JONES, C. .1.
In a suit instituted in a district court of Dallas county by F. W. Coleman, appellant, and H. N. Rogers, against appellees, O. R. Miller and C. R. Miller Manufacturing Company, a private -corporation, judgment was rendered on a verdict of a jury on. special issues, in favor of appellant for $1,063.93, against C. R. Miller Manufacturing Company and in favor of O. R. Miller. No judgment was rendered in favor of Rogers, as he had, previous to the trial, compromised and settled his alleged part of the cause of action. Judgment was also rendered in favor of appellant on the cross-action of C. R. Miller Manufacturing Company. Rogers is not a party to this appeal.
For convenience, Coleman will be referred to as appellant, appellee C. R. Miller by name, and appellee O. R. Miller Manufacturing Company as the Miller Company.
During the time under inquiry, appellant and Rogers were doing business as copartners, under the trade-name of Textile Finance Company, hereafter referred to as Finance Company. The Miller Company was chartered May 13, 1919, wtih a capital stock of $1,750,000, divided into shares of the par value of $100, of which shares, 15,000 represented common stock and 2,500 preferred stock. It operated a large manufacturing plant in the city of Waco, with this as its capital stock for approximately five years. In the summer of 1924, an amendment to the charter was authorized by the board of directors and secured from the state, increasing its capital stock to $3,250,000, by the issuance of 15,000 new shares of stock, of the par value of $100 each. At this time, the Miller Company ba0 been a solvent and going institution for more than two years- — in fact, from the time it opened business in 1919. C. R. Miller was president and general manager of the Miller Company. In order to consummate the purpose of this amendment to the charter, and to realize in money the par value of the increased issue of stock, Miller, as manager, at once began negotiations with appellant and Rogers to conduct a sale of the new issue of stock. An agreement between the parties was consummated, appel-ilant and .¿Rogers contracting under their trade-name of Textile Finance Company. The final draft of the written contract was made and executed on September 22,1924, and this contract in part forms the basis of this suit. This contract on its face recited that the Finance Company had become the purchaser of 14,250 shares of the common stock of the Miller Company at the value of $100 per share. This purchase represented all but 750 shares of the increase of capital stock, such remaining shares being subscribed for by C. R. Miller. No portion of the recited purchase price of these shares was paid in cash by the Finance Company and no shares were then issued to it. The plan, as understood and acted upon by the parties, was that the Finance Company was to sell these allotted shares of stock to other purchasers as the property of said company, and when shares were sold and fully paid for by the purchaser, they would be issued either to the purchaser direct, or to the Finance Company, to be transferred to the purchaser.
In January, 1925-, the Miller Company decided to purchase cotton mills in the cities of Dallas and McKinney and to pay therefor by a further increase of its capital stock, from $3,250,000 to $6,000,000, such increase in capital stock to be accomplished by the issuance of 27,500 new shares of stock, each share to be of the par value of $100, 13,780 shares of which to represent common stock and 13,720 shares to represent preferred stock. The charter was duly amended and the contemplated increase of stock authorized. Appellant alleged in his petition that an oral agreement was entered into between the Miller Company and the Finance Company, under which the Finance Company should have the right to sell 17,000 shares of this latest issue of stock, on the same terms of the existing contract. This alleged oral agreement also in part forms the basis of this suit.
The petition alleged a breach by the Miller
Company, both of the September contract and the alleged oral contract, in that the completion by the Finance Company of these contracts was rendered impossible because of the wrongful and unauthorized conduct of Miller and the Miller Company. The allegations in reference to this alleged conduct of appellees, set out at length and in specific terms the acts and conduct of the parties constituting the alleged wrongful conduct in this respect. Briefly stated, the effect of these allegations is to charge Miller, as the manager, and the Miller Company, of disorganizing the large sales force the Finance Company had organized and which was necessary for it to complete the sale of this stock within the contract time; and, further, that the Miller Company, in violation of the contract, organized a sales force of its own and began an active campaign of its own to sell the stock the Finance Company had been given the exclusive right to sell; that in organizing its own sales force, the Miller Company wrongfully induced many members of the Finance Company’s sales force to quit its employment and take employment from the Miller Company to sell this stock, and that by reason thereof the Finance Company was denied by appellees the right to complete the contract, at a time when, by the expenditure of large sums of money in perfecting its organization and in advertising the stock, and in interesting the purchasing public in the buying of this stock, the Finance Company was certain of full performance of the contract and 'of reaping the full benefit therefrom. Damages are claimed because of the alleged loss suffered by this breach.
