Court Opinion

ID: 3906191
Source: CourtListenerOpinion
Date Created: 2016-07-06 09:35:39.641284+00
Date Added: 2024-06-11T14:15:55.268206
License: Public Domain

The First National Bank of Amarillo brought this suit against Charles W. Sanger, declaring on a note for $10,000, dated January 15, 1910, alleged to have been payable to O. W. Butt, and that its payment was secured by 100 shares of stock in the Panhandle Packing Company, issued to Charles W. Sanger, and attached to said note as collateral. By his answer defendant Sanger made the National Bank of Commerce, H. B. Sanborn, Amarillo Bank  Trust Company, Will A. Miller, Jr., J. W. Crudgington, M. C. Nobles, and the Amarillo Improvement Company parties defendant, and alleged that said $10,000 note was given to O. W. Butt for 100 shares in the Panhandle Packing Company which the said Sanger was purchasing from Butt; that the said Butt had subscribed for $25,000 of stock in said Panhandle Packing Company; and that contemporaneously with the execution of said note another instrument in writing was executed and signed by the said Butt, whereby it was provided that the said $10,000 note should not become binding or effective until the remainder of said $25,000 of stock subscribed for by the said Butt had been "placed for the purpose of completing the plant" He further answered that, contemporaneously with the execution of said note, the said defendant Sanger agreed to purchase of the said Butt 100 shares of stock in the Panhandle Packing Company, and was to pay for the same by the execution and delivery of said note; that, as part of the consideration for such sale, the said Butt agreed to guarantee that the said stock should at all times while owned by the said Sanger be worth par, and should produce at all times a profit of not less than 10 per cent., and, when sold, should net the said Sanger $10,000, with interest at the rate of 10 per cent. per annum thereon from date of said note, and that the said Butt would deposit 450 shares of stock owned by him in the Panhandle Packing Company to secure the performance of said agreement; that according to the agreement of the parties the guaranty contract was to be executed in writing contemporaneously with the delivery of said notes; that while the papers were being prepared embodying said agreement in writing, the said Sanger was compelled to leave Amarillo suddenly; that the said note was prepared and signed by the said Sanger and delivered with the express understanding and agreement that the instrument embodying the guaranty contract should be immediately prepared by S. H. Madden, signed by the said Butt, and should form a part of the contract between said parties; that said guaranty contract was prepared by the said Madden, in *Page 1089 
accordance with such agreement, but the said Butt repudiated the same, and refused to sign it, and has wholly repudiated and denied any liability by reason of said agreement; that the said Butt failed to place said 450 shares of stock in escrow, and said stock is of no value, and has never produced any profit or dividend; that the consideration for the execution of said note has wholly failed, and that plaintiff bank took said note with notice of the facts above recited. By its supplemental petition plaintiff denied that the condition named in the memorandum executed by Butt, with reference to placing his $25,000 of stock, had not been performed, and alleged that defendant Sanger and Butt both represented to plaintiff that the said condition had been performed at and before the delivery of said note to plaintiff; that the plaintiff, in consideration thereof, advanced to the said Butt the sum of $4,500, and the National Bank of Commerce advanced the sum of $2,500; that Will A. Miller, Jr., the Amarillo Improvement Company, and H. B. Sanborn each advanced $1,000, all of which advances were made to enable the said Butt to pay out and obtain 100 shares of stock issued to the said Sanger and attached to said note, and that the defendant Sanger, by reason, of such representations, was