Court Opinion

ID: 3929924
Source: CourtListenerOpinion
Date Created: 2016-07-06 09:55:27.857767+00
Date Added: 2024-06-11T14:16:41.817555
License: Public Domain

November 6, 1905, W. R. Carroll and W. H. Carroll, merchandising under the firm name of W. R. Carroll  Co., made an assignment to John F. Rowe, as trustee for the benefit of their creditors. The property transferred was a stock of merchandise in the town of Tama, Coryell County, Texas. Thereafter Rowe, as trustee, brought this suit in the District Court of McLennan County against Galveston Shoe  Hat Company, a private corporation, seeking to recover the value of a portion of the stock of merchandise referred to, which he alleged the defendant obtained possession of by fraudulent representations made in McLennan County, and thereafter appropriated the property to its own use and refused to pay him therefor.
The defendant filed a plea in abatement, showing that it was a resident of Galveston County, which plea was in due form to raise the question of venue. The defendant followed its plea in abatement with a general demurrer, general denial and a special answer wherein it was alleged that the merchandise, for the value of which the plaintiff sought to recover, was procured by Carroll  Co. by fraud and deceit, and under such circumstances as entitled the defendant to a rescission of the sale, and to retake and dispose of the property as it had done without liability to the plaintiff or anyone else. The defendant also filed a cross-bill, impleading W. R. Carroll  Co.
The plaintiff filed a supplemental petition in which, among other things, he averred that if any false statements were made by Carroll  Company in reference to their financial affairs, that an agent of the defendant helped prepare such statement, and knowingly participated in any misrepresentations contained therein.
There was a nonjury trial which resulted in a judgment for the plaintiff against the defendant, Galveston Shoe  Hat Company for $891. Judgment was also rendered in favor of Galveston Shoe  Hat Company against W. R. and W. H. Carroll for the sum of $2082.28. Galveston Shoe and Hat Company has appealed and seeks a reversal of the judgment.
The trial judge filed findings of fact, which are as follows:
"About the middle of March, 1905, G. W. Neathery, the traveling salesman of defendant, Galveston Shoe  Hat Company, a private corporation, went to the place of business of W. R. Carroll  Co., at Tama, Coryell County, Texas, for the purpose of selling said firm a bill of goods; that while there he made such investigations as satisfied him as to the value of the stock of goods which Carroll  Co. had in the store at that time, and went to their homes on *Page 340 
their respective farms nearby and investigated the same, so as to satisfy himself of their value. He succeeded in procuring from them an order on the 16th of March, 1905, for goods to the amount of $807.70; that upon leaving Carroll's store defendant's salesman, G. W. Neathery, went to Gatesville and was accompanied to Gatesville by W. R. Carroll. After reaching Gatesville Neathery requested of Carroll a statement of the financial condition of W. R. Carroll  Co. and produced a blank form of the Galveston Shoe  Hat Co. with its name printed throughout the blank form, upon which to make said statement.
"The date of the statement, the words 'McLendon Hardware Company, Waco,' 'store building and lot $700,' notes secured by liens '$700,' appearing in said statement were written therein by defendant's agent Neathery, and he placed the valuation on the Stock of goods and homestead of the Carrolls. This statement and its probative force as evidence can not be appreciated without being seen, and therefore I have ordered the original to be sent up with the record, as in my judgment it is so imperfect and contradictory as to show upon its face to have been made by a man so ignorant of mercantile matters as to carry grave doubt to the mind of an ordinarily prudent person as to his ability to make out a statement sufficiently accurate to base a line of credit upon.
