Case Name: Mrs. May Pearl FLINT, Joined Pro Forma by Her Husband, C. W. Flint, Jr., Petitioner, v. A. B. CULBERTSON, Receiver for Fraternal Bank & Trust Co., Respondent
Court: Supreme Court of Texas
Jurisdiction: Texas
Decision Date: 1958-06-25
Citations: 319 S.W.2d 690
Docket Number: No. A-6749
Parties: Mrs. May Pearl FLINT, Joined Pro Forma by Her Husband, C. W. Flint, Jr., Petitioner, v. A. B. CULBERTSON, Receiver for Fraternal Bank & Trust Co., Respondent.
Judges: SMITH and NORVELL, JJ., dissenting.
Reporter: South Western Reporter Second Series
Volume: 319
Pages: 690–703

Head Matter:
Mrs. May Pearl FLINT, Joined Pro Forma by Her Husband, C. W. Flint, Jr., Petitioner, v. A. B. CULBERTSON, Receiver for Fraternal Bank & Trust Co., Respondent.
No. A-6749.
Supreme Court of Texas.
June 25, 1958.
Rehearing Denied Dec. 10, 1958.
Tuchin & Mehl, and Milton J. Mehl, Stanley A. Freed, Fort Worth, for petitioner.
Alexander & Martin, Morgan & Shropshire, Cline & Cline, Fort Worth, J. L. Turner, Jr., Dallas, Sol Gordon, Fort Worth, Slagle & Hughes, Sherman, Richard Owens, L. Clifford Davis, Fort Worth, for respondent stockholders.
Ernest May, Fort Worth, for respondent A. B. Culbertson, receiver.

Opinion:
CULVER, Justice.
The Fraternal Bank & Trust Company was organized in 1911 as an unincorporated joint stock association and continued to carry on a banking business until 1957, when in a depositors' class suit it was adjudged insolvent. The receiver thereafter, in accord with Article 6137, Vernon's Annotated Civil Statutes, obtained service on some or all of the members or shareholders individually. The trial court declared these members so served to be liable as partners to the creditors of the insolvent bank. The petitioner, May Pearl Flint, appealed urging coverture as a defense, her disabilities in this respect not having been removed. The Court of Civil Appeals held that she was bound, nevertheless, and affirmed. 309 S.W.2d 269. We are of the opinion that the plea of coverture is good and operates to relieve the petitioner of personal liability.
The petitioner owns 102 shares inherited from her husband who died on July 4, 1950. Four months later she married her present husband. The certificates of ownership were not actually delivered to her and placed in her name until after her remarriage. She did receive one hundred or so dollars as dividends over the years, but none while she was a widow. After her remarriage she was elected and served as a director. The respondent, as we understand, does not rely on any theory of estoppel for holding petitioner liable nor is the trial court's judgment so predicated. Respondent says that, "the simple issue is whether Mrs. Flint's coverture relieves her of the liability usually incidental to membership of an unincorporated company."
In this state the authorities are uniform that a married woman cannot become a partner, at least in the ordinary partnership venture, and the marriage of a single woman will dissolve a partnership theretofore existing with another, even though the parties attempt to carry on the partnership business. Wallace v. Finberg, 46 Tex. 35; Brown & Company v. Chancellor, 61 Tex. 437; Purdom v. Boyd, 82 Tex. 130, 17 S.W. 606; Dillard v. Smith, 146 Tex. 227, 205 S.W.2d 366; Jung v. Dallas Tailor & Laundry Supply Co., Tex.Civ.App., 256 S.W.2d 703 (no writ history); King v. Matney, Tex.Civ.App., 259 S.W.2d 606 (writ refused n.r.e.).
The Court of Civil Appeals held, however, and the respondent contends here, that this rule is not applicable principally because of the all-inclusive force of Article 6137, Vernon's Annotated Civil Statutes, as follows:
"In a suit against such company or association, in addition to service on the president, secretary, treasurer or general agent of such companies or association, service of citation may also be had on any and all of the stockholders or members of such companies or associations; and, in the event judgment shall be against such unincorporated company or association, it shall be equally binding upon the individual property of the stockholders or members so served, and executions may issue against the property of the individual stockholders or members, as well as against the joint property; but executions shall not issue against the individual property of the stockholders or members until execution against the joint property has been returned without satisfaction."
