Case Name: TERRY et al. v. WITHERSPOON et al.
Court: Texas Courts of Civil Appeals
Jurisdiction: Texas
Decision Date: 1923-10-10
Citations: 255 S.W. 471
Docket Number: No. 2090
Parties: TERRY et al. v. WITHERSPOON et al.
Judges: 
Reporter: South Western Reporter
Volume: 255
Pages: 471–478

Head Matter:
TERRY et al. v. WITHERSPOON et al.
(No. 2090.)
(Court of Civil Appeals of Texas. Amarillo.
Oct. 10, 1923.
Rehearing Denied Nov. 14, 1923.
Second Motion for Rehearing Denied Dec. 5, 1923.)
1. Trover and conversion <&wkey;>l — Ownership of property at time, of conversion material on question of consent.
In a suit for conversion, the ownership of the property at the time of the conversion is material on the question of consent to possession by the then owner.
2. Chattel mortgages &wkey;>278 — Allegations necessary to cause of action must be sustained by proof.
Where plaintiffs, in a foreclosure suit, in. order to recover certain expenditures, were required to allege that such expenditures were necessary and reasonable, the burden was on them to sustain the allegation by competent proof.
On Motion for Rehearing.
3. Chattel mortgages <&wkey;l 02 — Mortgagees in possession held not authorized under contract to conduct retail business.
Where mortgagees of a garage property had possession for the purpose of selling the property for the debt, neither a bill of sale nor a contract under which the possession was transferred vested the mortgagees with power to run the garage ns a retail business.
4. Evidence <&wkey;47l(3l) — Conclusions as to ex-, tent of authority while in possession of mortgaged property held inadmissible.
Where, in a suit to foreclose liens by mortgagees in possession, the extent of the authority of such mortgagees wfes in issue, evidence by plaintiffs as to what they concluded or uhder-stood from a conversation with defendant as to their authority was not admissible.
5. Chattel mortgages <&wkey; 106 — Evidence insufficient to show that mortgagees in possession had authority to carry on retail business.
Where plaintiffs, who were defendant’s creditors, under agreement, entered into possession of defendant’s garage in order to sell the property to satisfy the debt, evidence held not to show that plaintiffs had authority to carry on the business as a retail one, their authority. being limited to a sale in bulk.
6. Chattel mortgages <&wkey;249 — Mortgagee must choose, between sale under power and foreclosure by suit.
A mortgagee cannot resort to. a sale under power in the mortgage and at the same time to a suit foreclosing the mortgage; the remedies being inconsistent.
Boyce, J., dissenting in part.
^craFor other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes
Appeal from District Court, Deaf Smith County; Reese Tatum, Judge.
Action by Yern Witherspoon and others against W. H. Terry and others, with cross-action by defendants. Judgment for- plaintiffs, and defendants appeal.
Reversed and remanded.
Jno. P. Slaton and Carl Gilliland, both of Hereford, and H. G. 'Hendricks, of Amarillo, for appellants.
E. T. Roloson, W. H. Russell, and Wm. M. Knight, all of Hereford, for appellees.
writ of error granted January 9, 1924.

Opinion:
HALL, C. J.
This is the second appeal in this case. The first judgment was reversed because the court erred in directing a verdict. See 239 S. W. 300. The appel-lees since then have amended their petition. As amended the petition shows that Yern Witherspoon, Geo Beams, G. E. Webb, and E. W. Kinney are seeking to recover of W. H. Terry, J. G. Terry, and R. A. Terry upon a promissory note, dated May 1, 1920, in the sum of $6,695, due six months' after date, with interest at 10 per cent., and containing the usual stipulation for attorney's fees.