In addition to this claim for damages, the petition also alleged the failure by the Miller Company to pay to the Finance Company earned commissions in a sum in excess of $40,-000, collected from purchasers of stock on a deferred payment plan, which was due the Finance Company for unpaid commissions on such sales. Claim is further alleged against the Miller Company for reimbursement under the contract for a sum not exceeding $20,000 for advertising expenses incurred by the Finance Company. '
Appellees filed very elaborate pleadings in answer to appellant’s petition. These answers deny any wrongful conduct, as alleged by the Finance Company, that could have hindered or prevented it from carrying out the September contract, or that the contract was breached in any particular by the Miller Company. Appellees alleged that the Finance Company breached the contract by voluntarily abandoning any attempt to complete same. Appellees denied that the Miller Company ever contracted with the Finance Company to sell any of the latest issue of stock, and that in reference to such issue of stock no contract relations existed between the said companies. The Miller Company also denied that any sum is due the Finance Company for com-missions alleged to be withheld by it, but, on the contrary, that under the terms of the contract, the Finance Company had collected an. excess of commissions on sales of stock made by it; that this excess is approximately $17,-500, and the Miller Company filed a cross-action over against the Finance Company to. recover such amount.. The allegations of the-respective answers are full and .complete and show on their face no right of damages and no overdue commissions, as alleged by appellant. The allegations of the cross-action will be discussed later.
The Miller Company further defends this claim, on the ground that, the September contract being voluntarily abandoned by the Finance Company, suit did not lie on the contract for- recovery of the alleged unpaid commissions. The Miller Company also claims in its answer that the suit attempted to be prosecuted by appellant could not be maintained, because the alleged contracts forming the basis of this suit are in direct violation of the 'Blue Sky Law (Rev. St. 1925, arts. 579-600), and that such contracts, if entered into, were void and could not be made the basis for this suit. After the settlement was consummated with Rogers, appellees filed a plea in abatement, on the ground that the suit could not be continued against them in the names of appellant and Rogers after such settlement, but that appellant, if he desired to pursue his alleged cause of action, could do so by filing a new suit in his name only. This plea was overruled. Rogers also filed a plea alleging his settlement with ap-pellees, and praying that he be dismissed from this suit. This plea was denied.
The case was submitted to the jury on special issues and, findings made thereon. Tbe findings material to the questions to be discussed are: (1) That the Miller Company was indebted to appellee in the sum of $1,063.93 as his one-half interest in the commission on the sale of stock under the contract of September, 1924; (2) that no later contract was entered into with the Finance Company to sell any portion of the increase of stock to $6,000,-000; (3) that the Miller Company, acting through O. R. Miller, did not wrongfully prevent the Finance Company from completing sale of the issuance of stock covered by the September contract; (4) that C. R. Miller did not wrongfully cause the Miller Company to prevent the Finance Company from completing. the sale of stock under the September contract; (5) that the Finance Company failed to perform the September contract before the ifinal sale of all stock therein agreed to be sold by it; (6) that the Finance Company ceased efforts to market the stock covered by the September contract about the middle of June; (7) that misrepresentations were made by salesmen of the Finance Company to purchasers of stock under the Sep
tember contract; (8) that the Miller Company suffered no damages by reason of such misrepresentations. Under these findings, the court entered the judgment above described.
Numerous errors are assigned by appellant to the action of the court in refusing to sustain special exceptions directed to allegations in the answers of appellees. Error on the finding of the jury as to the amount of money due appellant' on his claim for commissions alleged to be withheld, because (l)'it is unsupported by evidence, and (2) it is supported by insufficient evidence. Also numerous assignments on the ruling of the court on the admission of evidence during the trial of the case, and assignment of error on alleged improper argument of counsel for appellees. There are also assignments of error on practically each adverse finding of the jury, as well as assignments on the manner in which certain issues were submitted, and on the refusal of the court to submit these issues in the form requested by appellant.
Appellees have filed cross-assignments, of error on the refusal of the court to give their requested peremptory instructions, because of the illegality of the two contracts, and further because of the finding of the jury to the effect that the failure of the Finance Company to complete the September contract was due to voluntary abandonment, for which ap-pellees were blameless, and as the suit for recovery of commissions withheld is based solely on this contract, no recovery for such commissions could be had, and judgment should have been entered for appellees.
Under our construction of the September contract, which construction the parties thereto adopted in their dealings with each other, the Finance Company was given the exclusive right to sell 14,250 shares of the 1924 issue of stock upon the following conditions: (1) The stock to .be sold at $130 per share and sold as the stock of the Finance Company; (2) of this purchase price, the Finance Company should receive $30 per share and the Miller Company $100 per share; (3) the Finance Company to bear all expenses of sale, including advertising, except that,- on the completion of the contract, the Miller Company would pay to the Finance Company the sum of $20,000 as part of the advertising expense; (4) the Finance Company to assume all responsibility with á purchaser of stock, of any claim arising out of such purchase and, in effect, the Miller Company to be exempt from liability on any such claim; (5) the Finance Company must sell the stock, either for cash or for one-half cash and the remainder by the execution by the purchasér to the Miller Company, as payee, of short-time note or notes; (6) stock paid for in cash by the purchaser to 'be at once issued by the Miller Company, either to the purchaser or to the Finance Company, and transferred by the Finance Company to such purchaser; (7) no stock to be issued to the purchaser when notes were issued for deferred payments until such payments were made, when all of the stock purchased would be issued in the same manner as to a purchaser for cash; (8) if the Finance Company contracted with a purchaser, for the sale of stock for one-half cash and one-half on deferred notes, $40 on each share of stock so sold, together with the notes for deferred payments, to be delivered at once to the Miller Company and the remainder, or $20 per share, of the cash payment to be retained by the Finance Company; the Miller Company to remit the balance of $10 per share to the Finance Company when the stock was issued; (9) the September contract to be completéd by July 1, 1925.