Respondent's position is that the phrase "any and all of the stockholders or members of such companies or associations" means exactly what it says and encompasses married women as well as all others. If this contention is sound it must also include minors who inherit or otherwise come into ownership of certificates of interest and make them and their estates personally liable. And this in spite of the general rule that, absent fraud or other elements of estoppel, a minor is not to be held liable on his contracts against the plea of minority. We agree with the pronouncement in the early case of DeLeon v. Owen, 3 Tex. 153, that the courts are not to en-graft exceptions upon a statute when the lawmaking power has not done so. But we are equally of the opinion that it is not within the scope of the court's authority to broaden a statute by implication, or interpret it as affecting matters that were clearly not within the intention of the lawmaking body. That the Legislature, when it used the term "any and all of the stockholders or members" meant those persons that would in the normal course of business dealings be liable and did not intend to create new obligations or additional classes of obligees is shown by the remainder of the Act, Article 6138, setting out that the provisions of the chapter should be construed as cumulative merely of other remedies then existing under the law. We think the statute was correctly evaluated in Mayhew & Isbell Lumber Co. v. Valley Wells Truck Growers' Ass'n, 216 S.W. 225, 229 as follows:
" The statute which permits an unincorporated association to sue or be sued in its association name merely furnishes a convenient method of conducting suits, without undertaking to change the legal status of the association or in any way affect the law in so far as it relates to contracts. ⅜ ⅜ ⅝ >>
Respondent supports his construction and application of the statute by Spears v. City of San Antonio, 110 Tex. 618, 223 S.W. 166, 169. In that case the Court held that the plea of coverture did not exclude a married woman from the operation of an act imposing personal liability upon the owner of exempt real estate for paving assessments, but the Court carefully pointed out:
" The latter (the act adopted by city charter) imposed a charge regardless of any contractual power or contractual obligation on the part of the owner whose property was enhanced by a necessary public improvement. In order to be enforceable, the charge had to be validly imposed regardless of the assent or consent of the owner. "
Under this holding, no doubt, such a charge could be validly assessed and collected from the estate of a minor or an insane person. The imposition of the liability follows ownership on the theory that the value of the property has' been enhanced by the paving improvement. On the other hand liability as a partner flows from a contractual obligation. Speer's Law of Marital Rights, 3rd Ed. § 291-292.
More to the point, we think, is the later decision of Harris v. Prince, 132 Tex. 231, 121 S.W.2d 983. In that case a married woman had signed articles of association in "Lloyds of Texas" and had taken other steps to comply with the Lloyds Plan, Article 18.01 et seq., Insurance Code, V.A. T.S. (formerly Article 5013 et seq., Vernon's Annotated Civil Statutes) as an underwriter. On insolvency of this concern, the receiver sought a personal judgment against the married woman and her husband. Judgments of the district court and Court of Civil Appeals in favor of the receiver were reversed and rendered by this Court, holding that no provision of law permits a married woman to execute contracts of insurance and bind herself and her separate estate, at least in the absence of removal of the disability of cov-erture.
The language of Article 18.17 of the Lloyds Plan in fixing personal liability is just as broad and comprehensive as that of Article 6137. It provides that suit on any insurance policy may be brought against the attorney for the underwriters and the underwriters or any of them and that a judgment against the attorney or any of the underwriters shall be equally binding upon "each and all of the underwriters as their several liabilities may appear." This Court did not consider, evidently, despite its broad terms, that this statute has the effect of holding a married woman liable. True enough Mrs. Harris was an underwriter and not a stockholder. But if the term "all underwriters" in the statute was not sufficient to include married women who purported to act as underwriters neither would the term "all members" in Article 6137 serve to embrace married women and subject them to personal liability. Respondent further argues that while Mrs. Harris became an underwriter by virtue of a contract, Mrs. Flint did not contract to become a shareholder of Fraternal Bank & Trust Company because she got her shares by legacy. We think the distinction is somewhat strained. The manner of acquisition is relatively unimportant. Mrs. Flint could have refused to accept the legacy, but by acceptance she impliedly contracted just as effectively as if she had purchased the certificates. Surely there would not be a difference in the liability of a married woman who purchases and a married woman who inherits, and particularly so under the contention that the statute placing liability on all shareholders includes all married women alike.
