Prairie Lea Production Co. v. Lincoln Tank Co.

294 S.W. 270, 1927 Tex. App. LEXIS 232
CourtCourt of Appeals of Texas
DecidedMarch 30, 1927
DocketNo. 7081.
StatusPublished
Cited by10 cases

This text of 294 S.W. 270 (Prairie Lea Production Co. v. Lincoln Tank Co.) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Prairie Lea Production Co. v. Lincoln Tank Co., 294 S.W. 270, 1927 Tex. App. LEXIS 232 (Tex. Ct. App. 1927).

Opinion

BAUGH, J.

The Lincoln Tank Company sued the Prairie Lea Production Company, a corporation, for $3,640.74 and interest, claimed to be due it for certain oil tanks, and for -labor done and materials furnished in repairing other oil tanks, on an oil lease in Caldwell county, and asked for a foreclosure of a mechanic’s, laborer’s, contractor’s, and materialman’s lien on the property. The Prairie Lea Production Company impleaded J. B. Walsh and A. M. Eversole, composing the partnership of Walsh & Eversole, and H. *271 B. Davis, trustee thereof, alleging that the debt sued upon was the debt of said Walsh & Eversole and not that of appellant. Of the amount sued for §1,500 was for new tanks furnished, and the balance for labor, material, and repairs. By amended petition, the Lincoln Tank Company prayed, in the alternative, that if appellant was not liable for $2,141.74 for labor, materials, and repairs, then that it have judgment for that amount against Walsh & Eversole. The case was submitted to a jury on special issues, and on their findings' and those of the court judgment was rendered in favor of Lincoln Tank Company against appellant and that appellant take nothing against Walsh & Eversole.

The Prairie Lea Production Company owned, amongst others an oil and gas lease on 20 acres of land in Caldwell county, in a proven field. On August 2, 1923, said company, acting through its board of directors, entered into a written contract with J. E. Walsh under which Walsh was to develop said 20 acres and furnish all labor and materials therefor at his own cost and expense. This contract was not introduced in evidence, but the above terms were admitted by all parties thereto. Walsh subsequently assigned a part of his interest in said lease to Eversole. About three weeks after this contract was made. Walsh went into the store of A. J. McKean at Prairie Lea, in Caldwell county, and after discussing the matter with McKean, who was president of the Prairie Lea Production Company, wrote out himself, and induced McKean to sign, the following letter:

“McKean Bros. Mercantile Company — General Merchandise.
“Prairie Lea, Tex., Aug. 20, 1923.
“J. E. Walsh, Luling, Tex., Dear Sir: Taking into consideration the fact that we must conserve all oil possible on our lease,, also taking into consideration the present conditions of the storage tanks now upon .the lease, this is to inform you that we, the Prairie Lea Production Company, agrees and consents to allow you to fix up the present tanks in the proper manner so as to save all oil possible, and if necessary to put up at least two thousand barrel additional storage all at our expense. [Signed] A. J. McKean, President Prairie Lea Production Co.”

It is upon this letter that the Lincoln Tank Company chiefly relies to hold appellant corporation liable. The first two issues submitted to the jury, and their answers, were as follows:

-No. 1. “Did the Prairie Lea Production Company authorize J. E. Walsh to incur the account sued upon by the plaintiff? Answer: Xes.”

No. 2. “Did A. J. McKean, as president of the Prairie Lea Production Company, authorize J. E. Walsh to incur for the account of the Prairie Lea Production Company any indebtedness for work and materials on the Merriweather Lease, over and above the indebtedness for the erection of four 500-barrel tanks ? Answer: Tes.”