This contract is made up of the original draft executed September 19, 1924, and by additions made to comply with the agreement actually entered into between the parties. These additions consist of a supplemental contract and of a letter written to the Finance Company by Miller, as manager of the Miller Company, further supplementing the contract.
It was further stipulated in the contract that: “If the Textile Finance Company should violate any of the provisions of this contract, that party of the first part (The Miller Company) will have the right to immediately cancel and terminate this contract by simply giving party of the second part (Textile Finance Company) notice to that effect, and it is agreed and understood that, if party of the second part, in re-selling the stock hereinbefore mentioned, should fail to comply with the laws of this State, then in such event, party of the first part will have the right to terminate this contract by giving notice in writing to party of the second part to that effect.”
On September 22, 1924, the Miller Company received, on its application, from the secretary of state, “Exemption No. 154,” which is as follows:
“Exemption No. 154:
“Department of State, Blue Sky Division, the State of Texas
“Know all men by these presents:
“That C. R. Miller Mfg. Company, Waco, Texas, a domestic corporation chartered under the laws of the State of Texas on the 31st day of May, 1919, under the name of Miller Cotton Mills, having at this time an authorized capital stock of $1,750,000.00, divided into shares of the par value of $100.00 per share; 2500 shares of said stock being preferred stock and 15000 shares of said stock being common stock, said corporation being chartered for the following purposes, to wit:
“ ‘The transaction of a manufacturing business, to wit: tiie manufacture of cotton goods, particularly cotton piece goods, and the purchase and sale of goods, wares and merchandise used for such business,’ has filed with
the Secretary of State of the State of Texas, an application with its accompanying documents and exhibits, asking for an Exemption from the requirements of the Blue Sky Law of this State for the issuance and sale of 15000 shares of the par value of $100.00 per share, for the purpose of increasing the capital stock of said corporation from $1,750,000.-00 to $3,250,000.00, said increase in said stock to be sold at the par value of $100.00 per share, no commissions to be paid for the sale of the stock, and all other sales expense for the sale thereof not to exceed 5% upon the sales price of said stock, and no amount of said stock to be issued for promotion, compensation or other purposes except for value.
“Now, therefore, I, J. J. Strickland, Secretary of State of the State of Texas, do hereby certify that said application and its accompanying exhibits have been examined and upon full consideration thereof, do hereby grant an exemption from the requirements of said law to the said C. R. Miller Mfg. Company, to offer for sale and sell 15000 shares of common stock of the par yalue of $100.00 per share, to be sold at the price of $100.00 per share for the purpose of increasing said capital stock of said corporation from the sum of $1,750,000.00 to $3,250,000.00, no commissions to be paid for the sale of said stock, and all other sales expense for the sale thereof not to exceed 5% upon the sales price of said stock, and no amount of said stock to be issued for promotion, compensation or other purposes except for value. The sale of said stock to be made and conducted in all things in accordance with the Constitution and laws of the State of Texas, the Blue Sky Law thereof, said application and this exemption granted thereon. This exemption is permissive only and no recommendation is hereby made of said stock.
“In testimony whereof, I have hereunto signed my name officially and have caused to be impressed hereon the Seal of State at my office in the City of Austin, Texas, this the 22nd day of September, A. D., 1924. “[Seal] (S) J. J. Strickland,
“Secretary of State.”
On February 9, 1925, after the second charter amendment, increasing the capital stock to $6,000,000, on the application of the Miller Company, the secretary of state issued “Exemption No. 154-A.” This exemption is worded similarly to the one above copied, except that it makes the necessary change in the amount of the capital stock of -the Miller Company, and recites that it had filed an amendment to its charter increasing its capital stock to $6,000,000, and recites the character of stock to be issued, giving the amount of preferred stock and the amount of common stock. In all other respects, this exemption is the same as the previous one. On the 8th day of June, 1925, the secretary of state, on application of the Miller Company, issued “Exemption 154^0,” which is as follows:
“Exemption No. 154M3
“Department of State, Blue Sky Division, the State of Texas
“Know all men by these presents:
“That C. R. Miller Mfg. Company, a corporation chartered under the laws of the State of Texas on the 31st day of May, 1919, and having received Exemption No. 154-A under the Blue Sky Law from the Secretary of State of Texas, on the 9th day of February 1925, for the sale of 13780 shares of common stock and 13720 shares of preferred stock, to be sold at the par value of $100.00 per share, the purpose of said sale being to increase the capital stock of said company from $3,250,000.00 to $6,000,000.00, has filed in the office of the Secretary of State of the State of Texas an application for the privilege of selling the unsold portion of said 13780 shares of common stock at a price of $130.00 per share.
“Now, therefore, I, D. A. Gregg, Acting Secretary of State of the State of Texas, do hereby certify that said application and its accompanying documents and exhibits have been examined, and upon full consideration thereof, do hereby grant to the said C. R. Miller Mfg. Company the privilege of selling the unsold portion of said 13780 shares of common stock at a price of $130.00 per share; the commissions for the sale of said stock not to exceed $15.00 per share. This exemption is permissive only, and no recommendation is hereby made, or is intended to be made of said stock.
