Court Opinion

ID: 9832184
Source: CourtListenerOpinion
Date Created: 2023-09-01 21:41:29.386133+00
Date Added: 2024-06-11T07:43:43.571059
License: Public Domain

On Motion for Rehearing.
 We have concluded we were in error in sustaining appellants’ second assignment of error, and holding that the court below should have sustained appellants’ special exception, and required appellee to set out the provisions of the contract referred to in the contract sued oh. Regardless of the binding character of the final contract upon the tank ear company, that company had fully complied with the obligations imposed upon it therein until the whole agreement was abrogated at the instance of appellant, who had received all the benefits accruing to it thereunder. This being true, appellant is estopped to deny the validity of the contract as made (6 R. C. L. 699, and authorities there collated), and the second assignment of error will be overruled.
Ip the contract between the parties, which was prepared by appellee’s agent, Albrecht, appellant was described as “North Texas Oil & Refining Co., Ltd.,” and as being “a com-. *257pany organized under a declaration of trust.” In preparing the original draft of the contract Albrecht omitted the descriptive abbreviation, “Ltd.,” from the name of appellant, and also omitted the supplemental description, “a company organized under a declaration of trust.” Appellants’ manager, Morehead, with whom Albrecht was carrying on his negotiations, ealled the latter’s attention to these omissions, and explained to him that the concern was a so-called common-law trust; that by the terms of the declaration under which the trust was operated and' which was on record in Hunt county, Tex., the shareholders therein were exempt from individual liability for the debts of the concern, and, according to testimony, the parties then agreed that these shareholders were not to be held liable for the performance of this contract or for the debts of the concern, but were to be expressly exempted from such liability, and to that end Albrecht then inserted the descriptive words in the contract with the express understanding that they had and would be given that effect. It was also in evidence that the parties, Albrecht for appellee, and Morehead for appellant, further intended and agreed that the contract should and would contain stipulations expressly exempting the shareholders in the trust from personal or individual liability for the performance of the contract, or for the concern’s debts. There was a conflict in the testimony concerning these matters, but the issue was clearly raised, and should have been submitted to the jury, if the matters were material.
Out of the foregoing facts several questions of law arise, and some of them are pressed for more definite disposition here. The abbreviation “Ltd.,” and the phrase, “a company organized under a declaration of trust,” as used in the contract, 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 by their use. They served here to interpolate obvious ambiguities into the contract, and upon proper pleadings it became the duty of the court to hear testimony and determine the meaning intended by the parties to be given them, and to give effect thereto in enforcing the contract. This course does not contravene the general rules that parol testimony will not be heard to vary or ■ contradict the terms of a written agreement, or that all antecedent parol agreements are presumed to have been merged into such agreements.,. It is only where the terms of the written instruments are plainly expressed that these rules apply; and the presence of an ambiguous provision in the instrument avoids those rules and subjects the instrument to the alternative rule, under which parol testimony is admissible to explain ambiguities appearing in the contract. Moreover, no contract is so sacred in form as to prohibit its reformation for the purpose of expressing the true intention of the parties, where it has failed to do so through the mu-. tual mistake of the parties, or through accident, or the fraud of either party. Farley v. Deslonde, 69 Tex. 458, 6 S. W. 786; Kelley v. Ward. 94 Tex. 289, 60 S. W. 311.
Here it is contended that the parties understood and agreed that the interpolated-clauses had the effect of exempting the individual shareholders of the trust from personal or individual liability, in accordance with the provisions of the declaration of trust under which the concern was operating. They believed, and acted upon that belief, that this attempted limitation in the declaration was valid, and that the interpolations in the contract would have the effect of carrying the limitation into that instrument so that the exemption would thus be affirmatively expressed therein. If the expressions used did not in fact operate to so exempt the shareholders, then the parties were mutually mistaken as to the legal effect thereof, and, this being true, equity will reform the instrument so that it may speak the true intention of the parties, and exempt the shareholders from personal liability. Moreland v. Atchison, 19 Tex. 309; Ramey v. Allison, 64 Tex. 697; Gammage v. Moore, 42 Tex. 170; Kelley v. Ward, 94 Tex. 289, 60 S. W. 311; Roberts, v. Short, 1 Tex. 373. The mistake made by the parties here was more or less natural, particularly in view of the well-established belief heretofore existing in many quarters that shareholders under the so-called common-law trust could in their trust agreements or declaration effectively provide against individual liability for debts contracted in behalf of the trust estate. It is only recently that the courts of Texas have definitely declared that these shareholders are mere partners in such concerns.
