Court Opinion

ID: 6544264
Source: CourtListenerOpinion
Date Created: 2022-07-19 22:18:17.776079+00
Date Added: 2024-06-11T15:55:55.372077
License: Public Domain

Wood, J., (after stating the facts.) Appellant contends, first, that it is not liable, because “the note in suit was executed by its president, W. L. Whitaker, solely for his own private accommodation.” On this point the court instructed the jury as follows: “If you believe from the evidence that the note sued on was executed by W. L. Whitaker for his own private use or accommodation, and that the defendant received no consideration therefor, and that such facts were known to the plaintiff or to said Weinstein before Weinstein lent the money to Whitaker, then you should find for the defendant.” And, among others, refused the following: “If you believe from the evidence that the defendant, the Texarkana & Ft. Smith Railway Company, did not receive any consideration for the note sued upon, but that said note was executed in its name by its president, W. L. Whitaker, for his own private use or accommodation, or for the use and accommodation of himself and Benjamin Whitaker, and was indorsed by him and said Benjamin Whitaker before the same was delivered to the said A. Weinstein, then the plaintiff is not entitled to recover against the Texarkana & Ft. Smith Railway Company, and you will find a verdict for defendant.” If the note sned on was really understood by the parties, payer and payee, at the time of its execution to be for the accommodation of W. L. Whitaker, then, under the laws of Texas, by which it must be construed, it was an ultra vires contract, and absolutely void. Const. Texas, art. 12, § 6; Rev. Stat. Texas, 1895, arts. 665, 4486 supra. A contract prohibited by the constitution or statute of a state, although negotiable in form, is not so in fact, and no innocence or ignorance on the part of the holder will make it enforceable. It is an absolute nullity. 1 Dan. Neg. Inst. § 807; Union Pac. Ry. Co. v. Chicago, etc. R. Co., 163 U.S . 581; Central Trans. Co. v. Pullman’s Palace Car Co., 139 U. S. 59, 60; McCormick v. Market National Bank, 165 U. S. 538; Northside Ry. CXo. v. Worthington, 30 S. W. Rep. (Texas) 1057; S. C. 88 Texas, 569; South Texas National Bank v. Lagrange Oil Mill Co., 40 S. W. Rep. (Texas) 328. There is a marked distinction between such contracts and those which are merely in excess of power expressly conferred or necessarily implied, a failure to observe which has led to some confusion in the authorities. If it be conceded, therefore, that the note in suit was executed solely for the accommodation of W. L. Whitaker, or that there was evidence to justify such a finding, the instruction given by the court was erroneous. We do not find, however, that there was any evidence to warrant a finding that the note was given for accommodation. True, Whitaker testified: “I executed this note for my own benefit, and signed the railway company as maker without any authority, because it was the only way I could raise money.” Such might have been the mental reservation of Whitaker at the time he executed the note, or it might have been the conclusion to which he came when giving his testimony. But there is nothing in the proof to show that it was the understanding between the railway company, the maker, and Whitaker, or between the railway company and the payee, Weinstein, that the note was executed for Whitaker’s benefit individually. On the contrary, the positive proof of what actually occurred when the note was executed, un contradicted, is that the money was loaned to the railway company for the purpose of paying off its employees for labor done in the construction of the road. There is nothing upon the face of the paper to indicate that it was given for accommodation. The presumption is in view of the constitutional provision, that it was not. The positive proof of the payee is that at the time of the execution of the note the declarations of the agent of the railroad, acting for it, were as stated above. Such then must be taken as the uncontroverted fact. A mental reservation in the mind of one of the parties, not communicated to the other at the time of the making of the contract, or a conclusion formed afterwards as to the effect of the contract, does not even tend to show what the contract really was. The question was not what one or both of the parties thought or said about the note afterwards, but what did they think and say at the time of its execution. This only could throw any light upon the real character of the intrument. The contract must be determined by what they said contemporaneous with the making thereof. We are of the opinion, from the proof, that the appellant’s request for instructions on the accommodation phase of the note, and the court’s charge as given orally, raised a supposititious issue, suggested in the answer, but not sustained by the prdof. Aside from the question of payment, which we will discuss later, the true theory of the liability or non-liábility of appellant under the evidence was presented in the following instruction: “If the jury find from the evidence that W. L. Whitaker, as president of the Texarkana & Fort Smith Railway Company, executed the note sued on, and that in the execution of said note he was acting within the scope of his actual authority, or within the scope of his apparent authority, and that he received from A. Weinstein $300, less the legal discount or the discount agreed on, and delivered said note to said Weinstein for said money, and that he represented to said Weinstein that the money was being borrowed by defendant railway company, and for the purpose of paying laborers the money due them for the construction of said railroad, and that Weinstein loaned said money to defendant for that purpose, then did said railway company become liable to pay said note.” The note, having been given for money used in the construction of the railroad, was within the express power of the corporation to make. Did the president have authority to make it? He “was in the habit of signing the railway company’s name to notes, etc., without authority from the board of directors.” The directory was cognizant of the fact. The matter had been brought to their attention, and was discussed in their meeting, but no formal action was taken, and the president continued to exercise such authority for years. The board of directors must be held; under the circumstances, to have acquiesced, and the corporation was bound for the same, as though the board of directors had, by formal action, conferred upon the president express authority to make the note. Estes v. German National Bank, 62 Ark. 7; City Electric Ry. Co. v. First National Bank, 62 Ark. 33; Mining Co. v. Anglo-Californian Bank, 104 U. S. 192. As to the plea of payment, the facts, in the main, are correctly stated in appellee’s brief as follows: “Weinstein held the joint notes of W. L. Whitaker, Benjamin Whitaker and T. L. L. Temple, aggregating $3,666. He also held the note here sued on. Weinstein filed two suits in the Nevada circuit court,—one against the Whitakers and Temple on the joint notes for $8,666; the other on the note herein sued on against theWhitakers alone. Attachments were issued in both suits, and levied on 1,480 shares of the capital stock of the Ozan Lumber Company and 150 shares of the capital stock of the Prescott & Northwestern Railway Company, as the property of Benjamin Whitaker. To secure this entire indebtedness to Weinstein, Benjamin Whitaker executed a deed of trust to W. R. Grim, conveying to Grim, as trustee, all of the lumber company stock and all of the railway company stock which had been levied on under the orders of attachment. The suits were filed and attachments levied on April 8,1892. This was not done, as appellants states, in settlement of the indebtedness due to Weinstein, but to secure the payment of that indebtedness. Afterwards appellee purchased the lumber company stock and the railway company stock from Benjamin Whitaker, and, in order to relieve it from the lien of the Grim deed of trust, paid to Weinstein the entire indebtedness due him. Appellee paid Weinstein the amount due on the note in this controversy long before he concluded the deal with Whitaker for the stock, and had the note transferred to him. Judgments by default were rendered against W. L. and Benjamin Whitaker in the Weinstein suits on July 25, 1894. These judgments were paid off at different times, but W. N. Bemis could not say whether full payment was made before or after he closed his deal with Benjamin Whitaker for the stock. The Bemis Lumber Company had tried to get Weinstein to sue appellee on this note, but Weinstein declined to do so, because he was amply secured. The lumber company then paid to Scott & Jones, • Weinstein’s attorneys, the amount due on the note, and had the note transferred to it by Weinstein, and instructed Scott & Jones to sue appellant on the note, which was done. There had been previous dealings between Benjamin Whitaker and the Bemis Lumber Company, and Mrs. J. H. Bemis, the mother of the Bemis boys, who organized the Bemis Lumber Company. When the deal for the stock was finally consummated, and settlement made with Benjamin Whitaker, the Bemis Lumber Company neglected to include in the settlement the note in suit, and a balance was found to be due Whitaker on settlement of $21,000, which was paid him by the Bemis Lumber Company, and the stock was transferred to H. D. K. Bemis. This note formed no part of the consideration paid by Bemis Lumber Company for the stock. The claim made by appellant in its brief is that Benjamin Whitaker paid this note. This is contradicted by Benjamin Whitaker himself. His testimony on this point is as follows: ‘'Judgment on this note has been paid off and satisfied by the Bemis Lumber Company to A. Weinstein. Nothing is due A. Weinstein on note or judgment, because the same has been paid to him by the Bemis Lumber Company. I don’t knowhow, from whom, nor under what circumstances the Bemis Lumber Company obtained possession of said note. I think they must have gotten it from Weinstein or his attorney. Q. Did not the Bemis Lumber Company pay to A. Weinstein the amount due on this note? If yes, state the circumstances under which they paid it.” Ans. “Yes; under the following circumstances: Weinstein had attached some of the stock of the Ozan Lumber Company, and some of the stock of the Prescott & Northwestern Railway Company in which some of the Bemises were interested, but which stood in my name, and the Bemis Lumber Company paid off the note to relieve the stock.” The finding that the note had not been paid was justified by the evidence. We find no reversible error in any of the other assignments presented by counsel. ■ Affirmed. Battle, J., did not sit in this case.