"Neathery forwarded the order and statement which he had thus procured from Carroll to defendant; when received, said company caused the order to be laid aside and not filled for the time being, and Frenkel, its secretary and treasurer and credit man, wrote a letter to said traveling salesman, Neathery, who took said order, to the effect he thought Neathery had sold Carroll a little bit too much goods, and thereafter said order was filled and the goods shipped to the Carrolls. In reply to Frenkel's letter Neathery replied that he thought they were perfectly good for every nickel they bought. On April 13, 1905, defendant company shipped to Carroll  Company on their order other goods of the value of $72. Afterwards, while Neathery was in the store of the defendant at Galveston he was called upon for further information by Frenkel in regard to W. R. Carroll Co., and at that time Frenkel discussed fully with Neathery Carroll  Co.'s condition at that time and the crop prospects in that county and their neighborhood. This was before he left Galveston to obtain orders for the fall trade, and while on said trip, on July 3, 1905, he procured from W. R. Carroll 
Co. another order for goods amounting to the sum of $886.65, which he forwarded to the defendant company, and which was filled and shipped out as requested, and on August 15, 1905, defendant company sold Carroll Co. a bill to the amount of $36, nothing having been paid up to that time by W. R. Carroll  Co. on the March order, which was due July 1, 1905.
"About November 1, 1905, Charles Frenkel, the secretary-treasurer of the defendant company, went to W. R. Carroll  Co.'s place of business in Coryell County, and there ascertained from them that they were unable to meet their indebtedness, and tried to get them to return to him such goods as had been sold them by the defendant *Page 341 
company as were then in their stock, and informed them that he would sequestrate them if he could not otherwise obtain possession, claiming that Carroll had bought them on misrepresentation. Carroll  Company declined to surrender the goods, stating they desired to treat all their creditors equally, and informed said Frenkel that they were going to Waco to have a conference with all their creditors, and would meet him there on the 6th day of November, 1905. On that day there was held at the Rotan Grocery Company's office in Waco, a meeting of the creditors of W. R. Carroll  Company, which was attended by said Frenkel, where it was agreed by the creditors that W. R. Carroll  Company should make an assignment of all their property to John F. Rowe for the benefit of their creditors generally. Frenkel at this meeting claimed that the goods procured by Carroll  Company from his firm were obtained through misrepresentation, and that unless some satisfactory arrangements were made in regard thereto that he would sue to recover said goods and sequestrate the same; whereupon it was agreed between him and Rowe, as trustee for all the creditors, that in order to save the expense of a sequestration suit that he should accompany Rowe to the Carrolls' place of business in Coryell County, and that all the goods of the defendant which could be found in the stock of Carroll  Co. at that time should be set aside and sold either by Frenkel or Rowe, and the proceeds of the sale, if sold by Frenkel, should be turned over to Rowe and held by him, or if the goods were sold by Rowe, that he should retain the proceeds of the sale, and that defendant company would institute its suit therefor in McLennan County, Texas, against said Rowe for such proceeds in order to test the question as to whether or not the defendant company should recover said goods on account of having been obtained through fraud by W. R. Carroll  Co. This agreement was made on the part of said Frenkel with fraudulent intent on his part of obtaining possession of the proceeds of said goods and retaining the same from said trustee. With this understanding the assignment was made by W. R. Carroll  Co. to Rowe on said day, and they with Frenkel and Rowe, at once went to Coryell County, to the store of Carroll  Company, where, in accordance with the agreement that had been made in Waco, the goods purchased from the defendant company were identified, separated from the remainder of the stock and laid aside and that night were sold by Frenkel on credit for $825, he taking the note of the purchaser therefor, payable to defendant company, and he, Frenkel, agreeing at the time with Rowe that as soon as he reached Galveston he would forward to Rowe the company's check for the amount thereof, $825, for which he had sold said goods, to be held by said Rowe subject to the agreement that had been made in Waco as to holding said funds for future litigation. After Frenkel had reached Galveston the defendant company declined to deliver to Rowe the proceeds of said sale, or, in other words, their check for the proceeds, and hence this suit to recover the same.
