Case Name: NORTH TEXAS OIL & REFINING CO., Limited, et al. v. STANDARD TANK CAR CO.
Court: Texas Courts of Civil Appeals
Jurisdiction: Texas
Decision Date: 1923-01-31
Citations: 249 S.W. 253
Docket Number: No. 6873
Parties: NORTH TEXAS OIL & REFINING CO., Limited, et al. v. STANDARD TANK CAR CO.
Judges: 
Reporter: South Western Reporter
Volume: 249
Pages: 253–258

Head Matter:
NORTH TEXAS OIL & REFINING CO., Limited, et al. v. STANDARD TANK CAR CO.
(No. 6873.)
(Court of Civil Appeals of Texas. San Antonio.
Jan. 31, 1923.
On Motion for Rehearing March 21, 1923.)
1. Bailment <&wkey;30—Petition on contract for lease of personal property not subject to general demurrer.
A petition in an action on a contract of lease of tank line cars, which alleged the terms of such lease, is not subject to general demurrer for failure to allege the terms of another contract referred to, and made a part of the lease sued upon.
2. Principal and agent <&wkey;l24(2)—Authority of agent to bind' principal question for jury.
In an action on a contract of lease of tank line oil cars, whether plaintiff’s agent had authority to bind plaintiff to an agreement that shareholders of defendant, a common-law trust, and as such liable as partners, should be exempt from individual liability on the contract, and that the contract should embrace stipulations, to that effect held for the jury.
3. Reformation of instruments <&wkey;I9(2)— Equity will supply stipulation omitted from contract by mutual mistake.
If through mutual mistake of parties to a contract for lease of personal property the intention of the lessor’s authorized agent and of the officers of lessee, a common-law trust, to stipulate that the members of such trust should not be individually liable on the contract was not expressed in the contract, such intention should be given effect in a court of equity upon appropriate pleadings and proof, even though lessor’s agent failed to apprise lessor of the limitation.
4. Principal and agent &wkey;>124(2)—Whether agent made settlement, and whether he had authority to make settlement questions-for jury.
In an action on a contract for the lease of tank line oil cars, evidence held to make it a question for the jury whether the lessor’s agent had express, implied, or apparent authority to make a binding settlement of the> controversy, and whether he made an agreement for such settlement.
5..Appeal and error <&wkey;757(2)— Statement in appellants’ brief should show substance of pleas of abatement, sustaining of which is assigned as error.
Objection on appeal that pleas in abatement interposed by defendants impleaded at the instance of appellants were improperly sustained are not sufficiently presented where the pleas in abatement in question are not set out in the statement in appellants’ brief under the appropriate proposition in substance or otherwise.
6. Pleading <&wkey;449—Cross-action impleading other defendants must have ail requisites of original petition.
A cross-action must show all the facts and have all the requisites of an original petition necessary to recovery as in an original action, and must be equally proof against demurrer, and where defendants, members of a common-law trust, by cross-action impleaded other members on general allegations that, if defendants were liable as partners, the parties impleaded were also liable, the allegations were insufficient on demurrer.
On Motion for Rehearing.
7. Estoppel <&wkey;$2(2)—Where lessor fully complies with contract until abrogation at Instance of lessee latter is estopped to deny validity.
Where a contract for the lease of tank line oil cars provided that such lease was subject to the right of the owners from whom the lessor had leased to take possession of said cars as and when by said lease provided, but the lessor had fully complied with the obligations of his contract until the lessee abrogated the agreement, the lessee, having received all the benefits accruing to it under such contract, is estopped to deny its validity, and in an action by the lessor cannot urge by special exception to the petition the failure of the petition to set out the provisions of the lease referred to in the contract between plaintiff and defendant.
8. Evidence <&wkey;457—Parol evidence admissible to explain ambiguous terms “Ltd.,” “company organized under declaration of trust.”
The abbreviation “Ltd.” and the phrase “a company organized under 'a declaration of trust” as used in the contract to describe the lessee of personal property have no particular meaning, and unexplained have no other direct effect than to put the parties upon inquiry to ascertain what particular meaning was intended, but as used in the contract in question they interpolated obvious ambiguities, and parol testimony was admissible to explain and interpret such terms.
9. Reformation' of instruments <&wkey;44—Parol evidence rule not applicable to prevent reformation of ambiguous contract.