estopped to deny liability on said note. Plaintiff denied that it had any notice of the alleged guaranty contract between Butt and Sanger until after the institution of this suit. The defendants National Bank of Commerce, Will A. Miller, Jr., Western Stockyards Company, M. C. Nobles, J. W. Crudgington, and Mrs. Ellen M. Sanborn (as the community survivor of H. B. Sanborn), who had been made defendants by Charles W. Sanger, by way of cross-action and reconvention against the said Sanger, alleged that each of them, except the National Bank of Commerce, had executed and delivered to O. W. Butt an accommodation note, each for the sum of $1,000, to enable the said Butt, by use of the said Sanger note as collateral security to the notes executed by said parties, to secure money with which to put in operation the packing plant, and that the defendant the National Bank of Commerce, relying upon the securities aforesaid, advanced to the said Butt $2,500; that the said defendants Miller and Sanborn had subsequently paid the notes of $1,000 each executed by them; that the notes executed by the Western Stockyards Company, M. C. Nobles, and J. W. Crudgington are still held by the plaintiff bank; that said parties, in executing said notes, relied on the security of said $10,000 note executed by Sanger, and had no notice of any agreement or conditions attached to the execution and delivery of said $10,000 note as pleaded by the defendant Sanger. Upon the trial Sanger dismissed as to the defendants interpleaded by him, but the court permitted the defendants National Bank of Commerce, Will A. Miller, Jr., Western Stockyards Company, Ellen M. Sanborn, J. W. Crudgington, and M. C. Nobles to remain in the case, because each filed an answer; but the defendants Amarillo Improvement Company and Amarillo Bank  Trust Company, having filed no answer, were dismissed. It was shown upon the trial that O. W. Butt had subscribed for $75,000 of the stock of the packing company; that he had paid $50,000 of this amount in machinery and services; and that the remaining $25,000 of his subscription was to be paid in cash. Not having the cash necessary to make this payment, Butt was making an effort to sell this $25,000 of stock so that it might be issued by the company and the plant completed. Certain citizens of Amarillo, including the appellants codefendants in this case, being interested in seeing the packing plant completed and put in operation, were induced to aid the said Butt in his efforts to dispose of said stock. Defendant Sanger, as has been stated, agreed to take 100 shares of this stock, for which the $10,000 note sued upon was executed. Negotiations between them having reached this stage on January 15th, Sanger received a telegram that his wife was sick in California, and left on the evening train, an effort being made to close the transaction before train time. Late in the afternoon of that day a meeting was had at the First National Bank of Amarillo between 0. W. Butt, Charles W. Sanger, and W. H. Fuqua, president of the First National Bank, during which meeting the said note was executed and delivered to Fuqua, and the following agreement was also dictated, and either at that time or subsequently, signed by Butt:
"The First National Bank.
"Amarillo, Texas, Jan. 15, 1910.
"This memorandum is to witness that I have this day received of Charles W. Sanger one note for $10,000, which note is now being held by W. H. Fuqua, pending the issue of 100 shares of stock in the Panhandle Packing Company of Amarillo, Texas, which is to be issued to Mr. Charles W. Sanger, the executor of this note; and when said stock is issued to him and attached to this note, then it becomes the property of Mr. O. W. Butt, which he desired to use in the way of collateral with his stocks, for the purpose of procuring money from the banks or elsewhere, for the finishing of the packing plant. This obligation is not to become effective or binding until the remainder of my stock is placed for the purpose of completing the plant, aggregating $25,000.
"[Signed] O. W. Butt."