"At the time W. R. Carroll and Neathery made out the statement of Carroll  Co.'s financial condition, Carroll was not requested *Page 342 
by Neathery to give the individual assets or liabilities of either himself or his partner, W. H. Carroll; Neathery and Carroll both testifying that Carroll was not asked to state the same, that the subject of individual debts did not come up at all, and that Carroll, being away from his books, could only give the partnership assets from recollection. At that time the firm owed the Rotan Grocery Co. $449.31, as shown on this trial, which Carroll gave in the statement as $400; it owed Sanger Bros. $464.81, stated at $400; it owed the McLendon Hardware Company an amount not shown, which amount Carroll stated to Neathery at the time he did not know. W. R. Carroll Co. were at that time running a weekly account with Cochran Co., and on the day said statement was made, owed Cochran 
Co. about $75 on that week's account, and the same way with the Waters-Pierce Oil Company, to whom it owed at that time about $33, and also a few other small accounts of like nature that were not included in the statement. At the time the statement was given, W. R. Carroll individually was indebted to various persons to the extent of some $1000 or $1500, one of these debts, $450, being a lien upon the store house of W. R. Carroll Co., said lien having become fixed prior to W. H. Carroll buying an interest in said business, which he did shortly prior to the giving of the first order by said firm to the defendant company. W. H. Carroll was surety on some of the notes given by W. R. Carroll for a portion of this indebtedness. I find the value of the stock in the store of W. R. Carroll  Co., on the 16th day of March, 1905, to be about $4000, and that they held notes secured by mortgage to the amount of $7000, as stated in said statement. These notes were what were known as advancement notes of farmers, and the full amount thereof had not been advanced to the makers at the time said statement was made, there having been advanced at that time some $250 or $300. The evidence also shows that the value of live stock not exempt under State laws to have been $1200, and the store and lot were probably worth about $700, as stated therein.
"I further find that W. R. Carroll had only been in the mercantile business a short while, was a man thirty-five years of age, his father, W. H. Carroll, 68 years of age, both farmers, and that defendant's agent who procured the orders was fully cognizant of all these facts, was present while the statement was being made, and assisted therein, and that the sales made by the defendant company to W. R. Carroll  Co. were not made exclusively upon said statement, and that they were not caused to make the same because of their reliance on the correctness of said statement, that the same was intended by W. R. Carroll to be correct, and did set forth the financial condition of W. R. Carroll  Co. at the time it was given to the best of W. R. Carroll's ability to give the same at the time and under the circumstances under which it was given, and said statement does, to a reasonable extent, set forth approximately the financial condition of said partnership at that time. Defendant Galveston Shoe  Hat Company's principal office and place of business is in Galveston, Texas, and it has no office or place of business *Page 343 
in McLennan County, Texas, nor any local agent in McLennan County, Texas."
Opinion. — The first assignment of error is addressed to the action of the court in overruling the defendant's plea in abatement, asserting its right to be sued in Galveston County. The second assignment assails the trial judge's finding of fact to the effect that an agreement was made by appellant in McLennan County, Texas, to pay for the goods involved in this litigation, with the fraudulent intent on its part of obtaining possession of the proceeds of said goods, which constituted such fraud as authorized appellee to sue appellant in McLennan County. We find testimony in the record which supports the finding in question.
The trial court held as a conclusion of law that such fraud was committed by appellant's agent Frenkel in making the agreement referred to, in McLennan County, as would authorize the suit in that county under both section 7 and section 23 of article 1194 of the Revised Statutes, and that conclusion is complained of by the third assignment of error. The 7th section authorizes a defendant to be sued out of the county of his residence when the plaintiff's suit is predicated upon fraud committed by the defendant in the county where the suit is instituted. Section 23 authorizes suit against any private corporation, association or joint stock company in any county where the cause of action or a part thereof arose. We agree with the trial court on the question of law involved, and especially as to the right to sue in McLennan County under the 23d section of the statute in question.
The fourth assignment complains because a motion for a continuance was overruled. Appellant's brief does not disclose, except by inference, the ground upon which the continuance was sought. An examination of the record shows that it was sought because of the absence of the mercantile books of Carroll 
Company. The application failed to show proper diligence. It was not shown that a subpoena duces tecum had been applied for. Mere requests or demands upon the plaintiff and Carroll 
Company to have the books in court was not sufficient diligence.
The fifth, sixth and seventh assignments challenge the findings of fact and conclusions of law, which resulted in the trial court's holding that appellant was not entitled to rescind its contract of sale with Carroll  Company. There is evidence in the record supporting the material findings upon that issue; and, taking the facts as found, we are of opinion that the right to rescind was not shown.
There are some other minor questions presented in appellant's briefs, but they do not show that reversible error was committed.
Our conclusion is that the judgment should be affirmed, and it is so ordered.
Affirmed. *Page 344