Continental State Bank of Beckville v. Trabue

WILLSON, C. J. According to findings made by the court and a jury, supported, we think, by testimony, the facts material [210] to the controversies between the parties to this litigation are as follows: E. L. Etheridge owned a sawmill, some timber, and between 400,000 and 500,000 feet of lumber. He was indebted to the Continental State Bank of Beckville in the sum of $3,400, and interest thereon, for money borrowed of the bank to pay for timber to be used in operating the mill and other expenses of operating it. The indebtedness was evidenced by several promissory notes, made by him to said bank; each stipulating for interest at the rate of 10 per cent, per annum and 10 per cent, as attorney’s fees, if suit was brought thereon. Among the notes was one for $2,500, which R, E. Trabue also had executed. $1,000 had been paid on this note, leaving due thereon $1,500 and interest. The indebtedness to the bank was secured by a verbal lien in its favor on the lumber, given by Etheridge. February 29, 1912, Trabue purchased the lumber of Etheridge, agreeing to pay him therefor the sum of $6,000 as follows (quoting from the written instrument evidencing the contract of sale): “The sum of $1,750 cash, the receipt of which is hereby acknowledged, and one note for the sum of $850, dated the same date as this contract, and due April 1, 1912, and the assumption of the payment of the sum of $3,400 due to the Continental State Bank of Beckville, Texas, and P. R. Nesbitt, together with all accrued interest and interest which may be due at the time of the payment of said indebtedness.” The $850 note was made and delivered by Trabue to Etheridge as agreed on, and on the day the contract was executed Trabue delivered to Etheridge as a payment of the $1,750 cash agreed on, a draft for that sum drawn by a bank in Carthage on a bank in New Orleans. There was a controversy as to whether this draft had been paid or not at the time this suit was instituted (March 13, 1912); but the testimony was conclusive that Etheridge accepted it in lieu of cash, and that the draft was paid by the New Orleans bank March 8, 1912. At the time the contract was entered into, the indebtedness to the bank which Trabue assumed to pay was all due, except $150 thereof, evidenced by a note which matured April. 1, 1912. There was a controversy as to whether Trabue’s undertaking was to pay the $3,400 indebtedness to the bank at once on the making of the contract, or on June 1, 1912. Trabue claimed his undertaking was to pay same on said June 1st. The jury found that his undertaking was not to pay it on that day; and the court in effect found that his undertaking was to pay it at the time the contract was executed. The testimony was sufficient to support the findings. There was a controversy as to whether Trabue, at the. time he purchased the lumber, had notice of the existence of the lien in favor of the bank. The court found that Trabue “was fully acquainted with the dealings between the bank and Etheridge,” and we assume thereby intended to find that Trabue had notice of the fact that Etheridge had agreed with the bank that it should have a lien on the lumber to secure the debt to it We think the testimony was sufficient to support such a finding. The court found that from the date (February 29, 1912) of the execution of the contract until March 12, 1912, Trabue was in actual possession of the lumber he had purchased of Etheridge, and the jury found that he had sold of that lumber 120,000. feet, of the value of $1,440. Trabue not having paid the $3,400 and interest he had agreed to pay to the bank, on March 12, 1912, Etheridge drew a draft on said Trabue in favor of the bank for same, less the amount of the $150 note referred to as not maturing until April 1, 1912. On the ground that he was not to pay Etheridge’s debt to the bank until June 1, 1912, Trabue refused to pay the draft. March 13, 1912, Trabue undertook to load some of the lumber on cars and ship same. Etheridge objected to a removal of the lumber until Trabue had paid the $3,400 and interest to the bank, and, as Trabue understood it, threatened to use force to prevent him from loading and shipping any of the lumber. Trabue thereupon applied for and obtained a temporary injunction, restraining Etheridge from interfering with him in the loading, shipping, selling, or otherwise disposing of the lumber. In his 'answer to the petition for the injunction, Etheridge set up Trabue’s agreement to pay the debt to the bank and his failure to pay it, and asked for a judgment against him for the amount' thereof. He asked that the bank be made a party to the suit. The bank filed an answer setting up the notes referred to evidencing the $3,400 indebtedness to it, alleged the existence of a lien in its favor on the lumber to secure the payment thereof, and a conversion by Trabue of a part thereof, and sought a judgment against Etheridge for the amount due on the notes, against Trabue for the amount of the balance due on the $2,500 note and the value of lumber he had, as alleged, converted to his own use, and a foreclosure of the lien it asserted on the lumber as against both Etheridge and Trabue. The judgment rendered was (1) a dismissal as to one Nesbitt, who had been made a party at the instance of Etheridge; (2) in favor of Etheridge, for the use of the bank, against Trabue for the sum of $3,425.-26, being the $3,400 and accrued interest Trabue had agreed to pay the bank, and interest thereon at the rate of 6 per cent, per annum: and (3) in favor of the bank against Etheridge for the sum of $3,802.10, being said $3,400, accrued interest and attorney’s fees and interest thereon at the rate of 10 per cent, per annum. By the decree the court dissolved the injunction he had granted, directed that Etheridge take and retain possession of the lumber until Trabue paid into court the sum adjudged against him, [211] or executed and filed a supersedeas bond, when he should deliver same to Trabue, and directed that in the event Trabue, within 20 days, did not pay into court the sum adjudged against him the lumber should be sold by the sheriff, and the proceeds be by him paid into court to await the further orders of the court, for which purpose jurisdiction of the cause was reserved. The court refused to foreclose the lien asserted by the bank against the lumber. The decree declared it should not be construed as affecting Etheridge’s