But this presumption cannot arise, unless there are facts upon which to base it. In this case it is admitted that tbe land which was leased was) tbe separate property of tbe busband, and that tbe sale of tbe crops thereon took place before they bad been severed from tbe soil. A wife is not authorized to dispose of or pledge tbe separate property of ber busband, unless sbe acts as bis agent, duly authorized. Souther v. Hunt (Tex. Civ. App.) 141 S. W. 362.

For tbe reasons stated, we think there was error in the Judgment of tbe trial court, and here order said judgment reversed and rendered in favor of E. C. Cray, administrator, and against tbe defendant bank, for tbe sum of $782.09, with interest thereon from September 26,1923, at 6 per cent, per annum, and that, as to tbe judgment in defendant bank’s favor as to tbe claims of tbe plaintiff and plaintiff’s judgment for tbe c$i-mond ring, they be and tbe same are affirmed.

On Second Motion for Rehearing.

Appellees Black and tbe bank have filed their second motion for rehearing, and seem to have misinterpreted and misunderstood our original opinion and our opinion on rehearing.

First: We are of tbe opinion that, by reason of tbe conversion of the property under tbe circumstances set out in tbe original opinion, tbe relation of depositor and banker did not exist between Farr and tbe bank; there had been no meeting of their minds to form such contractual relationship. This being true, tbe bank’s debt against Farr and its debt owing to Farr stood on the same footing as that of an ordinary creditor. While tbe conversion took place during the lifetime of Farr, it left tbe bank in debt to Farr for the converted property. This debt became a debt due and owing to the estate of Farr on bis death.' There having been no lien in favor of tbe bank created by tbe relationship of banker and depositor, tbe bank’s debt and tbe debt owing Farr’s estate by tbe bank stood on tbe footing of any other nonlien debt.

In our discussion of tbe facts in the original opinion, it will be seen that tbe bank, when it appropriated tbe proceeds of the sale of tbe crops and lease of tbe land, bad no character of lien upon tbe funds so appropriated. This being true, regardless of tbe question of solvency or insolvency of tbe estate, and waiving tbe question as to whether or not tbe appellees’ pleadings were- sufficient to entitle them to tbe right of set-off, such right, in any event, could not arise as against the debts of tbe first and second class. In other words, tbe statute (article 3458, Vernon’s Sayles’ Ann. Civ. St.) requires tbe county judge to classify all claims against an estate, and give priority to same as follows: First, funeral expenses and tbe expenses of last sickness; second, expenses of administration, etc.; third, lien debts; fourth, all claims legally exhibited within one year after tbe original grant of letters; fifth, all claims legally exhibited after tbe lapse of one year.

It appears from tbe face of tbe record that there are debts due and owing by tbe estate in each of these classes, and it appears from the evidence that tbe estate is practically insolvent. Tbe secured or third-class claims resting upon tbe land of the estate take that asset out from under tbe right of tbe administrator to appropriate it to tbe payment of tbe appellees’ claim for a set-off, and takes it out from under such right of appellees, for, as between tbe first and second class claims and unsecured claims against tbe estate of a decedent, tbe claims under the first and second classes must be paid out of tbe unincumbered assets of the estate, even though tbe estate is insolvent. Rodgers v. Sturgis National Bank (Tex. Civ. App.) 152 S. W. 1176. This being true, tbe bank cannot claim the right to set-off certainly as against tbe first and second class claims. Williams v. Robinson, 56 Tex. 350.

It will appear from what we have said that appellees’ right of set-off did not and could not exist until those claims given priority by statute be first paid, and it is incumbent upon tbe bank to pay into tbe registry of tbe court tbe value of tbe property as indicated in the original opinion.

We therefore withdraw our opinion on tbe first motion for rehearing, and substitute this opinion upon both tbe first and second motions for rehearing made by appellees, and here overrule both motions. 
      É=sFor other eases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes
     
      @=>For other oases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes