Griffing Nurseries v. Texas Nat. Bank of Beaumont

WALKER, Chief Justice. This was an action by the Texas National Bank of Beaumont, appellee, against Griffing Nurseries, a joint-stock association, W. C. Griffing and his wife, Nellie R. Griffing, Ralph C. Griffing and his wife, Maurine Griffing, and the Misses Wilma and Sibyl Gunter, upon a promissory note in the sum of $8,000, dated 30th day of September, 1931, with interest at 6 per cent, per annum from date, and with the stipulation for attorney’s fee at 10 per cent., executed by “Griffing Nurseries, by W. C. Griffing, Pres.” The theory of the petition was that Griffing Nurseries was a partnership, that all the defendants owned shares therein, and were, therefore, partners. All the defendants, except W. C. Griffing, filed pleas in abatement. The pleas of Mrs. W. C. Griffing and Mrs. Ralph C. Griffing were sustained, and no complaint is before us against that ruling. The pleas of the other defendants were overruled, and, on trial to the court without a jury, judgment was rendered jointly and • severally against them for the relief prayed for. The lower court did not file conclusions of fact and law. Griffing Nurseries, Ralph C. Griffing, and the Miss Gunters perfected their appeal to this court, and have assigned error that the court erred in overruling their pleas in abatement. The plea in abatement of Griffing Nurseries was to the effect that, as a joint-stock association, it was dissolved prior to the institution of this suit. The pleas [426] in abatement of the other defendants presented the issue that they did not own stock in Griffing Nurseries, and were, therefore, not liable as partners. Appellants concede, under Thompson v. Schmitt, 115 Tex. 53, 274 S.W. 554, that, as organized and all during its existence as a joint-stock association, Grif-fing Nurseries was a general partnership, and that all persons owning stock therein occupied the relation of partners to each other. The Miss Gunters were employees of Griffing Nurseries before and long after the execution of the note in issue. As a bonus, in addition to their regular salary, they were given certain shares of stock in Griffing Nurseries, which they held, claimed, and owned before the note in question was issued, and continuously thereafter, long after the execution of the note. On this statement, these appellants were partners, and the judgment of the lower court was properly rendered against them as such. It is immaterial that this stock was originally given to them as a bonus for services rendered, in addition to their regular salary. By accepting the stock, claiming it, and exercising over it acts of ownership, they made themselves members of the partnership. The following proposition of law announced in Houston Finance Corporation v. Stewart (Tex. Civ.App.) 7 S.W. (2d) 644, 647, sustains this conclusion: “If the debt in question had existed as a charge against the Houston Finance Corporation at the time Wiley inherited his stock, he would not be personally liable thereon. However, he became the owner of said stock on July 30, 1921. The debt sued upon was not incurred until January 28, 1922. Meantime said Wiley had asserted his ownership of said stock, had been recognized as its .owner by the partnership, and had received dividends thereon up to December 31, 1921. Having thus participated in the business of the partnership after he became such owner, having been recognized as such, and having claimed the benefits accruing to the partnership subsequent to the date he acquired his interest, he was, we think, chargeable also with the liabilities thereof incurred subsequent to such time. Miller v. Marx & Kempner, 65 Tex. [131] 133.” The facts of the plea of Ralph C. Grif-fing are as follows: On the 5th day of September, 1929, Ralph C. Griffing entered into the following contract with his father, W. C. Griffing: “Memorandum of Agreement “The State of Texas 1 “County of Jefferson J “This agreement entered into by and between W. C. Griffing, hereinafter known as Party of the First Part, and Ralph C. Griffing, hereinafter known as Pajty of the Second Part, both of Jefferson County, Texas, to-wit: “Whereas, the Griffing Nurseries, has been duly organized under the laws of the State of Texas, and recorded in the Records of Jefferson County, Texas, as a Joint Stock Association, same being recorded on January 29, 1929, in Volume 313, page 480, the said instrument being dated December 15, 1928, effective as of July 1, 1928; and “Whereas, the Griffing Nurseries was organized so that the Real Estate and personal property actually used for the Nursery business would show a profit or loss derived from the operation of the Nursery business,, and further to induce new members of', the organization to earn an interest in the Nursery business as a bonus as their ability and services warranted; and desired to so do; and “Whereas, Ralph C. Griffing, son of W. C. Griffing, will finish his College Course at Texas A. & M. College in June, 1930, and has expressed a desire of making the Nursery business his life’s work, and has shown a desire to become owner of Certificates of participation in the Griffing Nurseries Trust; and “Whereas, W. C. Griffing is owner of Three Thousand (3000) Shares of participation in the Griffing Nurseries Trust, which he agrees to sell to the said Ralph C. Griffing for the consideration of seventy-five thousand ($75,000.00) dollars in cash, without interest, to be paid within five years from the date of this agreement, and upon the payment of which obligation, the said W. C. Griffing agrees to deliver unto the said Ralph C. Griffing, the said shares of Participation. “Now therefore, in accordance with this transaction, W. C. Griffing has had such shares of participation in Griffing Nurseries Trust issued to Ralph C. Griffing, and in consideration of the obligation on the part of Ralph C. Griffing, he has indorsed such shares in blank to W. C. Griffing, who is to hold and control such [427] shares until the purchase price is paid m full, it being expressly understood that Ralph C. Griffing assumes no responsibility or obligation for the shares until he has them in his possession. “It is understood and agreed that the Party of the First Part shall continue to control and manage the trust and will continue to use his best judgment as President and Trustee, and the Party of the Second Part is to hold Party of the First Part absolutely harmless for any acts or mismanagement. “This Agreement signed in duplicate, this Sth day of September, 1929, A. D., at Beaumont, Texas, by and between the parties hereto, to remain in full force and effect until a mutual agreement is reached between the parties hereto. “W. C. Griffing “Party of the First Part “Ralph C. Griffing “Party of the Second Part.” In January of 1935, by mutual consent between father and son, this contract was canceled. On July 12, 1935, before this suit was instituted on the 26th day of July, 1935, W. C. Griffing dissolved Griffing Nurseries. Ralph C. Griffing had assets of very small value exclusive of the interest granted him by this contract. Dur-. ing the life of the contract, his salary was sometimes $200 per month, again only $100 per month. During the life of the contract, after the execution of the note in controversy, he filed an affidavit claiming to own stock in Griffing Nurseries. He never had the stock in his possession and never exercised any act of control or management over it. It is our conclusion, on the undisputed facts, that .Ralph C. Griffing never acquired title to the stock involved in the contract between him and his father; that he had nothing more than a contract to purchase the stock on the consideration named. Construing the contract, the parties thereto expressly agreed that Ralph C. Griffing assumed no responsibility under the contract until he had the stock in his possession. No language of the contract bound Ralph C. Griffing to pay the $75,000, or any other sum. There was no language in the contract of sale vesting present title in Ralph C. Griffing; the express language of the contract is that W. C. Griffing “agrees to sell to the said Ralph C. Griffing.” That Ralph C. Griffing may have had an enforceable contract against his father whereby he had the right to acquire the title to three thousand shares of stock is immaterial. The determining point is that, in fact, he had no title to this stock, and therefore was not a member of Griffing Nurseries. Millers’ Indemnity Underwriters v. Patten (Tex.Com.App.) 250 S.W. 154. Griffing Nurseries was sued as a joint-stock association, and makes the point on appeal that, since it had been lawfully dissolved, appellee could not maintain an action against it in that character. We pre-termit a discussion of this point. All members of the association were before the court as parties defendant, thereby bringing into court all its assets, whether it be considered a joint-stock association or a mere partnership. It follows that the judgment of the lower court against Ralph C. Griffing must be reversed and judgment here rendered in his favor; that he go hence without day and recover of and from appel-lee his costs. In all other respects, the judgment of the lower court is affirmed. In part, reversed and rendered; in part, affirmed.