“In testimony whereof, I have hereunto signed my name officially, and caused to be impressed hereon the Seal of State at my office in the City of Austin, Texas, this the 8th day of June, A. D., 1925.
“[Signed] D. A. Gregg,
“Acting Secretary of State.”
■ The evidence conclusively shows that the Finance Company, on the execution of the September contract, at once organized a large sales force and went diligently to work to execute this contract; that a large amount of literature, advertising this stock, was printed and mailed to many parties over the state, whose adresses had been ■ secured from the tax lists of the different counties; and that there had been sold by the Finance Company approximately 12,500 shares of stock under the September contract, at the time the Finance Company ceased operations. The Finance Company, under the approval of C. R. Miller, as manager of the Miller Company, used the following printed form of application, which form was signed by all purchasers of stock and constituted the written contract between the Finance Company and the purchaser of stock:
“Purchasing Contract. for Capital Stock of the .C. R. Miller Mfg. Co.
“No; 417 No. Shares-
“Incorporated under the laws of the State of Texas.
“Authorized Capital, $3,250,000.00.
“General Office: Cotton Mills:
“Dallas, Texas. Waco, Texas.
“Par Value $100.00 Sale Price $130.00 per share
“I hereby apply to the Textile Finance Co. of Dallas, Texas, and subscribe for and agree to accept upon delivery-— shares of the capital stock of the C. R. Miller Mfg. Co. Par Value $100.00, Sale Price $130.00 per share, payable as follows: Not less than one-half cash, accompanying this application, and the balance thereof, as evidenced by my promissory note of this date.
“It is further understood that no stock shall be delivered to the- purchaser until the agreed consideration therefor is paid in full in cash and any payment becoming due on the stock hereby purchased for any note given for said stock, not paid within sixty days after due, shall at the option of the seller cause this contract and note or notes given therefor to become null and void and all payments made on the contract by the purchaser shall become the property of the seller absolutely as liquidated damage for the failure of the purchaser to carry out his contract.
“This contract may be rejected by refunding all moneys paid thereon, also contains the entire agreement and no agent or representative of the seller or any other person has any power to change or alter the terms of this contract.
“This stock is owned by the Textile Go. and the O. R. Miller Mfg. Co. is in no way party to this contract.
“Dated this-day of-, 1924.
“---, Representative’.
“-, Purchaser.
“Name, - (Print in name of Subscriber)
“Address: - County - State -- Occupation-.
“Received of- of- the sum of ■-Dollars Cash $-
Notes-
“It is agreed for the convenience of the seller of said shares of stock that all checks, drafts or money orders must be made payable to the C. R. Miller Mfg. Company.
“Textile Finance Co., 205 Magnolia Bldg., Dallas, Texas.”
After the second amendment of the Miller Company’s charter, increasing the capital stock to $6,000,000, another form of purchasing contract was prepared under approval of Miller, and used by the Finance Company, as the contract of purchase between such company and the purchaser of the stock. This was substantially as the form above copied, except the authorized stock is given as $6,000,-000.
The evidence further shows that the sale of the stock increased month by month until about in May, 1925, when the dispute came up between the parties as to the right of the Finance Company to sell the new issue, of stock under the alleged oral contract.
The evidence further discloses that in the early part of June, 1925, the Miller Company began the organization of a sales force for the disposition of the unsold portion of its stock, and a number of salesmen
who
had been in the employ of the Finance Company left such employment and accepted similar employment with the Miller Company. After this had occurred, the Finance Company, claiming that the Miller Company had violated the terms of the agreement and had destroyed its sales force, ceased its attempt to complete the September contract. From this arose the conflicting claim as to which party breached the contract. The evidence of this conflicting issue is voluminous, and we will not further refer to same, except to state that the finding of the jury that the Finance Company breached the contract is sustained by substantial evidence.
The evidence, as to the oral contract for the sale of shares of the new issue, is conflicting. Appellant testified positively to the making of such an agreement, and introduced in evidence newspaper advertisements, which appeared in Dallas newspapers shortly after the time he claimed the oral contract was consummated. These ‘ advertisements contained subject-matter consistent only with appellant’s claim that such contract was made. Appellant testified in positive terms that these advertisements, as they appeared in the papers, were submitted to Miller as president and manager of the Miller Company, and approved by him. The securing of the second exemption for the sale of new stock to be issued, above referred to, by the Miller Company to the precise effect as the one secured under the former amendment to the charter, also tends to corroborate appellant’s claim in this respect.
On the other hand, Miller in positive terms denied the making of such a contract with the Finance Company,’ and in this he is corroborated by, the testimony of Rogers and by the testimony of other witnesses. Miller testified that the advertisements, as they appeared in the Dallas newspapers, were not the advertisements that he had approved, claiming that the matter which tended to show that the Finance Company had the right to sell this new issue of stock was inserted after his approval. The fact as to whether there was such a second contract between the parties became, therefore, a sharply contested issue for the jury to determine, and the finding that there was no such
contract entered into is supported by substantial evidence.