The rule against admitting parol testimony to vary or contradict terms of a written agreement and the rule that antecedent parol agreements are presumed to have been merged into a subsequent written agreement apply only where the terms of the written instrument are plain and unambiguous and do not prohibit reformation of a contract to express the true intent of the parties, where by mutual mistake, accident or fraud the contract has failed to exr press such intention.
10. Reformation of instruments tg=>I9(2)— Mutual mistake will warrant reformation in equity.
In an action on a contract for the lease of personal property, if the parties agreed and intended at the time of its execution to insert therein a stipulation exempting members of a common-law trust, a party to> the agreement, from individual liability which it was believed was an incident to membership in such ..trust, but. the expressions used in the contract did not in fact operate to exempt such members, the failure to express such stipulation was a mutual mistake, and equity will reform the instrument to make it speak the true intention of the parties.
11. Reformation of instruments. <ss=» 19(1)— Mutual mistake creating or releasing liability or lien ground for reformation.
Where a mutual mistake operates to relieve or create personal liability of one or more of the parties or to release or create a lien, equity will reform the contract so that it will effectuate the real intention.
12. Corporations <@=»383, 399(1) — Corporation can act only through its agents, and agent’s actual authority includes powers necessary to perform his agency.
A corporation can act only through its agents, and every agency carries with it or includes as an incident all the powers which are necessary and proper or usual as means to effectuate the purpose for which it is created.
13. Corporations c@=»428(I) — Knowledge of agent as to purpose of ambiguous language in contract imputed to principal.
It is an agent’s duty to fully advise his principal of all matters within his knowledge affecting a contract, negotiated by him, and whether or not he communicated the true facts to his principal he is presumed to have done so, and the corporation is bound by his knowledge as to the purpose or meaning of ambiguous language used in the contract where it executed the same in the form as presented by the agent.
14. Corporations <@=w433(2) — Apparent authority of agent and ratification of agent’s acts by corporation held for jury.
Whether an agent for the purposes of making final settlement of disputed matters was within the apparent scope of his authority in making settlement agreement and whether his aets were ratified by his corporation under the evidence were questions for the jury.
Appeal from Seventy-Third Judicial District Court, Bexar County; Robt. W. B'. Terrell, Judge.
Action by the Standard Tank Car Company against the North Texas Oil & Refining Company, Limited, and others. Judgment for plaintiff and defendants appeal.
Reversed and remanded.
Hicks, Hicks, Dickson & Bobbitt, Wurz-bách & Mueller, Hertzberg, Kercheville & Thomson,, and Mauermann & Hair, all of San Antonio, for appellants.
Clamp, Searcy & Groesbeeck, of San Antonio, for appellee.
Writ or error dismissed ior want o£ jurisdiction May 2, 1923.

Opinion:
SMITH, J.
The Standard Tank Car Company, a corporation domiciled at Sharon, in the state of Pennsylvania, controls a line of tank cars which it leases to others, and the North Texas Oil & Refining Company, an unincorporated association of persons operating under a trust agreement, ánd having offices at Greenville, and San Antonio, Tex., was engaged in refining and transporting petroleum products. On February 9, 1920, the two companies entered into a written con- . tract by which the ear company subleased to the oil company 50 tank cars for a term ending March 3J, 1922, at the rate of $85 a month per car. In October, 1920, the oil .company telegraphed the car company.that, on account of temporary suspension of its operations, it requested the latter to take the cars back, and asked for a statement of the account. The cars were taken back, and statement'was rendered, but the parties finally disagreed as to the amount involved and the car company brought this suit against the individual shareholders in the oil concern, whom it alleged to be partners doing business under the trade-name of the oil and refining company. Upon a trial the court directed a verdict in favor of the car company against P. M. Newton, L. M. Morehead, M. Riley, Richard Blumel, Ed BÍaag, E. X. White, W. M. Morgan, and R. G. Woodword, as partners, and the oil and refining company, jointly and severally, for $13,150.02. Upon the verdict returned as directed, the court rendered judgment as indicated in the verdict, and further in favor of- defendants White, Morgan, Woodward, Haag, and Blumel, over against defendants Morehead and Newton for the same amount. All the defendants haVe appealed. The primary question is whether or not there was any material evidence adduced upon any material issue in controversy, although in disposing of the appeal other questions must be considered and decided. The facts need not be stated except as it is found to be necessary to the particular matters discussed.
