Kolp v. Specht

TARLTON, Chief Justice. The appellees, H. Specht, S. B. Burnett, and Theo. Vogel, as plaintiffs, recovered a judgment against the appellant, D. C. Kolp, as defendant, on a promissory note in the principal sum of $600. They also obtained a decree foreclosing the vendor’s lien retained in the note on blocks 7, 8 and 9 of the Texas Addition to Iowa Park, Texas. From this judgment this appeal is prosecuted. The note, as 'described in the petition, was dated April 23, 1890, due one year after date, and was payable to the order of W. H. Warner, trustee. It was transferred by the payee to the appellees. The question mainly presented for our consideration arises upon the action of the court in holding that the special answer of the defendant, in so far as it asserted a failure of consideration and sought a recovery in reconvention or as a counter-claim, presented no defense to the plaintiffs’ cause of action, or. grounds for relief against the plaintiffs’ cause of action. This action of the court was invoked upon a special exception, but as the latter includes a general demurrer, it suffices, in our view of the case, to consider the question as if it arose upon this character of ex- ■ ception. The special answer is quite lengthy. We content ourselves with stating substantially the defense as set out in the light of what we take to be a fair analysis of the averments. Briefly, it is alleged that the consideration for the note has failed, because of the following facts: The defendant purchased from Iowa Park College, a corporation organized for educational purposes, the land described in the note, consisting of twelve acres. The note was transferred to the plaintiffs after its maturity. . The consideration paid for the land was $600 in cash, and two promissory notes, each for the sum of $600. The first note maturing has been paid; the second is the one in suit. An additional consideration not expressed in the note or in the deed executed by the corporation, through its trustee, Warner, to the defendant, consisted in certain representations or statements made by eleven named persons (including the defendant himself), who were trus *688 1 ces of the corporation. These representations made to the defendant induced him to make the purchase. They consisted in statements and promises that if the defendant would make the purchase, paying thus $150 per acre for land otherwise worth about $10 per acre, the corporation would build and maintain a college worth $10,000, the' prospective building thus justifying an estimate of $150 per acre upon the land. Relying upon these representations of the trustees, the defendant, at the request of the corporation, paid the sum of about $400 for the purpose of freeing from prior sales to other parties certain grounds destined for use as a campus, adjoining the land purchased by defendant. This sum has never been repaid by the corporation, but is yet due. The representations and promises made by the trustees have never been complied with; the corporation is unable to build and maintain the college, because of insolvency. This insolvency consists of an indebtedness of about $500 above its assets. As a consequence, the answer alleged that the defendant had been damaged in the sum of $1200, which amount he pleaded also in reconvention and as a counterclaim to the plaintiffs’ demand. In our opinion, this plea, treating the appellees as if they occupied the attitude of the corporation, were it a plaintiff, fails to present a defense, for several reasons: 1. It will be noted that the representations relied upon were made, not by the board of trustees acting for the corporation, but by the trustees themselves, including the defendant. A corporation could not be bound in this manner. The representations, to be effective, should have been made by the corporation itself, acting through its board of trustees or directors having charge of its affairs. Taylor, Priv. Corp., sec. 258. 2. The answer contains no averments that the representations relied upon were made with any fraudulent intent. On the contrary, it is quite manifest that when the defendant — a trustee along with the remaining ten trustees — promised himself that if he would buy the land in question, a college would be built, great expectations were doubtless indulged by the participants in the enterprise (of which the defendant was himself no insignificant factor) that it would succeed; that the value of adjoining land would greatly enhance, and that the owners of such land would be greatly benefited. Considering the subject matter of these statements; the entire absence of any fraud or artifice by way of inducing the defendant to make the purchase; the fact that the situation was alike open to all the trustees; the intimate connection of the defendant with the corporation — we regard the representations as but the mere expression of an opinion, the inaccurateness of which, as subsequently developed, should form no ground of defense to the note sued upon, and no cause of action as for the breach of a contract. Mitchell v. Zimmerman, 4 Texas, 75; Walton v. Reagor, 20 Texas; 103; 8 Am. & Eng. Encycl. Law, 636, 637, and notes. The cases of Henderson v. Railway, 17 Texas, 380, and Greenwood v. Pierce, 58 Texas, 132, cited by the appellant, are not believed to be pertinent here. If otherwise applicable, they are thought to be distinguish *689 able from the present case in that the railroad corporations there mailing, through their authorized agents, representations and promises on which the adverse parties relied, had peculiar and exclusive facilities for judging and knowing the correctness of the statements. Delivered Dec. 7, 1895. It will also be noted that this corporation is in the nature of an eleemosynary corporation, the liability of which for the conduct of its trustees is not regarded by us as in all respects analogous to that of a corporation organized purely for profit and owning capital stock. 3. With reference to the claim for about $400 pleaded as a part of the counterclaim, it will be noted that the validity of this demand is made by the averments of the answer to depend upon the efficacy of the representations on which we have already commented. Giving to the allegations of the answer the benefit of all reasonable intendments, it is fairly inferable from them that the payment of this sum was intended but as a donation to help along the plans of the corporation in the building and maintaining of the college. No promise -on the part of the corporation to repay the money is averred, and it is manifest that had the enterprise succeeded, and that had it not disappointed the expectations of its trustees and promoters, including the defendant, no demand for the repayment of this sum would have been thought of. 4. The inability of the corporation to accomplish the purposes of its existence in the building and maintaining of an educational institution, and its noncompliance with the representations made by the trustees and relied upon by the defendant, are ascribed by the answer to its insolvency. This insolvency consists in an indebtedness of $500 which it is unable to pay. Had the defendant, complying with his obligation, paid the note here sued upon, this insolvency would have been avoided. The defendant should not be heard to urge that condition as a defense which is brought about by his own failure to comply with the terms of his obligation. So much of the defendant’s special answer as alleged a want of ownership in the plaintiffs to the note sued upon, was held to be sufficient by the court. On the trial certain evidence was offered by the defendant which in his opinion tended to support this defense. The' action of the court in excluding this evidence is assigned as error. The bill of exceptions does not disclose the ground on which the court excluded the testimony. Hence we decline to consider the bill, and overrule the assignment predicated thereon. Johnson v. Crawl, 55 Texas, 571; Cabell v. Holloway, 31 S. W. Rep., 201. The judgment is affirmed. Affirmed. Writ of error refused.