Appellant brings 20 propositions based on numerous assignments; but only 2 substantial issues are raised. The first is, whether or not A. J. McKean, as president of the corporation, could, without any authority from its board of directors, alter, by the letter set out above, or in effect abrogate, in part at least, a written contract theretofore entered into by Walsh with the board of directors of the corporation. No question of ratification or es-toppel is presented. Nor is there any question of* the apparent scope of authority either in McKean or in Walsh to bind the corporation on the Lincoln Tank Company debt. McKean had no authority from the board of directors of appellant corporation to change its contract with Walsh, and they refused to ratify his acts in so'doing. The Lincoln Tank Company when the debt was created did not know of, nor rely upon, the letter written by Mc-Kean, nor did their agent ever disctiss the matter with any officer or representative of appellant corporation. It is not shown whether or not Creel, agent of the Lincoln Tank Company, was familiar with the terms of the contract between appellant and Walsh, but said contract was of record in Caldwell county at that time. Walsh testified that the acount was first charged to him, but that he returned saíne to Lincoln Tank Company, .with instructions to charge it to appellant. Creel testified that in sending in the items to the Lincoln Tank Company he charged same to appellant, but on cross-examination he testified:

“I made the deal with Mr. Walsh all the way through for them. I relied upon Mr. Walsh to see that I got my money. I was looking to him because he was the man I dealt with, and the only man I dealt with. He told us that he was in charge of the property under contract, and was claiming an ownership in it.”

We think it is clear that in the original transactions the Lincoln Tank Company was dealing with Walsh and not with the Prairie Lea Production Company, and before they can recover against appellant they must show that the debt sued upon was in fact at that time the debt of appellant, or that it was subsequently assumed by appellant.

Under the statute, the directors have general management of the affairs of the corporation. Article 1327, R. S. 1925. And the general rule is that the president of a corporation, in the absence of authority conferred by its charter, or specially vested in him by the board of directors, has no more power or authority to contract or act for the corporation than any other officer. Standard Underground Cable Co. v. Telephone Co. (Tex. Civ. App.) 134 S. W. 433; Railway Co. v. Logue (Tex. Civ. App.) 139 S. W. 11; El Fresnal Irrigated Land Co. v. Bank (Tex. Civ. App.) 182 S. W. 701. There is no evidence as to what powers the charter of appellant corporation conferred upon its president. Mc-Kean himself testified that he had no author *272 *ty from the board of directors to change Walsh’s contract, and that he so told Walsh at the time. Nor can Walsh urge that he acted on the assumption that McKean had such authority. The letter attempted to alter the terms of his written contract with the corporation. In making that contract he had advised with his attorney, and had dealt with the board of directors, recognizing that the power to make it was vested in the board of directors. No less authority would be required to abrogate his contract or materially alter it. No such authority was shown to have been vested in McKean.

Nor was such authority implied. Appellees Lincoln Tank Company and Walsh & Eversole urged that McKean was the general manager of appellant company as well as its president and was therefore vested as such manager with powers co-extensive with the purposes of the corporation, which were to drill for and develop land for oil. This would undoubtedly be true if McKean had had actual management and control on the ground in developing this lease, or if Lincoln Tank Company’s agent had dealt directly with Mc-Kean in such capacity.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Wotola Royalty Corp. v. Bethlehem Supply Co.
152 S.W.2d 480 (Court of Appeals of Texas, 1941)
Miller v. Fenner, Beane & Ungerleider
89 S.W.2d 506 (Court of Appeals of Texas, 1935)
Hardwicke v. Trinity Universal Ins. Co.
89 S.W.2d 500 (Court of Appeals of Texas, 1935)
Elrod v. Word
66 S.W.2d 410 (Court of Appeals of Texas, 1933)
J. R. Watkins Co. v. Gibbs
66 S.W.2d 355 (Court of Appeals of Texas, 1933)
Leak v. Halaby Galleries, Inc.
49 S.W.2d 858 (Court of Appeals of Texas, 1932)
Spencer v. Thorp Springs Christian College
41 S.W.2d 482 (Court of Appeals of Texas, 1931)

Cite This Page — Counsel Stack

Bluebook (online)
294 S.W. 270, 1927 Tex. App. LEXIS 232, Counsel Stack Legal Research, https://law.counselstack.com/opinion/prairie-lea-production-co-v-lincoln-tank-co-texapp-1927.