Hollister v. McCamey

*52 Mr. Justice GREENWOOD delivered the opinion of the court. The single question in this case is whether the shareholders in the Hollister Oil Company, including plaintiffs in error, became liable for a debt incurred under a drilling contract between defendant in error and the Hollister Oil Company. Under an agreed statement of facts, the liability of the shareholders was made to depend on whether, as a matter of law, a certain writing, copied on pages 691 to 694 in Volume 241 of the Southwestern Reporter, under which the Oil Company was doing business, created a joint stock company or a common law trust, and, if it created the former, whether it made the shareholders in the company liable as partners for the company’s debts. The trial court held that the oil company was a common law trust and denied defendant in error a personal judgment against plaintiffs in error. The Fort Worth Court of Civil Appeals reversed the judgment of the District Court, and rendered judgment for defendant in error against plaintiffs in error as well as against the Hollister Oil Company. 241 S. W., 700. The conclusions reached by the Court of Civil Appeals in an admirable opinion of Judge Dunklin are in harmony with our disposition today of similar questions in the case of Thompson v. Schmitt, 115 Texas, 53. Under the rules announced in that case, plaintiffs in error are liable as partners for debts of the Hollister Oil Company including the debt to defendant in error. One ground of the decision of the Court of Civil Appeals, not involved in the case of Thompson v. Schmitt, was that the articles of association conferred such control on the shareholders over the company and its business as to prevent a decision that the articles of association created a trust under the refined rule which it would seem would be applied in Massachusetts. In this view, we also concur. The vitally important power to increase the capital with which the business was to be done was dependent on express authorization of a majority of the stockholders. The trustees were empowered to do any act necessary or proper to effect the purposes specified either in the declaration of trust or in any amendments thereof, and the shareholders by majority vote, could alter or amend the declaration of trust. The trustees were therefore certainly subject to the control of the certificate holders, and under the decisions of the -Supreme Judicial Court of Massachusetts the company would be regarded as partnership. Neville v. Gifford, 242 Mass., 127, 136 N. E., 160; Frost v. Thompson, 219 Mass., 365, 366, 106 N. E., 1009; Morehead v. Greenville Ex *53 change National Bank, 243 S. W., 546; Feldman v. American Dist. Telegraph Co., 257 S. W., 930. The argument for "plaintiffs in error reflects much zeal and marked ability. All the points presented are disposed of by the opinion in the Thompson v. Schmitt case. The judgment of the Court of Civil Appeals is in all things affirmed., Affirmed.