Appellee urges that the mistake, was upon a collateral matter, which was not essential to the contract, which “is a perfectly good contract irrespective of whether the court lets it remain as, written or writes into it the clause contended for by appellants,” and that the rule is that in such cases equity wili not intercede to correct the mistake. But the omission was not of a “collateral issue.” On the contrary, it was of a direct issue, which goes to the very vitals of the contract, and the rule in Texas is that, where the 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. Ramey v. Allison, supra; Kelley v. Ward, supra.
A corporation cannot act directly, of course, but only through its agents. Whatever negotiations appellee had with the oil and refining company were perforce conducted through its agents. In this instance, al*258though the negotiations between the parties were initiated by correspondence between the offices of the respective concerns, they were continued and concluded in behalf of appellee by its agent, Albrecht, whom it sent to San Antonio for that purpose. The only apparent limitation upon his authority in the premises was that he could not actually execute the contract in behalf of his principal, whose approval and execution thereof was necessary to put it in operation. He was delegated by his principal to formulate, and agree with appellants upon, the terms, provisions, and conditions of the contract, and deliver it in its completed form for rejection or approval and execution, by his principal. This was done, and his principal approved and executed the completed agreement in the exact form agreed upon between Albrecht and appellants. We think the facts, if not conclusive, at least raise the issue of whether or not Albrecht had the implied or apparent authority to bind his principal to the agreement exempting the shareholders of the oil and refining company from individual liability. The extent and nature of the apparent authority of an agent is to be gathered from all the facts and circumstances in evidence, and; in case of a conflict in the evidence the question is one of fact for the jury. 21 R. C. L. p. 857. Every agency carries with it, or includes in it, as an incident, all the powers which are necessary and proper, or usual, as means to effectuate the purposes for which it is created. Mecham, Ag., § 715; McAlpin v. Cassidy, 17 Tex. 449; Birge-Forbes v. Ry., 53 Tex. Civ. App. 55, 115 S. W. 333.
Here Albrecht had the power to tentatively agree upon the prices, terms of the payments, and other vital conditions provided for in the contract, and we see no reason why this power should not be extended by implication to embrace the agreement exempting, not the appellant company, as such, but the individual shareholders thereof. It is true that this agreement was only tentative, as were the other conditions in the contract, and it is true that it was not fully expressed, but Albrecht knew of its full meaning and purpose, and his principal was charged with the knowledge acquired by Albrecht in the transaction. It was his duty to fully advise his principal of the agreement, and of the matters within his knowledge, and to explain the purpose of the language used in the contract to effectuate the limitation. And, whether or not he. did communicate the true facts to his principal, he is' presumed to have done so, and the corporation was bound thereby when it executed the contract in the form presented to it by its agent. Mecham, Ag., § 1802 et seq.; Irvine v. Grady, 85 Tex. 123, 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.
Appellee complains of our holding that the question of the authority of its agent, Henderson, to bind the company in the final settlement negotiated between the parties, was one .of fact for the jury. We do not deem it necessary to set out the evidence upon this issue, but deem it sufficient to say that that evidence very clearly raises two specific issues of fact: .(1) Was Henderson acting within the apparent scope of his authority, considering all the facts and circumstances? .and (2) Did the company, knowing the terms of that settlement, subsequently ratify it?
We have gope into the matters here discussed in deference to appellee’s insistence that our decision of those matters be more definitely expressed. It appears that judgment was rendered in the court below in favor of one of the defendants, R. Maurer, and as no complaint is made here of that judgment, the judgment will be affirmed as to said Maurer, but in all other respects reversed, and the cause remanded for another trial.
Appellee’s motion for rehearing will be overruled.