On the same evening Butt and Sanger applied to Attorney S. H. Madden, for the purpose of having the guaranty contract prepared. The purpose of making the accommodation notes for $1,000 each, by defendants Miller and others, was to aid Butt to procure the $10,000 upon the Sanger note from the banks of Amarillo. It further appears that after Sanger left on January 17,1910, a meeting composed of W. H. Fuqua, O. W. Butt, J. W. Crudgington, Will A. Miller, Jr., M. C. Nobles, J. IL. Smith, the president of the National Bank of Commerce, and perhaps others, was had, at which meeting *Page 1090 
the whole arrangement for the loan of $10,000 upon the Sanger note and upon the accommodation notes was explained. Fuqua said nothing at this meeting about any collateral guaranty concerning the $10,000 note, and there is no evidence that any of the parties except Fuqua had actual knowledge thereof, but it was agreed at that time that the First National Bank on this security would advance $4,500, and the National Bank of Commerce $2,500. The Amarillo Bank  Trust Company agreed to buy outright three of the accommodation notes, but refused to participate in the collateral agreement. The $25,000 of stock subscribed for by Butt and referred to in the memorandum accompanying the $10,000 note was placed as follows: $500 sold to Mrs. Adair, for cash, stock being issued December 3, 1909; $1,000 sold to Mr. Bugbee for cash, time of its issuance not appearing from the record; the balance of $25,000 of stock was made out in certificates on January 17, 1910, but was not delivered until about the 28th or 29th of January. Of this $10,000 was issued to Sanger and paid for in cash, being the money obtained by Butt from the banks on Sanger's note and the accommodation notes above referred to. Another $10,000 of the stock was issued to O. W. Butt on January 28th, and paid for by his note for that amount, made payable to the Panhandle Packing Company, and indorsed by the Western Stockyards Company and Al Popham. This note was afterwards taken as cash by the creditors of the packing company and subsequently paid by the stockyards company and Popham. Of the $25,000 of stock, $2,000 was issued to Butt and paid for by him by a note for that amount, signed by Charles W. Sanger, but the stock was never delivered to either Sanger or Butt; $500 of the stock was issued to S. H. Madden on January 29th, and paid for in cash; another $500 of stock was issued to W. B. Slaughter on January 29th. This certificate was attached to a draft on W. B. Slaughter, but the draft was never paid. Upon its return Butt gave his note to the company for $500, which was held by the company, together with the stock, but the certificate of stock has never been delivered to any one. It was shown that W. H. Fuqua, the president of the First National Bank, was a director in the Panhandle Packing Company, and had knowledge of the manner in which the stock was issued and how it had been paid for. At the time the $2,000 note above mentioned was executed by Sanger to Butt, an agreement was dictated with reference to the same; Sanger testifying that the agreement was prepared after he left, while Fuqua testifies that it was prepared and signed beforehand. The court submitted the case on special issues, which together with the findings of the jury thereon are as follows:
"First. Was the remainder of the O. W. Butt $25,000 stock in the Panhandle Packing Company placed within the meaning and contemplation of the parties Fuqua and Sanger, at or before the time the three banks placed the $10,000 to the credit of said packing company, about January 27 to 29, 1910? Let your answer be `Yes' or `No.'" To which the jury answered: "Yes."
"Second. Did the defendant Sanger and Fuqua, president of the plaintiff bank, after the transaction of January 15, 1910, treat the remainder of the $25,000 stock of O. W. Butt in the Panhandle Packing Company as placed within the meaning of the memorandum of January 15, 1910, signed by O. W. Butt, relating to the $10,000 note of Sanger, introduced in evidence before you? Let your answer be `Yes' or `No.'" To which the jury answered: "No."
"Third. Did the defendant Sanger and O. W. Butt, or either of them, in the presence of and without objection by the other, represent to W. H. Fuqua that the execution of the $2,000 note by Sanger and the memorandum of O. W. Butt, referring to the same, dated January 15, 1910, read in evidence before you, conclude the placing of the remainder of the O. W. Butt $25,000 of stock, and did the said Fuqua rely upon such representation, and cause the plaintiff bank to accept the said Sanger's $10,000 note and advance to O. W. Butt the $4,500, by placing the same to the credit of the Panhandle Packing Company on its books, and afterwards paid out the same on the checks of the said packing company? Let your answer be `Yes' or `No.'" To which the jury answered: "No."
"Fourth. Did the defendant Sanger and O. W. Butt, on or about January 15, 1910, make a complete and final oral contract, agreeing upon all of the terms of the same, with reference to Butt guaranteeing Sanger's stock, leaving nothing to be done but to reduce it to writing; or did they only come to an understanding and give to the attorney, S. H. Madden, general instructions for drawing the contract, leaving him to state the details, with the intention that no complete and binding contract should be made until the instrument was drawn and submitted to both of them for their acceptance or rejection? Let your answer be, `They made complete oral contract,' or `They waited for the written instrument to complete the contract.'" To which the jury answered: "They made complete oral contract."