It appears that the Standard Tank Gar Company 'was itself a lessee of the cars, and the contract upon which the suit is based contained a stipulation that the rights obtained thereunder by the sublessee were subject to "the terms, provisions and" covenants of the lease of said cars from the Logan Trust Company of Philadelphia, trustee, or the Union Trust Company of Pittsburg, trustee, as the case may be, to the party of the first part (the tank car company) and to the right of said trustee to demand, receive, and take possession of said cars as and when by said lease provided." The terms of the inner contract referred to in the contract sued on were not set out in the latter, and in basing its suit upon the present contract the car . company did not in its petition set out those terms, or any of them, and made no reference to them. In this state of the pleadings appellants, as defendants below, urged a general demurrer, as well as a special exception, to plaintiff's petition, upon the ground that neither the inner contract nor any of its terms were set out. Complaint is made here of the action of the court below in overruling the general and special exceptions. • Since the petition undoubtedly set out a cause of action regardless of the omission complained of, there was no error in overruling the general demurrer. But we think, upon the demand made through the special exception, the plaintiffs were required to produce and set up the concealed contract, which, because of the quoted provision in the contract sued on, was in effect made a part of the latter, and the two together constituted the whole agreement. The rights, liabilities, and obligations of the parties were made subject to the concealed contract, and in a suit to enforce the terms of the final agreement the defendants wfere entitled to know the full terms, since the provisions of both contracts, thus made interdependent, must be construed together in order to ascertain the full obligations and remedies of both parties. It may be that the production of the concealed contract would have disclosed that by its terms the subsequent contract could have been terminated, and the cars withdrawn from the lessee's use, at any time the officials of the Logan or Union Trust Companies, or either of them, elected, notwithstanding the definite term fixed in the final contract;, or it may be that by the express provisions of the concealed agreement the Standard Tank Car Company's right to use or let the cars terminated at a definite date during the tenure of the lease fixed in the final contract, and at a time when the lessor would not be entitled to collect the very rentals here sued for. Instances might be multiplied of possible provisions in the concealed contract by which the rights of appellants under the terms óf the present contract would be impaired or destroyed, and, since appellee demands strict performance by appellants, the latter are within their rights in calling for the whole of the instrument by which they were bound. The second assignment of error, raising this question, must be sustained, but the first, complaining of the overruling of appellants' general demurrer, will be. overruled.
The negotiations which culminated in the execution of the contract sued upon were initiated by correspondence between the two parties, in pursuance of- which the tank car company sent its representative, one Al-brecht, to San Antonio to continue the negotiations with the officials of the oil company. Albrecht worked out the. details of the transaction with the oil company officials, agreed on those details, and prepared the final contract embracing them. The contract thus prepared by Albrecht was then executed by both principals, who proceeded with the performance of their respective rights and remedies thereunder. The testimony raises the issue as to whether or not Albrecht, at the time he prepared the contract, and of its execution by the officials of the oil company, was advised of the facts, ana acquiesced therein, that the latter was not a corporation, but was a so-called common-law trust, whose shareholders were under the terms of the trust agreement exempt from liability for the acts and obligations of the association, and agreed to such limitations of liability, and further agreed that the contract in question did and would embrace stipulations to such effect. We repeat, there was ample testimony upon the trial raising these issues of fact. But appellee seeks to eliminate these issues from the suit by the contention that Albrecht was without authority as its agent to bind it in the matters involved in those issues, either by affirmative acts, representations, or conduct, or by acquiring notice of the nonliability of the shareholders of the oil company.