It is charged that for the purpose of securing said note the defendants, J. G. and R. A. Terry, on May 1, 1920, executed and delivered to Witherspoon a- chattel mortgage on personal property situated in and used by the Hereford Garage, and that on May 1, 1920, W. H. Terry executed a deed of trust to secure said note, conveying the west 400 acres of a certain section of land in Gaines county, Tex. It is further charged that on or about October 16, 1920, the defendants informed plaintiffs that they would not be able to pay the note when due, on November 1, 1920, and that the parties entered into a verbal agreement whereby W. H. Terry, acting either for himself or as agents of the defendants J. G. Terry and R. A. Terry, agreed that plaintiffs were to go into joint possession of the garage with the defendants J. G. Terry and R. A." Terry, and that plaintiffs would use their efforts in trying to find a purchaser for the business, and were to keep the garage open and as a going concern, and apply the proceeds obtained from the sale of the business or from conducting it to the payment of said note, and that plaintiffs should be paid a reasonable compensation for their services in conducting said business; that, after entering into said verbal agreement, plaintiffs immediately went into joint possession of the property with defendants R. A. and J. G. Terry, and continued to conduct the business in connection with them until about November 1, 1920, when the defendants R. A. and J. G. Terry voluntarily abandoned the business and left said plaintiffs in sole possession and control thei'eof; that plaintiffs had been active and diligent in trying to find a purchaser for the business and in disposing of the property under said agreement, that at the time said parol agreement was made the defendants R. *A. and J. G. Terry were conducting a garage and automobile repair shop, dealing in and selling automobile tires, repairs, and accessories; that under said parol agreement two of tbe plaintiffs were employed and rendered services for a part of tbe time, wbieb services were reasonably worth $150 per month for each man so employed; that on October 20, 1920, in furtherance of said verbal agreement, the said defendants J. G. and R. A. Terry executed and delivered a bill of sale in form, but which was in fact a chattel mortgage, to plaintiffs, by the terms of which said defendants J. G. and R. A. Terry, conveyed to plaintiffs the said stock of merchandise, consisting of parts, repairs, and accessories then in the garage, and at the same time plaintiffs entered into a written contract with the said J.' G. and R. A. Terry, which provided that said bill of sale was not received in discharge of said indebtedness due plaintiffs, and would not in any way affect other securities held by plaintiffs for the indebtedness of the defendants, but that plaintiffs would take charge of the property named in the bill of sale, and use their efforts in selling such property and turning same into cash and other property, and the proceeds to be used in paying the necessary expenses in looking after and carrying on the business, and that any excess should be applied to the note held by plaintiffs. It was further charged that the purpose and intent of the parties was that said bill of sale and contract should create a lien upon the property and operate as a chattel mortgage thereon, and for the purpose of placing plaintiffs in possession of the property to further secure the payment of said note.
Plaintiffs offer in said pleading to account to defendants for all money received and expended by them in running and managing the business while they had charge of it, alleging that the receipts aggregated $24,426.-33 and that the expenditures aggregated $24,230.77. The prayer is for judgment for the amount of the note, principal, interest, and attorney's fees, and a foreclosure of the liens upon the real estate" and personal property described therein. Since the judgment was reversed the defendants, W. H., R. A. and J. G. Terry, have filed their first , amended original answer, in which they admit the execution and delivery of the note sued upon, as well as the chattel mortgage and deed of trust. The execution of the bill of sale and contract, dated October 20, 1920, is also admitted, but they deny that said instruments were executed for the purposes charged in the petition, and allege that the defendants J. G. and R. A. Terry were induced to execute said bill of sale and enter into said contract by false and fraudulent representations made by plaintiffs to them, to the effect that their father, W. H. Terry, who owned the garage, tools, goods, etc., had authorized the said J. G. Terry and R. A. Terry to execute said bill of sale and contract and to deliver the possession of the property and business to plaintiffs; that after the said bill of sale and contract were executed plaintiffs, as a result of the conspiracy between themselves and H. B. Webb, to defraud defendants, took possession of all of said property,' and have converted the same to their own use. It is further alleged that the defendant W. H. Terry did not authorize his sons, defendants, R. A. and J. G. Terry, to execute said bill of sale and contract, or either of them, but that, Upon the fraudulent representation of the plaintiffs, the defendants J. G. Terry and R. A. Terry believed that their father, W. H. Terry, had directed them to execute said instruments and deliver possession of the property to plaintiffs; that, if said representations had not been made, and if they had not believed them to be true, they would not have executed said bill of sale and contract,. and would'not have delivered possession 'of the property to Witherspoon and his co-plaintiffs. They allege that said fraudulent representations were willfully and maliciously made; that plaintiffs took charge of and converted the property before maturity of the note; that H. B. Webb had fraudulently conspired' with plaintiffs in order to get possession of the property, and assisted and acted with them in taking possession of the same; that upon the date of the conversion thereof the property was of the value of $13,000; that W. H, Terry was the owner of the property when it was converted; that, if he was not. the owner thereof, then that J. G. and R. A. Terry had assigned their cause of action herein, by reason of the conversion to him. They asked damages in reeonvention for the value of the property and for $10,000 exemplary damages.
