Mann v. Mitchell

COBBS, J. Appellee, being appointed receiver of the Commonwealth Bonding & Casualty Insurance Company, an Arizona corporation by the district court of Tarrant county, Tex., September 18, 1915, to bring suits for all unpaid stock and other indebtedness owing said Commonwealth Bonding & Casualty Insurance Company, filed his original petition against O. D. Mann January 6, 1919, to which appellant on March 19, 1916, by demurrers, general and special denials as to any legal liability to pay said note or subscription contract, answered and pleaded the statute of two and four year limitation as to said ^subscription contract and note. On April 13, 1921, appellee filed his first amended original petition. By special order the court, over appellant’s objection, permitted said petition to be filed as of September 18, 1916. Appellant excepted to the amended petition, because the same had reference to the so-called subscription contract sued on as pleaded April 13, 1921, because barred by the [735] four-year statute of limitation, and excepted to the allegations in respect to the note therein sued on because barred by the four-year statute of limitations, because the said note as alleged therein was different from the note alleged in the original petition and pleaded in bar to the note and subscription contract sued on in said amended petition, the particular subscription contract therein being set up for the first time in said amended petition, filed April 13, 1921, and the particular note sued on being declared upon for the first time in said amended petition filed April 13, 1921. The petition of January 6, 1916, was to recover on the note for $1,750, dated the 30th day of January, 1911, and due the 30th day of January, 1915, bearing 6 per cent, interest from date, payable in Fort Worth, with usual attorney’s fees in case of default. The second count in the petition in the alternative seeks to recover on the ground that on 30th day of January, 1911, appellant subscribed in writing for the capital stock of said bonding company corporation for stock of the value of $1,750, and became liable and bound, etc. The petition also seeks a foreclosure upon certain collaterals appellant gave to secure the payment of said subscription. The amended petition of April 13,1921, sues upon and describes the same, so far as we can see not included in the original petition, alleging when appellant executed the note and delivered it as being secured by certain collaterals described, and sought now to be foreclosed. The amended petition of April 13, 1921, as in the original petition, seeks to recover in the alternative on the stock subscription as set forth in the original petition, and also seeks, as in the original petition, a foreclosure of the collateral security now fully described and attached to the last amended petition. We set out, as pleaded, the fifth paragraph of appellee’s amended petition as important to be considered in connection with appellant’s pleading and defense, as follows: “Plaintiff further alleges that on the 16th day of December, 1910, the Commonwealth Organization Company of Fort Worth, Tex., were promoting the organization of a casualty bonding and accident insurance company then contemplated to be incorporated under the laws of the state of Texas under the name of the Commonwealth Bonding & Accident Insurance Company or such other name as might be selected, and defendant on said date subscribed in writing for 50 one-tenth shares of stock of the par value of $10 each in said contemplated corporation, for which he agreed to pay $2,000, $250 of which he paid to the promoters of said contemplated corporation, and he agreed in writing in his said subscription to the capital stock of said corporation to pay the balance, namely, $1,750, to said Bonding & Accident Insurance Company, or its trustees in Fort Worth at any time after November 1, 1910, and immediately upon receipt of notice from the said Commonwealth Organization Company that its capital stock has been subscribed in good faith in amounts and at rates netting the company at least $200,000 of capital stock in the aggregate when paid, and defendant afterwards did receive such notice, such amount of the capital stock of said contemplated corporation having been so subscribed. Plaintiff further alleges that before said contemplated corporation had been incorporated the name of the proposed corporation had been changed to the Commonwealth Bonding & Casualty Insurance Company, the corporation of which plaintiff is receiver, and on, to wit, the 23d of March, 1911, it was incorporated under the' laws of the then territory, but now state, of Arizona, instead of under the laws of Texas, that this was all done with the knowledge and consent and acquiescence of defendant and all other subscribers to the capital stock of said contemplated corporation, and thereafter defendant, with full knowledge of all the facts in the premises, fully ratified and confirmed the change in the name of said corporation and its incorporation under the laws of Arizona instead of under