We do not regard the ruling in Chapman v. Pettus, Tex.Civ.App., 269 S.W. 268, 269, namely, that married women stockholders in a bank are personally liable for an assessment in the event of the bank's insolvency, as controlling in the situation before us. At that time Section 16, Article 16 of the Texas Constitution, Vernon's Ann.St, provided in substance that each shareholder should be personally liable for all debts of the banking corporation to the amount of the par value of the shares of stock so owned. The Court, observing that no constitutional or statutory provisions expressly fixed that liability upon married women, did not rest its decision alone upon the implication that the term "each shareholder" would as it says "overcome the ancient, but still vigorous, rule of strict construction in favor of married women against all enactments affecting their personal liabilities," but rather relied upon the express provisions of Article 1306, Vernon's Annotated Civil Statutes (1123, R.S.) to the effect that charters of all corporations may be subscribed by married women; that they may be, stockholders, officers and directors and that their acts, contracts and deeds as such shall be as binding and effective for all the purposes of said corporation as if they were males. The statute applying to all private corporations likewise applied to a banking corporation and it would therefore subject a married woman to liability as any other person.
In Meares v. Duncan, 123 N.C. 203, 31 S.E. 476, relied upon by respondent and cited in connection with the Chapman case, the married woman was a stockholder and an incorporator of a building and loan association, not a partnership. She was held liable for her proportionate share of the company losses as were the others similarly situated, despite her plea of coverture. This result, the Court said, was according to the principles of equity and was the equitable solution of the matter. Even so, the Court offered what it terms "a more direct solution" and one with which the plea of coverture was not concerned. The case, therefore, is of small significance as we deal here not with equitable principles, but with a rule of law.
Associations such as Fraternal Bank & Trust Company have been held to be partnerships. Thompson v. Schmitt, 115 Tex. 53, 274 S.W. 554; Victor Refining Co. v. City National Bank of Commerce, 115 Tex. 71, 274 S.W. 561; Hollister v. McCamey, 115 Tex. 49, 274 S.W. 562; Howe v. Keystone Pipe & Supply Co., 115 Tex. 158, 274 S.W. 563, 278 S.W. 177.
It is quite true that a joint stock company is distinguishable from the ordinary commercial partnership in many respects. Its management, control, term, existence and method of operation depend upon the articles of association adopted. The death of a member does not dissolve the association and ordinarily the shares owned by the members may be transferred at will, though the articles of association in Fraternal Bank & Trust Company provided that they might be transferred only upon consent of the board of directors. But all of these are matters of contractual obligation among those who associate themselves together. Of course, as respondent asserts, the ultimate holding in the cases cited immediately above is that the member is liable as a partner, but that result is based on the determination that he was a member of a partnership. In the cases holding that a married woman cannot be a member of an ordinary partnership, also the ultimate result reached is that she is relieved of personal liability.
All of the text writers treat a joint stock company as a kind of partnership and deal with it under the law of partnership. In Rowley's Modern Law of Partnership, Vol. 1, § 147, p. 144, the author quotes from a well-recognized authority saying:
"In joint stock and other large companies which are not incorporated, but are a simple, though extensive, partnership, their liabilities to third persons are generally governed by the ame rules and principles which regulate commercial partnership."
It may be said that this decision is out of step with modern development and trend, and that the result is unjust to creditors and other shareholders, but it is no more so than in Harris v. Prince. The trend is and has been to remove restrictions upon married women and the so-called disabilities of coverture and to more nearly place them upon an equal footing with other citizens, but that trend has been established by legislative action, and further relief must be had in like manner.
We hold that the petitioner is not personally liable to the creditors of this defunct concern and the judgments of the District Court and Court of Civil Appeals in so far as they subject her and her separate estate to personal liability are reversed and judgment here rendered for petitioner.
SMITH and NORVELL, JJ., dissenting.
. "Section 1. That chapter 7, Volume II of the Code of North Carolina, be and the same is hereby amended by adding a subsection after section 2294 and before section 2295, as follows:
"2294(a) That married women, and minors of the age of twelve years and upwards, are hereby authorized and empowered to become stockholders in and buy, sell, hold, pay dues on, withdraw, transfer and otherwise deal in stock in any such association in the same manner and with the same powers, right and liabilities, force and effect as though such minors or feme coverts were of full age or unmarried."