H. B. Webb answered the defendants' cross-action by a general demurrer and general denial. By a supplemental petition-plaintiffs demur generally to the answer,, and deny the facts set up in the cross-action.The case was tried to a jury, and in reply to special issue the jury found as follows: (1) That Terry Bros, owned the furniture, fixtures, stock -of merchandise, consisting of accessories, repair parts, tools, machinery, acetylene generator, and Eord burning-in stand, on the 20th day of October, 1920, known as the Hereford Garage; (2) that W. H. Terry did, on or before the 18th day of October, 1920, agree that Witherspoon and Kinney, or either of them, jointly with Terry Bros., might take possession of the furniture, fixtures, merchandise, generator, and burning-in stand located in the Hereford. Garage and conduct or assist in the management of the business; (3) that W. H. Terry,, on or before October 18, 1920, did agree that the possession of said personal property should be given to the plaintiffs for the pur pose of securing them and applying the proceeds derived from the business to the payment of the plaintiffs' note and the necessary expenses in conducting the business; (4) that W. H. Terry, in the conversation over the telephone with E. W. Kinney, authorized Kinney to have J. G. and R. A. Terry execute written instruments in substance such as the contract and bill of sale dated October 20, 1920, introduced in evidence. Based upon the verdict the court rendered judgment against W. H. Terry, and .T. O. Terry and R. A. Terry for the full amount of the note, foreclosing the chattel mortgage and the deed of trust upon the property described therein. It is further decreed that the defendants take nothing against the plaintiffs or H. B. Webb by reason of their cross-action.
It is contended that the court erred in submitting the first issue, inquiring as to the ownership of the property upon the date of the alleged conversion. In so far as the right of W. H. Terry to recover in his" own name is involved, the issue is immaterial, because by assignment he is the present owner of the cause of action. But the ownership of the property at the time of the conversion is material as bearing upon the issue of conversion, which depends upon the consent of the then owner to possession by plaintiffs. If the plaintiffs acted with consent of the then owner there was no conversion. H. E. & W. T. Ry. Co. v. Garrison (Tex. Civ. App.) 37 S. W. 971. The uncontroverted evidence does not show that W. H. Terry owned the property at that time. Upon this issue the testimony is sharply conflicting, and is sufficient to sustain the jury's findings.
In the light of this finding the second, third, and fourth issues become immaterial, because if his sons owned the property at the time of its conversion the consent or acquiescence of W. H. Terry is foreign to the controversy.
In their plea in reconvention the plaintiffs set up that $150 each per month was reasonable compensation for their services after they entered into and took charge of the business, and that the money expended by them was a proper, necessary, and reasonable expenditure in conducting the business. It was necessary for them to make this allegation. The contention of appellant Is that there is no evidence whatever to support it and therefore the court erred in rendering a judgment allowing them a recovery for such sums. This contention must be sustained. If the plaintiffs were required to allege that these expenditures were necessary and reasonable they must also sustain the allegation by competent proof. As said by Boyce, Justice, in Nunn v. Brillhart (Tex. Civ. App.) 230 S. W. 862:
"Our courts have held in a variety of cases that, when expenditures are made necessary by the wrong of another, the party making expenditures, before he can recover the amount paid, must show that there was a necessity for incurring the expense and that the amounts paid were reasonable. And we see no reason why the principles announced in these cases should not apply in this instance."
While the rule .is ordinarily applied in suits for damages it is equally applicable where a party seeks reimbursement for expenditures made under a contract or as agent, trustee, guardian, and other such relations. Seago v. White, 45 Tex. Civ. App. 539, 100 S. W. 1015; Smallwood v. First State Bank (Tex. Civ. App.) 211 S. W. 474; Wheeler v. Tyler S. E. Ry., 91 Tex. 356, 43 S. W. 876; T. & N. O. Ry. Co. v. Spencer (Tex. Civ. App.) 244 S. W. 1093; 2 C. J. "Agency," § 224, 225, 458; 35 Cyc. p. 1577; 38 Cyc. pp. 78-80; 39 Cyc. pp. 329, 331.
Because the court entered a judgment upon the verdict, unsustained by any proof of the reasonableness and necessity of the charges and expenditures, the judgment is reversed, and the cause remanded.