the laws of Texas.” The note attached to the petition is shown to be dated June 30, 1911, instead of, as alleged, January 30, 1911. The subscription obligation is dated the 16th day of December, 1910, for 50 one-tenth shares of the capital stock of the Casualty Bonding & Accident Insurance Company, to be incorporated under the laws of the state of Texas, under the name of Commonwealth Bonding & Accident Insurance Company, or such other name as may be selected. The pleading of appellant was sufficient to raise all the defenses necessary for the disposition of the case without further reciting them. The cause was tried by the court without a jury, and judgment was rendered in favor of appellee, as of April 13,1921, for $3,407, with foreclosure. We do not think there is any merit in appellant’s assignments and propositions claiming that a new or different cause of action was set up by the amendment than originally sued upon. The petition sets forth the note and subscription for stock as a part of the petition, and for all purposes of variance will be treated as a part of the petition. Peters v. Crittenden, 8 Tex. 131; Greenwood v. Anderson, 8 Tex. 225; English v. Helms, 4 Tex. 228; Pyron v. Grinder, 25 Tex. Supp. 159—so also may be looked to, to control the pleadings. Morrison v. Keese, 25 Tex. Supp. 154; Longley v. Caruthers, 64 Tex. 287. When the petition, on its face, sufficiently sets out the cause of action and then prays for all relief, as this one does, ordinarily that relief to which the pleader has shown himself entitled to will be administered. Farrar v. Beeman, 63 Tex. 175; Grabenheimer v. Blum, 63 Tex. 369; Silberberg v. Pearson, 75 Tex. 287, 12 S. W. 850; Lee v. Boutwell, 44 Tex. 151. [736] The true test is laid down by Mr. Justice Brown in Phoenix Lbr. Co. v. Houston Water Wks., 94 Tex. 456, 61 S. W. 707, in determining the identity of causes of action, viz.: (1) Would a recovery had upon the original petition bar a recovery under the amended petition? (2) Would the same evidence support both pleadings? (3) Is the measure of damages the same in each case? (4) Are the allegations of each subject to the same defenses? From an inspection of the pleadings here, the answer to Mr. Justice Brown’s well-stated rules must be in the affirmative. There was left in the files of this case for our inspection a manuscript opinion delivered by Mr. Justice Hodges in Mann v. Mitchell, handed down April 13, 1922, which appears in volume 241, at page 715, of the Southwestern Reporter, that seems to the foregoing effect very well in point with this case. There are not two separate causes of action. The suit grows out of a subscription for stock, and was, so to speak, merged in the note likewise sued upon. Neither are abandoned. The cause of action is the same, and none other, in whatever form it appears described in the pleadings. The assignment is overruled. It is assigned and claimed as error that there was no legal liability or obligation resting upon the appellant to pay either the note or the subscription because the appellant subscribed for stock of a corporation “to be incorporated in pursuance of the laws of the state of Texas,” whereas, after securing his subscription for the capital stock, the parties’ met and organized a corporation, not under the laws of Texas, but under the laws of Arizona, a nonresident state. The facts show that, after said subscription for stock was delivered, a meeting of the subscribers to the capital stock- was held, at which meeting, .without any notice to appellant, the name of the proposed corporation was changed from Commonwealth Bonding & Accident Insurance Company to Commonwealth Bonding & Casualty Insurance Company, and that the place of incorporation was changed from Texas to Arizona. Appellant gave H. P. Brahan and M. H. Mills a joint power “to vote as my proxy at any annual or special meeting of the stockholders of the Commonwealth Bonding & Casualty Insurance Company for the election of directors and upon such other questions as may come before such annual or special meeting.” It was at this first meeting that the incorporation was changed from Texas to Arizona, and the corporation carried the defendant on its books as a subscriber in said Arizona corporation from June 30, 1911, to date of the appointment of the receiver. Appellant testified that he did not learn that the corporation had been incorporated under the laws of Arizona until about 1916, instead of the laws of Texas; .that, when he subscribed to the contract and gave his note, it was represented to him that the stock certificate would be issued and sent him at once, which was never done, and he has never received any stock in the company. He never attended a meeting of the company, and had no knowledge of the change from a Texas corporation to an Arizona corporation, Some time after the subscription for the stock was made he wrote asking why his stock was not sent him, and, after the new or second note was given, wrote asking same question and demanded return of note, if stock was not issued and delivered. On more than one