Southwest Gas Co. v. Doney

99 S.W.2d 1107, 1936 Tex. App. LEXIS 1172
CourtCourt of Appeals of Texas
DecidedJune 18, 1936
DocketNo. 10174
StatusPublished
Cited by3 cases

This text of 99 S.W.2d 1107 (Southwest Gas Co. v. Doney) 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
Southwest Gas Co. v. Doney, 99 S.W.2d 1107, 1936 Tex. App. LEXIS 1172 (Tex. Ct. App. 1936).

Opinions

GRAVES, Justice.

The sole question involved in this record of 1,959 pages (1,312 of it statement of facts, 440 briefs of the parties, and 207 in the transcript) is: Which of the parties, appellant corporation, or the individual appellee, Doney, is entitled to a 1,000-share certificate — with a par value of $100 per share— of appellant’s preferred stock issued in the name of C. O. Moore on May 25 of 1927, [1109]*1109and held as stakeholder by appellee Bankers Mortgage Company, a corporation, under a tripartite escrow agreement of September 12 of 1927, between C. O. Moore, first party, appellee Doney, second party,- and appellee mortgage company, third party?

What the trial court determined to be the ultimate issues of fact underlying the controversy were submitted over appellant’s objections to a jury and all answered in ap-pellee Doney’s favor, whereupon the court, upon such verdict, as well as in response to its own findings upon the law and the evidence, entered a judgment in the appellee Doney’s favor, awarding the disputed stock to him, together with a recovery for him against the appellant of $31,500 accrued dividends thereon, and directing the mortgage company, as such stakeholder, to turn the certificate over to Doney; from that determination below the appellant prosecutes this appeal.

The controversy grew out of the promotion and organization of the appellant company by four individuals — the appellee Don-ey, O. R. Seagraves, acting through the Houston Gulf Gas Company, J. W. Colvin, and Paul Kayscr — to take over certain gas franchises, rights, and properties held under a contract between appellees C. O. Moore and L. C. Doney, dated April 2 of 1927, which constituted the main forerunner of and basis for the escrow agreement herein sued upon of September 12 of 1927, and referred to supra; the properties, rights, and franchises, with which the cited contract and escrow agreement had to do, finally by mesne conveyance and transfer passed into this appellant corporation that so originated.

The appellant company in this court earnestly insists that, notwithstanding the verdict, there was no legal basis whatever for the trial court’s adverse judgment to it herein, in consequence of which it should have a rendition here, in the alternative further urging that a remand in its favor should be ordered upon a number of specified procedural errors alleged to have been committed by the trial court in so disposing of the cause there.

In support of the structural demand for a rendition, these are the main points relied upon:

(a)The company never received any consideration for the stock, although the law forbade the issuance of the stock except for money paid, labor done, or property received, equal to the $100,000 par value of the stock.

(b) Although the law and the company’s charter provided that the stock could be issued only as the board of directors should direct, the board of directors never authorized or ratified any agreement, or arrangement, under which Doney could ever have any interest in the stock.

(c) Since Doney claimed that he was entitled to the stock for services performed prior to the incorporation of Southwest Gas Company those services were not a sufficient and legal consideration for the company to give him any right to the stock, even if the board of directors had attempted to do so.

(d) As Doney was a director of the Southwest Gas Company, he could not obtain any interest in this stock without making a full and fair disclosure to the board of directors of any arrangement or agreement that he might have for the acquisition of such interest in said stock, assuming that he could in some manner have acquired an interest therein, and Doney made no disclosure of any kind to the board of directors as a whole or to the individual members thereof, the only conversation or discussion that he had with any director being with J. W. Colvin, a director and president, with whom Doney claimed that he had made a verbal agreement under which he was to get his asserted interest in this stock. It docs not appear that any other member of the board of directors was ever apprised of that agreement by either Doney or Colvin, and the latter denies that such an agreement was ever made. * * *

(e) The stock in controversy was originally issued by appellant for a contingent consideration, which wholly failed, hence thereafter it was not validly outstanding, because the corporation had received nothing therefor, in consideration of which it could have been transferred to appellee Doney, even had such transaction been authorized or ratified by its bo&rd of directors.

(f) The general resolutions passed respectively by appellant’s board of directors and its stockholders, upon which the appel-lee Doney relies a.s consituting the transfer of this stock to him, cannot be given any such effect, because there was no evidence whatever that any of such directors or stockholders, other than Colvin and Doney, ever knew of, authorized, or ratified any agreement that may have been made between Col-vin and Doney, whereby the latter would [1110]*1110get this escrow-stock if it did not go to C. O. Moore.

The principal procedural objections referred to relate:

(1) To the exclusion of proffered testimony by Paul Kayser to the effect that he used Doney’s name in the cited éscrow agreement for and in behalf of and as representing appellant.

(2) To the exclusion of Main & Co.’s audit, which, it was contended, had been properly identified as the audit submitted to both the directors and stockholders of the appellant at their February, 1928, meeting.

(3) To the exclusion of certain voucher entries purportedly from appellant’s books and records, together with the testimony of the witness Viebig,' offered for the purpose of identifying certain original records and book entries of appellant, as well as to explain such entries from a bookkeeping standpoint.

In contrast to the controlling reaches of the cause, as thus promulgated by the appellant upon both the trial below and this appeal, the learned trial court conceived it to be determinable upon these questions of fact, as recited supra, which it submitted to — and which were answered by — the jury as follows:

“No. 1. Do you find from a preponderance of the evidence that J. W. Colvin, while President of Southwest Gas Company, agreed with L. C. Doney, Jr., that the said Doney was to own the thousand shares of preferred stock placed in escrow if C. O. Moore did not receive same i-n accordance with the escrow contract? Yes.
“No. 2. If you have answered the next preceding special issue ‘Yes’, and only in that event, then answer this issue: Do you find from a preponderance of the evidence that J. W. Colvin was acting at the time of said agreement, if any, in his official capacity as President of Southwest Gas Company ? He was.
“No. 3. If you have answered the next preceding special issue ‘He was,’ and only in that event, then answer this issue: Do you find from a preponderance of the evidence that the board of directors of Southwest Gas Company authorized J. W. Colvin, acting in his capacity as President of Southwest Gas Company (if you have found that he was so acting) to make said agreement with L. C. Doney, Jr., (if you have found that said agreement was made) ? Yes.

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Bluebook (online)
99 S.W.2d 1107, 1936 Tex. App. LEXIS 1172, Counsel Stack Legal Research, https://law.counselstack.com/opinion/southwest-gas-co-v-doney-texapp-1936.