Day Ranch Co. v. Hubert Woodward

McClendon, o. j. Day Ranch Company (designated hereto Day Company) sued Hubert & Woodward on several promissory notes given as consideration for leases of ranch lands covering, respectively two periods: The year 1922, and from January 1, 1923, to April 1, 1924. Since-no complaint is made of the judgment in favor of Hubert & Woodward, based upon a discharge in bankruptcy, that phase of the case will not be further noted. Cattle and other live stock belonging to Hubert & Woodward and covered by chattel mortgages held by the Inter-State- National Bank and Inter-State Cattle Loan Company (designated herein Inter-State Companies) were pastured on the leased property during the lease period; and the Inter-State Companies were sued on the notes and lease contracts, upon the following: theories: 1. That Hubert & Woodward were notoriously insolvent; the Inter-State Companies’ loans were in excess of the value of their security, and they were therefore the real owners of the cattle; and Hubert & Woodward: were their agents in executing the notes and making the lease contracts. 2. That the Day Company had agister’s and equitable liens upon the cattle superior to the mortgage liens. And 3. That the Inter-State Companies had obligated themselves to pay the debt due the Day Company. The judgment was in favor of the Inter-State Companies upon a directed verdict, and the Day company has appealed. The questions the appeal presents are whether the Day Company made a prima facie case against the Inter-State Companies under any of the above theories. The pertinent facts follow: Hubert & Woodward were stockmen, operating upon a large scale. In 1921 they owed the Inter-State Companies a large sum of money secured by druly registered chattel mortgages on their live stock. These loans were extended from time to time during the years 1922 and 1923. In the fall of 1921 there was a slump in the live stock market, followed by a steady further decline during 1922 and 1923. The evidence will support a finding that during 1922-1923 Hubert & AYoodward were in financial straits and possibly insolvent. Their financial condition was known both to the Day Company and the Inter-State Companies. January 1,1922, Hubert & Woodward executed one of the notes in suit in favor of the ranch company, which recited that it was given to cover a lease for the year 1922, on certain designated ranch lands; and January 1, 1923, the remaining notes in suit were executed in like manner with a like notation as to consideration for the second loan period. *253 All of tlie notes were signed by Hubert & Woodward and by tbe individual members of tbe firm. Under tbe lease agreements, Hubert & Woodward bad full possession and control of tbe pastures leased, with tbe right to use tbem or not and to pasture sueb live stock on tbem as they cbose. On several occasions in 1921-1922-1923, Woodward went to Kansas City, and interviewed Hovey, president of tbe Inter-State Companies. Tbe following quotation from bis testimony substantially reflects tbe negotiations and relations existing between Hubert & Woodward and tbe Inter-State Companies: ■“I went to bis office in Kansas City and talked to bim about my business in 1921. I discussed tbe question with bim of my need of assistance in looking after tbe stock and buying feed for it, in 1921, 1922 and 1923. He asked me to furnish bim some estimates of my needs along tbat line. “During tbat term of years, 1921, 1922, and 1923, I included the items of necessary expense to bold tbe stock -and carry tbem over one year to another, including tbe cost of pasturage. But I just do not remember tbe dates. I went more often in tbe spring of the year, and then I bave gone along in tbe fall of tbe same year. That would make twice a year. I bave furnished tbem a list of my needs in that respect; I bave done such a thing: I bave done tbat more than once; possibly so. “As to wbat if any statement be made to me with reference to giving me assistance— he loaned me some money. As to whether be made any statement to me as to meeting any reasonable demands to cover expenses of that kind: Well, be let me bave tbe money for it. I would get it in advance, and there would be times I would check on him and then send my expense ■ account in on tbe last of tbe month. As to why I furnished bim with a list of necessary expenses, pasturage, etc. — well, I did tbat you might say at bis request.” “As to Whether Mr. Hovey ever