right to enforce by another suit payment of the note for $850, made to him by Trabue. Trabue and the bank perfected separate appeals, and each sent to this court a transcript of the record. On the facts stated, we think the judgment should have been: [1] 1. In favor of Trabue perpetuating the injunction theretofore granted, restraining Eitheridge from interfering to forcibly prevent the removal by Trabue of the lumber he had purchased of Etheridge. Having sold the lumber and delivered the possession thereof to Trabue, Etheridge did not have a right, by force, to resume possession and control of same, because Trabue failed to pay to the bank the $3,400 and interest, as he had agreed to. Etheridge should have appealed to the courts for relief he may have been entitled to by reason of Trabue’s breach of his undertaking. [2] 2. In favor of the bank against both Etheridge and Trabue for the amount unpaid, including attorney’s fees therein stipulated for, on their note to said bank for $2,500. The sum adjudged against them on this note should bear interest at the rate of 10 per cent, per annum in accordance with a stipulation therefor in the note. Sayles’ Stat art 3105. The record discloses no reason why the bank should not recover against both makers of this note according to its terms. [3, 4] 3. In favor of the bank against Etheridge for the sum due it, including attorney’s fees, on the other notes. The sum adjudged in favor of the bank on account of these notes should bear interest, as stipulated for therein, at the rate of 10 per cent, per annum. The contention made by Etheridge, that by assuming to pay his indebtedness to the bank Trabue became primarily liable for same, and that he (Etheridge) was liable only as a surety, while tenable as between himself and Trabue, is not tenable as between him and the bank. The rights of the bank could not he affected by the agreement between Etheridge and Trabue, to which it was not a party. It had a right, as it did, to ignore that agreement and enforce, according to the terms thereof, the contract entered into between itself and Etheridge and Trabne, and the contracts entered into between itself and Etheridge. [6] 4. In favor of the bank against both Etheridge and Trabue, foreclosing the lien asserted by it against the lumber. The findings being that the bank bad a lien, and that Trabue bad notice of the fact at the time be purchased the lumber, no reason is apparent why the bank was not entitled to such a foreclosure. It was and is contended that the lien asserted by the bank was void by force of a statute, as follows: “Every mortgage, deed of trust or other form of lien attempted to be given by the owner of any stock of goods, wares or merchandise daily exposed to sale, in parcels, in the regular: course of the business of such merchandise, and contemplating a continuance of possession of said goods and control of said business, by sale of said goods by said owner, shall be deemed fraudulent and void.” Sayles’ Stat. art. 2548. But we think this statute is not applicable where, as here, the sale is of a stock of lumber to a purchaser who assumes to pay the debt secured by the lien asserted. The statute evidently was intended to protect purchasers in the ordinary course of the business of a dealer in goods, wares, and merchandise, and not a purchaser of the dealer’s stock in trade, who assumes the-payment of a debt which the dealer by contract has made a charge against the property.- [6-8] 5. In favor of Etheridge against Tra-bue for the sum the latter had undertaken* to pay to the bank, to wit, $3,400 and interest accrued thereon to March 26, 1912 (the date of the judgment of the court below), at the rate of 10 per cent, per annum, as stipulated for in the notes evidencing the indebtedness to the bank. This recovery in favor of Etheridge should have borne interest at the rate of 6 per cent, per annum, as determined by the court below. The decree should have provided that any payment made by Trabue to the bank on account of the judgment in its favor against him on the $2,500 note, as well as any payment on the recovery in favor of the bank and Etheridge on said $2,500 note, or in favor of the bank against Etheridge on the other notes, out of the proceeds of the sale of the lumber, should operate as a satisfaction pro tanto of the sum adjudged in favor of Etheridge against Trabue. We do not think the contention made, that Etheridge should recover of Trabue attorney’s fees stipulated for in the notes, should be sustained. Trabue did not undertake to pay such fees. His undertaking was only to pay the principal sums and interest thereon specified in the notes. The undertaking to pay attorney’s fees, on contingencies named in the notes, was Ether-idge’s alone. It was never assumed by Tra-bue. Eor the breach by Trabue of his undertaking, Etheridge was entitled to recover only the sum Trabue undertook to pay. Nor do we think the contention made, that the recovery in favor of Etheridge against Tra-bue should bear interest at the rate of 10 per cent., the rate specified in the notes, instead of 6 per cent., the rate fixed by law,, in the absence of a contract for a greater [212] rate, should be sustained. The recovery by Etheridge against Trabue was not on the notes, but on Trabue’s undertaking to pay to the bank a specific sum, to wit, the sum due on the notes. For a breach of this undertaking, Etheridge was entitled to recover of Trabue the sum the latter agreed to pay, and interest thereon at the rate fixed by law, when there is no contract between the parties for a greater rate. The judgment rendered by the court below will be set aside, and the judgment which should have been rendered by that court, as indicated by what has been said, will be rendered here. [9] The costs in the court below of the suit for the injunction will be adjudged in favor of Trabue against Etheridge. The other costs in that court will be adjudged in favor of Etheridge and the bank against Trabue. One-half of the costs of this appeal will be adjudged against Etheridge and the other half against Trabue. In disposing of the appeal, we have not thought it necessary to fully state the pleadings in the record, nor the grounds of the numerous assignments and cross-assignments presented in the briefs of the parties. Assignments in the briefs call for the rulings made; and the pleadings, we think, authorize the entry here of the judgment which the findings demanded.