We think, however, that the question of Albrecht's agency or apparent authority was one purely of fact, to be determined by the jury from all the circumstances and facts in evidence, and should have been submitted to the jury along with the other issues' we have mentioned. He was delegated by his principal to work out in its behalf details of the contract with the oil company, and did so. He incorporated into the contract all these details, and all the provisions agreed upon between him and the other party thereto, except the provision excluding the personal liability of the oil company's stockholders which they claim was" intended to be placed therein. According to testimony, he procured the oil company to execute it, and delivered it to his principal, who adopted it, acquiesced in its expressed conditions, performed thereunder, accepted the benefits accruing to it therefrom, and now seeks to enforce specific performance thereof. If these facts are found by the jury to be true, then they force the conclusion that Albrecht was acting within the apparent scope of his authority, and his principal will be bound thereby. If in his negotiations with them, and if acting with apparent authority, he agreed with appellants that his company would look to the assets of the oil company, and not to the individual shareholders, and that the contract should so provide, then the principal is estopped to deny his authority to so bind them, and notice to him of the re strictions against personal liability was notice thereof to his principal. So, also, if it was the intention of Albrecht, the authorized agent, and of the oil company's officials, to contract against the personal liability, such intention should be given effect in a court of equity, upon appropriate pleadings and proof, and, if, through the mutual mistake of the parties, acting through their authorized agent and officials respectively, the limitation is omitted from he contract as executed, or is imperfectly expressed therein (Farley v. Deslonde, 69 Tex. 458, 6 S. W. 786), then a court of equity will supply the omission upon appropriate pleadings and proof, even though the agent fails in his duty to apprise his principal of this intention, for notice acquired by ap agent acting within his express, implied, or apparent authority is, of course, notice to his principal. Mechem on Agency, § 720 et seq.; Story on Agency, § 740; 21 R. C. L. p. 854; Irvine v. Grady, 85 Tex. 120, 19 S. W. 1028; Evans v. Supply Co. (Tex. Civ. App.) 182 S. W. 694; Bergman v. Brown (Tex. Civ. App.) 172 S. W. 554; Rodgers v. Wynn (Tex. Civ. App.) 156 S. W. 340.
It appears that, when the oil company requested the car company to taire its cars back, and terminate the contract, the latter sent an agent to San Antonio to effect a settlement with the former. This agent, in response to this purpose, called on the officials of the oil company, and reached an agreement with them, but a controversy subsequently arose as'to the effect of this settlement, and the question of its purpose and effect is presented here. The car company challenges the authority of its agent to conclude the character of settlement the oil company contends was made. The question raised by the testimony is clearly one of fact, and should have been submitted to the jury, both as to the express, implied, or apparent authority of the agent, and as to the effect and finality of the settlement. If there was a good faith controversy as to the amount of the debt, and the agent, acting with apparent authority, agreed wih appellants to settle for a specific amount, then such agreement of the agent was binding upon his principal. Both issues were raised by the evidence in this case, and both were jury questions.
Some of the defendants impleaded a number of additional parties defendant, and by cross-action sought to have their liabilities adjudicated along with all the defendants. In this cross-action it was simply alleged that if the pleaders "are partners, which they specially deny," then the impleaded defendants "are also partners of these defendants, and are jointly liable therewith upon plaintiff's demand and debt, if any, and these defendants here and now pray that such persons be made additional parties defendant in order that the rights and liabilities of said interested parties may be adjudicated in this cause," and there was prayer for citation, etc. 'Complaint is made by some of the defendants that pleas in abatement filed by the defendants so impleaded were sustained. The statement in appellants' brief under the proposition based upon this action of the court is not sufficient. The pleas in abate-' ment are not set out in this statement, in substance or otherwise. We are referred to pages 72 to 75 of the transcript for the orders sustaining these pleas, but the orders appearing on these pages do not relate to pleas in abatement, but to certain general and special demurrers, which are shown to have been sustained. If these demurrers were directed at the cross-action referred to and quoted above, we think they were properly sustained.
A cross-action must have all the requisites of a plaintiff's petition, and must show all the facts essential to recovery as in an original action, and must be equally proof against demurrers. In the cross-action here the allegations are entirely too general to warrant any recovery against the parties therein impleaded. If it was meant by appellees to allege that the impleaded parties were shareholders in the trust in cóntroversy, and by reason thereof were partners, and jointly liable with all the other shareholders, and were therefore proper parties, and the full facts showing these relations of all the parties had been alleged, a different question would be presented.
We think this was essentially a jury case. There was a conflict in the testimony upon the material issues raised by the pleadings, and these issues should have been submitted to the jury, to which end the judgment must be reversed, and the cause remanded.
Reversed and remanded.
d&wkey;For other eases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes
®3»For other eases see same topic and KEY-NUMBER in all Key-Numbered Digests'and Indexes