In our opinion, the finding of the jury in favor of appellant for the sum of $1,063.93, as appellant’s interest in the amount -of money withheld on sales of stock that had been made, is entirely without support in the evidence. It is our opinion that the evidence as a whole conclusively shows that there was due and owing to the Finance Company, on commissions it had earned from sales of stock, which commissions the Miller Company had collected from purchasers of stock on deferred payments, the sum of $20,785, of which sum appellant’s interest is $10,392.50, and the verdict should have been in such an amount. Other facts will appear in the discussion of the issues involved on this appeal.
It is appellees’ theory that appellant neither by pleading, nor by proof,, presented a cause of action upon which a valid judgment in favor of appellant could be rendered. This theory is based upon the contention that, both by pleading and by proof, appellant disclosed that the alleged contracts upon which his recovery is based are void, because the subject-matter of both alleged contracts is in violation of law, and the courts will not adjudicate disputes between parties to a contract made in violation of law.
This contention is based upon certain provisions of our Blue Sky Law, which appellees charge were violated by the terms of the alleged contracts. The September contract binds the Finance Company to sell each share of stock for $130 per share, and allows such company upon each sale of a share of stock the sum of $30, and the Miller Company is allowed on such sale the sum of $100, or the par value of the share of stock sold. A specific claim is made’ that this is in violation of article 583 of the Blue Sky Law, which declares that: “Commissions for the sale of stock and other securities, promotion, and all other incidental expenses shall not, in the aggregate, exceed twenty per cent of the price at which the stock or other securities are to be sold, as shown by the application or amended application.”
That, under the contract pleaded by appellant and introduced in evidence, the commission allowed was, in itself, in excess of the statutory maximum for all expenses of sale, including commissions. It is also claimed that the instrument issued by the secretary of state and styled by that officer “Exemption 154” does not exempt the sale of this stock from the provisions of the Blue Sky Law, and was not issued under the provisions of article 588, prescribing the conditions under which such an exemption is allowed, but that such instrument shows on its face that it was issued under the provisions of article 580, which required the Miller Company to secure a permit to sell its stock; that under a provision of said article, the Miller Company was required to state the price for which its stock would be offered for sale, and the commission to be paid to any agent for the selling of such stock; that in compliance with this provision, the Miller Company, in the application made, represented that the stock would be sold at $100 per share, and that the entire expense for such sale would not be in excess of 5 per cent., and that on this condition the secretary of state issued a permit, erroneously styled by such officer “an exemption”; that the contract showed on its face to be in violation of the, condition on which the permit was issued.
In conformity to this contention, appellees requested peremptory instructions in their favor, duly objected to the submission of any issues to the jury, filed motion for judgment notwithstanding the verdict of the jury on special issue No. 1, and have' duly presented cross-assignments of error.
Were the operations of the parties, under the alleged contracts, in violation of the Blue Sky Law? This law, as it existed at the time of inquiry, was enacted in 1923, at the Second Called Session of the Thirty-Eighth Legislature, and is chapter 52, page 114, of the Acts of said session, and in the Revised Statutes of 1925 is title 19, consisting of articles 579-GOO, inclusive. The purpose of this act, as shown by its caption, is “to regulate and supervise and prevent fraud in the sale, purchase and disposition in the State of Texas of stocks, stock certificates, bonds, debentures or other securities, and the transaction of business in this State of persons, joint stock companies, brokers, agents, co-partnerships or other companies, individuals or other organizations, offering for sale or selling in this State. * * * ” This purpose is further shown by the emergency clause: “The fact that Texas has in recent years been flooded with worthless securities, issued and sold by irresponsible parties to the people of this State, resulting in great loss to investors, especially wage earners, a class least able to stand such losses, and the fact-that many companies have organized and made their domicile, or home office in this State, and sold worthless securities through the mails and otherwise, to people in other states by reason of inadequate laws in this State, calls for the enactment of laws to protect the citizens of Texas from such wastes and impositions.” Section 29 of the Original Act.
The purpose of this law is effectuated by •the enactment of section 2 of the original act and is now article 580, Rev. St. 1925, and reads:
“Every concern which shall hereafter be formed or created or which shall hereafter attempt to increase its capital stock or commence the transaction of business in this State, shall before offering for sale, directly or indirectly, through itself, its agents or employés, or through any holding company,
sales company or any character of person or association, whether herein defined or not, any stock as defined in the preceding article, and before transacting any business in this State, except the preparation of instruments hereinafter mentioned and other instruments relative to the organization and transaction of business thereof, file in the office of the Secretary of State, together with a fee equal in amount to the filing fee of a private corporation having capital and surplus of like amount, the following: (This requirement as ,to fees shall not apply to corporations, by reason of the existing requirement as to the payment of filing fees upon obtaining charters and permits from the Secretary of State). .
“1. An application for a permit to sell any of the securities mentioned herein, or any other securities offered, or to be offered for sale, and for the transaction of any and all other business in this State. Said application must show the name under which such business is to be conducted, its location and general purpose, the age, occupation and general qualifications of such trustees or managing officers, and also fully the business in which each has been engaged for the last five years immediately preceding the filing of such application.