"Fifth. Did the plaintiff bank have knowledge or notice of the existence of said guaranty agreement, if any, between Sanger and Butt, at or before January 29, 1910? Answer `Yes' or `No.'" To which the jury answered: "Yes."
"Sixth. Did Will A. Miller, Jr., J. W. Crudgington, H. B. Sanborn, M. C. Nobles, and the Western Stockyards Company, or any of them, have knowledge or notice of the alleged agreement and contract between O. W. Butt and defendant Sanger, by which the payment of said Sanger's $10,000 note might or could be avoided before or at the time they executed their respective accommodation notes offered in evidence before you? If all had notice, let your answer be, `Yes;' if all were without notice, let your answer be, `No.' If only a part had notice and others did not, then answer, naming the ones having notice and the ones without notice." To which the jury answered: "No."
"Seventh. Did the National Bank of Commerce have knowledge or notice of the alleged agreement and contract between Butt and Sanger, by which the payment of said Sanger's $10,000 note might or could be avoided at or before the 29th day of January, 1910? Let your answer be `Yes' or `No.'" To which the jury answered: "No."
The court did not give in charge to the jury the law with reference to any of the issues. *Page 1091 
Appellee objects to the consideration of all assignments based upon the refusal of the trial court to give special charges requested by appellant, upon the ground that the record does not show that these special charges were submitted to opposing counsel. Each of the special charges has written upon the bottom of it by the trial judge, the following:
"Presented and refused before the main charge was read to the jury."
Each of the separate bills of exception taken to the action of the court in refusing the special charges have also the following notation by the district judge:
"The foregoing exception was taken at the time of the refusal of the said special instruction and before the delivery of the charge to the jury, and was overruled by the court, to which the defendant Sanger then and there in open court excepted."
We do not understand article 1973 R.S., as amended by Acts 1913, p. 113, to require that the party requesting the special instruction should submit it to opposing counsel, but we think that duty rests upon the trial judge. Such is the practice as to bills of exception. Vernon's Sayles' Civ.Stat. arts. 2063, 2064. This record shows that each of the special charges were presented to him, and we should presume that he has performed his duty and submitted it to opposing counsel. This holding is not in conflict with the holding of this court in the case of Gulf, T. 
W. Ry. v. Culver, 168 S.W. 514; for in that case the bill of exception did not show it had been presented to the judge. The objection of appellant to the various assignments, based upon the action of the court in refusing the special charges, are all overruled.
By several assignments of error appellant contends because all of the stock to which Butt had subscribed had not been issued by the packing company and paid for, as required by article 12, § 6, of the Constitution of this state; that the stock had not been "placed" in accordance with law. We find this the difficult question in the case. The memoranda of January 15, 1910, provides that the note is not to become effective or binding until the remainder of the $25,000 of stock, to which Butt had subscribed, was "placed." The contention of appellant is that the answer of the jury to the first special issue, which is, in effect, that the stock had been "placed" within the meaning and contemplation of the parties, does not meet the law's requirements, and is immaterial. He insists that the stock must be placed in accordance with the constitutional requirement, regardless of whether it had been placed within the meaning and contemplation of Sanger, Butt, and Fuqua. It is said in Bailey v. Joy, 132 Mass. 358:
"The plaintiffs contend that the mortgages were `placed,' within the meaning of the orders, when they were recorded, or at least when they were transferred, and that the defendant then became liable to a full amount of the mortgages. But it seems clear to us that this is not what the parties intended. If the orders had been to pay the plaintiffs' bills when the mortgages `are placed,' with nothing more, it might have presented a more difficult question; but the added words `and from the amounts realized from said mortgages above the amount due George L. Joy for land and advances' point very strongly to the conclusion that by `placed' the parties meant `sold' or `realized.' Construing the words `are placed,' in connection with the context, and also with the contract between Joy and Tenney, to which the orders refer, it is clear that such was the meaning and intention of the parties."