did tell me to promise anybody else tbat tbe bank or tbe loan company would pay any debt owed by us: I never did represent tbe bank in tbat capacity, no sir. He never did tell me to do tbat.” “In explanation of my statement tbat Mr. Hovey bad told me tbat be would furnish me certain money: tbat was in tbe nature of a loan. Tbat particular money was used for tbat particular purpose; it was used for tbat particular purpose every time.” In tbe fall of 1922 Woodward gave tbe Day Company a draft on tbe Inter-State Companies for $3,200, which was paid and credited on tbe notes. After tbe suit was filed, the live stock not theretofore sold and applied on tbe mortgages was sold by agreement of tbe parties, and'the proceeds held in bank to abide the result of tbe suit. Upon the question of agency: There is nothing in tbe record to show tbat such relation existed. Tbe facts tbat tbe value of tbe security bad depreciated to such an extent that it would not bring tbe face of tbe mortgages, and tbat Hovey from time to time made advances, represented by additional loans, to Hubert & Woodward to cover expenses in connection with the live stock, were not sufficient we think to create tbat relation. Tbe evidence is clear .not only that the Inter-State Companies were interested in preserving their security and seeing that it was sufficient to meet tbe mortgaged debt, but tbat Hubert & Woodward were also trying to work out their financial troubles, not alone for tbe purpose of discharging tbe mortgages, but to secure for themselves an additional return. They were not in the employ of the Inter-State Com•panies, and their only interest in looking after tbe livestock was one personal to tbem, tbat is, to discharge their indebtedness and realize a surplus. It has been repeatedly held in this state that tbe relation of mortgagor and mortgagee, where tbe mortgagor is left in possession of property requiring care, sustenance, or upkeep, does not create tbe relation of principal and agent. Blackford v. Ryan (Tex. Civ. App.) 61 S. W. 161; Overland v. Findley (Tex. Civ. App.) 234 S. W. 106, 107. Hovey did not bind bis companies in any way to pay or discharge any obligations of Hubert & Woodward. Nor did be authorize tbem to contract any obligations on behalf of bis companies. He merely made agreements from time to time to make additional loans to tbem to cover itemized statements of expense, and these agreements were carried out in each instance. Furthermore, all of tbe facts relied upon to constitute agency were known to the Day Company, and tbe case therefore falls within tbe rule tbat when. the principal is disclosed be cannot be held upon a contract in tbe name of tbe agent. Heffron v. Pollard, 73 Tex. 96, 11 S. W. 166, 15 Am. St. Rep. 764. The cases of Blalack & Son v. Loan Co., 267 S. W. 474, and Commercial Co. v. Brown, 284 S. W. 911, both by tbe Commission of Appeals, are clearly conclusive we think of tbe priority of tbe mortgage liens over any equitable or agistment lien tbe Day Company might bave bad upon tbe mortgaged live stock. The holdings in these cases are clear and unequivocal, and we think it unnecessary to discuss tbem. They expressly overrule a number of decisions by tbe Courts of Civil Appeals upon which tbe Day Company relies. Independently of tbe holdings in those cases, however, it is quite clear tbat tbe Day Company acquired no agister’s lien, and we *254 seriously doubt whether any lien-at all was acquired by them. The contract between Hubert & Woodward and the Day Company was not one for pasturage or for furnishing necessaries'in-the way of labor or supplies in connection with the care of the live stock. The transaction comes within the following rule: “Where pasture land is leased for grazing purposes, and the lessee is given absolute control, the statutory lien given to agisters is not available to the lessor, as the lessor does not feed, care for, or attend to the animals.” See Hindes v. Lock (Tex. Com. App.) 259 S. W. 156; 2 Tex. Jur. p. 743, and authorities cited in note 12. As already stated, there is nothing in the record to support a finding that the InterState Companies obligated themselves to pay the notes or the indebtedness represented thereby. If, however, the negotiations between Hovey and Woodward might under any view be susceptible of that interpretation, such promise would come within the Statute of Frauds (Rev. St. 1925, art. 3995, § 2). The trial court’s judgment is affirmed. Affirmed.