“2. A copy of its articles of association, partnership agreement, constitution, by-laws, or any other contract, agreement or other form of organization under which business is to be transacted, and all amendments thereto, showing the county or counties in which such instruments are filed, or to be filed for record.
“3. Oopies of stock certificates, bonds, debentures, or other securities offered, or to be offered for sale, or other disposition, together with copies of application blank for such securities. Such application must show the capital stock, par value of such stock, the price at which the same is to be sold, the commissions to be paid for the sale thereof, the amount of such stock or other interest therein issued, or to be issued for promotion, compensation, or other purposes.
“4. A detailed statement showing the assets and liabilities of such issuer, together with a profit and loss statement. (Id.)”
This article is mandatory in its provisions and requires every concern, created after the enactment, or which shall hereafter attempt to increase its capital stock, before transacting any business in this state, and before offering for sale any shares of stock, to file in the office of the secretary of state an application for a permission to sell such stock, and such application, among other things, “must show the Capital stock, par value of such stock, the price at which the same is to be sold, the commissions to be paid for the sale thereof,
the
amount of such stock or other interest therein issued, or to be issued for promotion, compensation, or other purposes.”
Article 583 provides that, before the permit to sell stock provided for under this article shall be given, the application must show that “commissions for the sale of stock and other securities, promotion, and all other incidental expenses shall not, in the aggregate, exceed twenty per cent, of the price at which the stock or other securities are to be sold.” It is manifest, therefore, that if the increase of the capital stock of the Miller Company, contracted to be sold by the Finance Company, is controlled by these provisions of the Blue Sky Law, then the contract and other transactions with reference to the sale of this stock by the parties hereto was illegal and the contract void. This because the application to the secretary of state did not show the sale price for which this stock was to be offered the public, and the contract provided for a commission in excess of 20 per cent, of the sales price.
The controlling question, then, is: Was the Miller Company in its sale of the increased issue of stock authorized by its amended charter, subject to statutory restrictions of the Blue Sky Law, above quoted, in marketing such stock? This must be determined from the provisions of this law. Section 6a of the original act reads: “In order to avoid undue restrictions upon the handling of stock, as the term stock is defined in Section 1, hereof, of solvent concerns, it is provided that any concern which has been a solvent going concern for a period of two years next preceding the date of any application named in this section, may submit to the Secretary of State satisfactory evidence of such fact and of its present sound solvent condition ; whereupon the Secretary of State shall consider the same and shall require such further evidence, and may make such independent investigation as he may deem proper, concerning such matter. If upon full consideration thereof he shall conclude that such concern has been a solvent going concern for a. period of two years and is at present solvent, he shall enter such finding upon his record, whereupon the proposed issue and sale of such stock, debentures or other securities as in this Act defined of such concern shall be exempted from the general requirements of this Act.”
This section, with the omission of the introductory clause, “In order to avoid undue restrictions upon the handling of stock, as the term stock is defined in Section one, hereof, of solvent concerns, it is provided that, * * * ” is article 588, Rev. St. 1925. The omitted words show the purpose of the Legislature in enacting article 588, and such purpose undisputably is to exempt from the terms of the Blue Sky Law sales of stock of a “concern” which may qualify under the requirements of such article. The exemption issued shows that the Miller Company did qualify under the requirements of this article, and it then became the duty of the secretary
of state officially to declare the exemption. Exemption 154'shows that this duty was performed by such officer. It is argued that, because the exemption states that the Miller Company would receive $100 for each share of stock sold, the instrument was not an exemption, but was a permit and restricted the Miller Company and its agents from contracting with an investor for any excess of $100 per share in the sale of the stock placed on the market. We cannot accept this theory. We think that in any application for an ex'emption from the Blue Sky Law of a concern entitled to such exemption, it should be made known to the secretary of state, as bearing on the question of its solvency, how much would be realized by such concern claiming the right of exemption on its new issue of stock. To illustrate by the instant ease, the amended charter shows that the capital stock was to be increased to $3,250,000, an increase of $1,500,000, on the basis of the par value of the shares. If these shares of stock were to be sold at a price from which there would be’ realized less than the par value, then the actual value of the capital stock would be less than $3,250,000, and to some extent might affect its solvency, because of the decreased value of its capital stock; so to give the secretary of state assurance that there would be no such decrease in value, the representation was properly made, in the application for an exemption, that the Miller Company would receive approximately the par value of its new issue of stock. If the exemption was issued on the faith of this promise, there is no claim that it was in any way violated.
The Miller Company had been chartered in 1919, and the record before us conclusively shows that it had been a solvent and going concern during all this time, and that it received, without expense to it, the full par value of the stock sold under the contracts whose legality is attacked. There was no violation of the exemption by the entering into, and the execution of, this contract. It is also a clear inference from the contract that the Miller Company believed its business success and its stability were such to warrant a large increase in the market value of its shares of stock over the par value, and in order to accomplish this purpose it would require an expensive advertising campaign, as well as an organization of a large sales force, in order that the merits of an investment in the stock might be placed before the investing public.
