Case Name: STEGER LUMBER CO. v. STEGER
Court: Texas Courts of Civil Appeals
Jurisdiction: Texas
Decision Date: 1926-06-03
Citations: 285 S.W. 1107
Docket Number: No. 3182
Parties: STEGER LUMBER CO. v. STEGER.
Judges: 
Reporter: South Western Reporter
Volume: 285
Pages: 1107–1110

Head Matter:
STEGER LUMBER CO. v. STEGER.
(No. 3182.)
(Court of Civil Appeals of Texas. Texarkana.
June 3, 1926.
Rehearing Denied June 10, 1926.)
Cunningham & Lipscomb, of Bonham, for appellant.
Fred S. Rogers, of Bonham, for appellee.

Opinion:
LETS', J.
(after stating the facts as above). The right of the appellant to recover under the pleadings and the evidence in the case is the point presented on the appeal. The trial court concluded that, in view of the proofs in the ease, the appellant was not entitled to a judgment "on said note, setting up no other right in the petition." According to the petition the appellant declared on a note made by the appellee direct to it promising to pay to it the sum of money stated. Clearly a prima facie case was alleged entitling appellant to a judgment upon proof of the allegations. To this action the appellee specially answered as above set out in full. Such plea purports to be in confession of the material allegations in the appellant's petition and avoidance of any liability thereon. As seen, the answer admits the execution and delivery of the note to the corporation in the sum stated. The corporate character of the contract was admitted. As alleged, the corporation ceased to do active business, with the view of its ultimate voluntary dissolution; and the note was executed and delivered to the corporation for the bene•fit of the corporation, to enable it to pay its creditors in order to complete a "final dissolution." The maker of the note intended to impose liability upon himself in favor of the corporation for having withdrawn and lessened the assets of the corporation to the extent and limit of the value stated. The withdrawal of the assets and the execution of the note to the corporation as a means for it to pay the debts were specially authorized by "all the stockholders and directors of the said corporation." The corporation was to be dissolved "as soon as practicable" after its affairs were finally wound up. All those allegations were admissions of facts consistent with the cause of action pleaded by appellant. As matter of avoidance it was then alleged that the note was executed upon the following condition, viz.:
"That it was never intended that either one of said notes should be actually paid, but it was agreed and understood as aforesaid that they should take the place of thé assets of said corporation and should be accounted for and paid only so far as might be necessary for proper adjustment and partition of the assets of said corporation among its stockholders on final dissolution."
And as further alleged, the particular condition upon which the note was given does not now exist, since the corporation "is and was solvent, now owes no debts," and all the stockholders have been fully satisfied in funds and assets. The part of the allegation which states that the note was never intended to "be actually paid" has the meaning, and which should be given it, that the note was never intended to b.e paid to the full amount or to a proportionate amount except as necessary and required to pay the debts of the corporation; otherwise the allegation would be contradictory of the alleged facts and could not prevail. All that can be derived from the alleged defense is that the transferees of the assets expressly obligated themselves severally to ratably pay to the corporation, for lessening its assets, an amount to the extent and limit of the debts of the corporation, and that the notes as given to evidence the agreement were not intended to be actually paid or enforced in their full amount or in any amount except for debts of the corporation; and that there are no debts or stockholders' claims owing by the corporation. That was the nature and extent ' of the undertaking of the makers of the note. The effect of the pleaded defense'was not to destroy the effect of the allegations or to avoid the cause of action pleaded by the appellant, but only avoidance of the amount recoverable. The corporate character of the contract, the execution and delivery of the note to the corporation for its benefit, and the existence of the corporation, were admitted. An answer admitting the execution of the note to the corporation and the promise to pay it direct to the corporation admits the authority of the corporation to sue on it. Although the corporation had suspended business, it was not contempláted-that its existence should be dissolved until its affairs were finally wound up. And the undertaking was designed to account to the corporation as a provision for the payment of its debts under such circumstances. The corporation as such was the party in interest in the undertaking made in its name and direct to it. In such pleading the real questions which the court was called upon to determine were whether the appellant was entitled to recover the full amount or a proportionate amount, or any amount. The decision depended entirely upon evidence of whether or not the corporation owed any debts, and the amount of such debts. The defense, in avoidance, was that the corporation "now owes no debts." Therefore the burden of proof was upon the appellee to establish the defense; and he failing to do so, the appellant was entitled to recover. The appellant was not called upon to make replication to the alleged defense beyond a general denial, which is presumed to be made under the practice in this state. And under the general denial to the appellee's answer the appellant was authorized to show that the corporation did owe debts.. It was a matter of evidence under the issues made by the pleadings. The court found that the note was given "to take care of the debts of the corporation," and the evidence conclusively showed a judgment debt was due and unpaid by the corporation; that it was necessary for the corporation to pay this debt in order to wind up its business affairs to finally cease active business. Therefore the pleadings of the appellee, in view of the evidence, justified a judgment against him on the note in favor of appellant for an amount equal to only 32 per cent, of the amount, of the proven judgment debt owing by the corporation to Mr. Doss. The court should have rendered judgment for appellant for such amount with 10 per cent, attorney's fees.
Accordingly, the judgment is reversed, and judgment is, here rendered in favor of appellant against appellee in an amount equal to 32 per cent, of the judgment claim of Charlie Doss owing by the appellant, with interest and 10 per cent, of such amount as attorney's fees. The costs to be paid by appellee.