occasion proxies were sent him for his signature, which he returned stating, as he had received no stock, “I did not consider I was a stockholder.” “No demand was made me [him] for payment of note until suit was filed against me by the receiver, and at that time I learned for the first time of the change of the name and place of incorporation.” Appellee introduced stock certificate No.' 13, issued to appellant for 50 shares of the capital stock of the company, dated June 20, 1911, coming from the possession of appel-lee, and never, as shown by the appellant, delivered to or seen by him, though he had made his demand for the stock subscribed. The power of attorney did not authorize the agent to bind the appellant to become a subscriber to stock in ,an Arizona company. The agent exceeded the authority. In construing a written instrument, effect must be given to the obvious purpose and Intent of the party creating the agency — what was in the mind of the appellant when he subscribed to stock in a Texas company, it was never contemplated that the Texas corporation stock subscription would be changed to a nonresident corporation. There was no authority given, express or implied, so to do, nor would the principal be bound by such usurped powers. This agency was one of trust and confidence, and, in so far as any action should be taken in organizing a Texas corporation, .the appellant would be bound. Such a doctrine is so well settled to cite authorities would simply be weighting and loading the opinion down. This foreign corporation, the outgrowth of the excessive act of appellant’s agent, so far as it affects appellant, had no right to convert appellant’s subscription, made to a Texas corporation, into and enter it on its books and carry the same as though it were a subscription to said Arizona company, without appellant’s knowledge, consent, or participation. It knew from the subscription of appellants that it kept and from the power of attorney it kept, construing the two together here, and the proceedings on its books, [737] that under such instrument the vote of appellant’s attorney which it received and acted on was not authorized, but contrary to the very terms of the subscription for stock in a Texas corporation. We do not agree with appellee in his statement, citing Davis v. Mitchell, Receiver (Tex. Civ. App.) 225 S. W. 1117, and the two other cases, that no other judgment could be rendered. While the cited Davis Case grows out of the same receivership, the same questions do not arise there as here. In the Davis Case, supra, the court is holding: First, collateral attack on the appointment of a receiver is improper; second, a judgment in favor of receiver will bar creditors represented by the receiver; third, that when a stockholder participates in a stockholders’ meeting, he cannot escape liability on the ground that by our Constitution, a corporation is forbidden to issue stock, except for money paid, labor done, or property actually received reasonably worth the amount of the stock. There is no evidence, outside of the unlawful. act of appellant’s agent in participating in the organization of an Arizona corporation in lieu of the Texas corporation to which appellant subscribed for stock, that he ever knew he had been misrepresented, or that it was claimed that he was a stockholder therein, or that his name was carried on its books, unis his uncontradicted evidence shows. Moreover, he has testified that he demanded his stock repeatedly, and it was never delivered to him. Had it been, he would have known the facts. That was not done. It was kept in the corporation’s possession until appellee introduced it in evidence. The fact that appellant executed notes and delivered collateral security to pay the subscription cannot be treated as either a waiver or acquiescence or ratification. No one can waive acquiescence in or ratify a fact unless they had previous knowledge of its existence. How can one ratify or confirm a thing unknown to him? Such a proposition is academic. A Texan may well desire to subscribe to stock issued under the laws of his own state and under its protection and control and with which and the operation of corporations thereunder he may be quite familiar, but entirely unwilling to subscribe to and become a member of an Arizona company, administered under its laws and practice, of which he may be ignorant, as well as ignorant of the persons and officers handling its affairs. The difference is too great to bind appellant as a subscriber thereto. He must have notice of its change to an Arizona corporation, or thereafter, with knowledge, have waived all objections thereto and ratified and confirmed the same. There is no evidence that he did, or anything tending to show that he did. It may be on another trial that sufficient evidence of notice may be brought home to him or other relevant facts introduced on all the issues, so we do not feel that we would now be justified in reversing and rendering the judgment, and the cause is therefore remanded to the trial court for another trial. Reversed and remanded.