The undisputed evidence shows that the Finance Company put on such a campaign, organized such a force, and succeeded in realizing the hopes of the Miller Company to such an extent, that, in applying for its third exemption, the Miller Company was able to state that it would receive, above all expenses of making the sales of the large second increase of capital stock, the net sum of $115 per share. The Blue Sky Law was not enacted to prevent a successful business institution, such as the Miller Company, from realizing the full benefit of its success in the business world. This clearly appears from section 6a of the original act, now article 588.
We therefore conclude, that the Miller Company, in entering into the September contract and a similar contract, as appellant alleges was entered into in ¡February, 1925, was exempt from the operation of the Blue Sky Law.
Appellant has assigned 83 errors, on which he urges a reversal of this cause; a number of them refer to the same subject-matter, and a large number refer to the action of the court in overruling special exceptions to ap-pellees’ answer. A group of assignments on this ruling on special exceptions are directed to that portion of appellees’ answer which, in various ways, plead the illegality of the contracts and are disposed of in the preceding discussion of this very subject. We shall dismiss all of these assignments, with reference to the ruling' on special exceptions, with the statement that the issues in this case are simple. They arise out of a suit by appellant for earned commissions, alleged to be withheld by the Miller Company, damages for a breach by the Miller Company of two alleged contracts, and damages against Miller for alleged wrongful acts and conduct on his part, causing the Miller Company to commit such breach. Appellees’ defenses consist of a denial of the withholding of any commissions legally due appellant, a denial of the existence of the second alleged contract, a denial of a breach of the September contract, and a denial of any wrongful acts by Miller; also, a cross-action against appellant to recover alleged overpayment of commissions; also, affirmative allegations that the Finance Company breached the September contract by voluntarily abandoning same before completion, for which reason no suit could be maintained by the Finance Company on such contract. In view of another trial, we suggest the court should rule on special exceptions so as to hold the issues attempted to be made by the pleadings to those above announced.
The Miller Company’s cross-action is based on the claim that it was compelled to repay to various purchasers of stock from the Mnance Company the sum of $13,470, because of misrepresentations made by salesmen of the Finance Company to such purchasers. This claim is alleged in general terms without specifying the names of the purchasers to whom the several payments are alleged to have been made, nor the specific item paid to each purchaser. The exception directed to this pleading should have been sustained; however, after the case had been on trial for about three days, the Miller Company filed a trial amendment, in which it undertook to itemize the various items making ' up said
amount, and to name the recipient of each item. This cured the error of the court in so far as the exception applied to the general language alleging this cross-action. But the pleading, both in the answer and the trial amendment, was defective, in that, under the written contract and under the contract the Finance Company made with these and all other purchasers of stock, the stock was sold as the stock of the Finance Company and it alone was to be responsible to the purchasers for any claim of the character alleged in the cross-action. We do not hold that, under the construction we have given this contract, the Miller Company might not be ultimately responsible for this claim of misrepresentation in the sale of the stock, but we do hold that the Finance Company was primarily responsible, and before the Miller Company should voluntarily step in its shoes and adjust the claim, it should have presented the matter to the Finance .Company for adjustment. This action was contemplated by the contract, and the Miller Company should have referred the claim to the Finance Company for adjustment, and such reference was a necessary predicate to recover from the Finance Company any amount paid by the Miller Company in the adjustment of such a claim. The Finance Company was acquainted with all of the facts in reference to such claim and should have been given an opportunity to pass thereon before the Miller Company voluntarily settled with the purchaser. A special exception was directed to the deficiency of the allegation in this respect, and it was error to overrule same. The jury, however, found in favor of appellant on the cross-action and thus rendered this error harmless, and this holding is made to govern the trial court on another trial of the case.
A number of assignments are made on the ruling of the court on appellant’s exception to the manner in which the issues were submitted to the jury. We are not disposed to hold that the trial court violated its discretion in its manner of framing the special issues, but would suggest, in view of another trial, that appellant, as plaintiff in the case, has the right to an affirmative submission of each of the material ultimate issues of fact made by the pleading and evidence, rather than a negative submission. The same rule applies to appellees’ affirmative defensive issues.
We are of opinion that the assignments of error challenging the sufficiency of- the evidence to sustain the finding of the jury, in answer to special issue No. 1, that the Miller Company was due appellant only the sum of $1,063.93, on commissions on the sale of stock under the September contract must be sustained. Under our view of the case, there is no substantial dispute in the evidence that a much larger sum was due and owing to appellant by the Miller Company under consummated sales of stock while the Finance Company was operating under the September contract. Under the state of the evidence produced at the trial of the case, the court would have been warranted in giving peremptory instructions in favor of appellant in the sum of $10,392.52. We do not feel authorized to render judgment in favor of appellant for this amount, for the reason that the affidavit of a former employee of the Finance Company, introduced in evidence on the motion for rehearing, if sustained by evidence in another trial, shows that this amount should be reduced by a material sum.
Error is assigned because of the admission in evidence, over appellant’s timely and proper objection, of a pencil note signed by H. M. Rogers. This note reads as follows:
“Mr. Miller: Jones says you are sore at both of us about the addition to the Ad. I don’t want you to be sore at me for you know Coleman handled and wrote the ads and if a change was made, I did not know it.