We think the rule announced is applicable here. The memorandum of January 15, 1910, states that Butt desires to use the note with the stock attached in the way of collateral, for the purpose of procuring money from the banks or elsewhere, for the finishing of the packing plant. We must construe this instrument in the light of the surrounding circumstances, which appear from the record to have been known to all parties to the memorandum. Butt had subscribed for $25,000 of the stock of the packing plant and was unable to pay any part of it. It became necessary for him to procure other parties who would take and pay for the stock. Under the law, this could only be done by "money paid, labor done, or property actually received." Mason v. First National Bank of Paint Rock, 156 S.W. 366.
It appears that many of the citizens of Amarillo, including the parties to this suit, were interested in procuring the money necessary to complete the packing plant and put it in operation, and, as expressed in the written memorandum, it was especially the desire of Sanger and Butt. Of course, if the stock had already been acquired and paid for by Butt, it might be contended that the word "placed" had the meaning given it by appellee; but before it could be placed it must be paid for and the certificate of stock issued by the company, and this was the very thing Butt was endeavoring to have done. It appears from the record that the $2,000 note executed by Sanger to Butt had been delivered to the company; the certificates of stock had been issued and pinned to the note, but they had not been delivered to any one. It further appears that when the draft for $500 was made upon W. B. Slaughter, with the certificates of stock attached, and he had declined to honor the draft, Butt made his note and delivered it to the company in lieu of the draft, and in payment for the stock. This is clearly contrary to the law as announced in this state, and, under this state of facts, we can but conclude that at least $2,500 of the stock to which Butt had subscribed had not been placed when this suit was filed, and, as we gather from the record, cannot now be sold, since the plant has been sold under mortgages, and the *Page 1092 
company is insolvent. They must be held to have contracted with reference to existing rules of law. If, upon another trial, the evidence is the same upon this issue, the court should direct a verdict in favor of Sanger as against all of the appellees having notice of the memorandum of January 15, 1910.
Several of the makers of the $1,000 notes testified that they had no actual notice of the memorandum. Appellant contends that Fuqua was the agent of all parties in taking and holding the note and memorandum, and that notice to him is notice to all. These issues were not submitted to the jury, and under article 1985, Vernon's Sayles' Civil Statutes, we should presume they were found in such manner as to support the judgment; that is, we should presume that the makers of the $1,000 collateral notes had no notice of the memorandum and affirm the judgment as to them. But reference to their pleadings show no allegations of fraud or deceit or other grounds which would support the judgment in their favor against Sanger. Such being the state of the record, the judgment must be reversed, and the cause remanded.
Appellant asked the court to give several special charges, including one upon the burden of proof and the law with reference to the sale of corporate stock. Even if a case is submitted upon special issues, the court, if requested, should charge the jury with reference to the rules of law applicable to such issues, including a charge on the burden of proof. Texas Baptist University et al. v. Patton et al., 145 S.W. 1063; Southern Cotton Oil Co. v. Wallace, 23 Tex. Civ. App. 12, 54 S.W. 638; Cole v. Crawford, 69 Tex. 124, 5 S.W. 646.
The Amarillo Improvement Company is not a necessary party to the suit, and, having been dismissed by order duly entered, no judgment should have been rendered in its favor.
Several other matters are presented in appellant's brief which will probably not arise upon another trial, and will not be considered. Appellee insists that the obligation referred to in the memorandum of January 15, 1910, in that part of the instrument where it is said, "This obligation is not to become effective or binding until the remainder of my stock is placed," etc., has no reference whatever to the $10,000 note, but refers to the undertaking on the part of Butt to raise $10,000 to take out 100 shares of the stock in the packing company, in the name of Sanger, and then use the note with his other stocks to raise the money for finishing the packing plant. This theory has not been advanced in the pleadings, and no witness has testified to that effect; in fact, all the testimony in the record tends to show that the reference in the paragraph of the memorandum referred to is to the note, and it appears from the evidence of the parties to the memorandum that they so considered it.
Reversed and remanded.
HENDRICKS, J., not sitting.