“H. M. Rogers.”
It will be remémbered that Rogers and appellant constituted the copartnership- operating under the name of the Textile Finance Company; that Coleman and Rogers, as joint plaintiffs, filed this suit; that subsequent to the filing of the suit Rogers’ claim for damages and for money owing him was settled by him with the Miller Company by his receiving payment in the sum of $5,000, and further promising to pay any further amount that might be determined was due him from an audit of the business of the Finance Company with the Miller Company. The evidence shows indisputably that, after such settlement was made, he became unfriendly to appellant’s suit and gave his deposition, filed at the beginning of the trial, favorable to ap-pellees’ contentions. It will be remembered also that the issue as to whether a second contract was entered into with the Finance Company for the' sale of a large number of shares of the new issue of stock under an amendment of the charter of the Miller Company, increasing its capital stock to $6,000,000, was a sharply contested issue in the trial of this case; that appellant testified directly that such oral contract was entered into; that Miller positively testified that no such contract was entered into; that appellant relied on certain newspaper advertisements, claimed to have been approved by Miller, as conclusive corroboration of his claim that such contract was made; that Miller, in his testimony, claimed that the advertisements, when approved by him, did not contain any such corroborating matter, but that the advertisements had been changed before appearing in .the newspapers, and the corroborating matter inserted by the change. So the contested fact as to whether Miller approved the contract as it appeared became a very material issue to be determined by the jury. Nowhere in the deposition of Rogers is there any reference, by either question or answer to
the existence of this note. It is disclosed further that the whereabouts of Rogers was unknown to appellant at the time this evidence was offered. The effect of this evidence, received over appellant’s objection, was to disprove appellant’s contention that the advertisement was not changed after Miller had approved it, and to establish the contention of Miller that it was changed after such approval. On evidence as material as this, given by a witness unfriendly to himj appellant had the right of cross-examination, and its admission over the objection of appellant constitutes, in our opinion, reversible error.
Error has been assigned on argument of counsel for appellees, on the ground that such argument was “inflammatory, prejudicial, and not justified by the record, and was calculated to influence and prejudice the jury against the plaintiff.” Objection to the court was made to this argument, but the court permitted the argument to proceed and thereby overruled the objection. The argument is as follows: “The plaintiff, Mr. Coleman, has been referred to by counsel as a stock salesman. He is not a stock salesman; it would be an honor to him to call him a stock, salesman. The evidence in this case shows that he did not sell any stock but sat in a swivel chair while other men sold the stock, and his profit in it was $54,000. He is not a stock salesman, but is a kid-glove, patent leather, spat-wearing parasite. The evidence shows that this money was gathered from the taxpayers in Texas by obtaining lists from the Tax Assessors of the various counties over the State, and these taxpayers were selected as the purchasers of that stock, and that money was gathered from the tax-payers of Texas by selling them this stock, and after Coleman had acquired this money he took it from the State of Texas to Hollywood, Oalif., reaping the benefits from other men’s labors. The evidence shows that he sued Roy Johnston in California and recovered a judgment against him. He is not a stock salesman; he is a professional litigant, and prefers to extort money by law suits rather than earning an honest living, and he expects a Texas jury to put his hand in the pocket of the C. R. Miller Manufacturing Company and take out a large sum of money gathered from the taxpayers of Texas so that he can take it with him to his home in California.”
There is nothing in the record to warrant or justify the severe strictures made by counsel against appellant, the opposing litigant in this case. It could furnish no aid to the jury in determining any contested issue, and its only purpose could have been to prejudice appellant in the minds of the jury, with the result of creating also a prejudice against his cause of action. Opposing counsel should be allowed great latitude in criticizing testimony of witnesses, as well as the manner in which a witness gives his testimony; but such liberty should never be extended to permit counsel to indulge in the character of personal abuse and criticism of a litigant, as was done by the argument here under review. If allowed, the tendency of such an argument would inevitably be to divert the minds of the jury from the issues in the cause of action on trial, and thereby result in a trial of a party to the litigation, rather than a trial of his cause of action. In our opinion, the only question to be determined on this assignment of error is: Did injury result to appellant because of such argument? The issues of the ease were sharply contested by the evidence, appellant being the main witness in his own behalf. The result of the finding of the jury on these issues shows a strong probability that they were influenced by this inflammatory argument. As we have seen, a finding was made against appellant without sufficient evidence to sustain it, and almost every contested issue was decided in favor of appellees. Under such state of the record, this assignment of error is sustained. District Court Rules 39, 41; Willis v. McNeill Bros., 57 Tex. 465; Prather v. McClelland (Tex. Civ. App.) 26 S. W. 658; Railway Co. v. Greenlee, 70 Tex. 553, 8 S. W. 129; Willis & Bros. v. Lowry, 66 Tex. 540, 2 S. W. 449.
We have painstakingly gone over the very voluminous briefs filed by both appellant and appellees, with the result that, on the grounds stated, we believe this case should be reversed and remanded for a new trial. The assignments of error, as well as cross-assignments of error, not herein specifically referred to, have been examined and are overruled.
Reversed and remanded.