State v. Guardian Foundation of Texas, Inc.

112 S.W.2d 806, 1938 Tex. App. LEXIS 762
CourtCourt of Appeals of Texas
DecidedJanuary 12, 1938
DocketNo. 8560.
StatusPublished
Cited by4 cases

This text of 112 S.W.2d 806 (State v. Guardian Foundation of Texas, Inc.) 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
State v. Guardian Foundation of Texas, Inc., 112 S.W.2d 806, 1938 Tex. App. LEXIS 762 (Tex. Ct. App. 1938).

Opinion

McClendon, Chief Justice.

Appeal' from an interlocutory vacation order denying (pending trial on the merits) (-1) appointment of a receiver; (2) temporary injunction; in a quo warranto proceeding instituted by the state to forfeit the charter of appellee, a Texas corporation.

The order appealed from was passed by Hon. Hardy Hollers, who had been elected by the bar as special judge of the Ninety-eighth judicial court under the provisions of articles 1887 — 1892, R.C.S. (the regular judge of the Ninety-eighth judicial district, Hon. J. D. Moore, being ill and unable to hold the term of court). The suit was pending in the One hundred twenty-sixth judicial district court, which was then in vacation.

Appellee urged below and urges here the trial judge’s disqualification .to pass the order, on the ground that his jurisdiction extended only to the business of conducting the term of the Ninety-eighth judicial district court, of which he was elected special judge. We are strongly inclined to the view that this point is well taken. See Wynn v. R. E. Edmonson Land Co., Tex.Civ.App., 150 S.W. 310, error refused; League v. Brazoria County, Tex.Civ.App., 187 S.W. 1012; 25 Tex.Jur. p. 325, par. 76; and note 2, p. 327.

Appellant urges that the powers granted to the district judges of Travis county under article 199, R.C.S., as amended, Vernon’s Añn.Civ.St. art. 199, authorize the special judge to enter the order at issue. It is doubtful whether these provisions *807 were intended to apply to a special judge elected under the above statutes to hold a term of court for one of said judges. However, we find it unnecessary to decide that question, in view of our holding that the order was properly entered.

Appellant concedes there was not sufficient showing to authorize the appointment of a receiver and has not briefed that point. In this we concur, and therefore this subject will not be further noted.

Appellant’s action to forfeit the charter is predicated upon two grounds: (1) That the business appellee conducted was ultra vires; and (2) that certificates issued by it were in violation of article 580a, Vernon’s Ann. Penal Code.

The trial judge filed conclusions of law and fact at the request of appellant. In these he declined to decide whether the business conducted by appellee was ultra vires and to enjoin its transaction, upon the ground that such injunction would have the effect of deciding the entire case and destroying rather than preserving the status quo; and, further, that the provision of the quo warranto statutes under which either party had authority to demand a trial on five days’ notice, article 6255, afforded adequate legal remedy to the state, and no irreparable injury would result before the state could obtain a trial on the merits.

Appellee was chartered “to do a general advertising business.” It published a magazine known as “The Guardian Shield,” for. which it charged a lump sum subscription fee of $35, if paid in cash, or $36 on credit. Appellee owned certain copyrighted material designed to benefit advertising of funeral homes and increase their business and had agreed to give designated funeral homes the benefit of this material. In addition to the magazine, the subscriber was issued what was designated a “service contract.” The business of the corporation under this service contract is fairly stated in appellee’s brief in the following hypothetical case. We have substituted the name “John Doe” for that of a local undertaker used by appellee:

“Mr. John Doe is operating a funeral home and undertaking business. This business is operated as the Doe Funeral Home and is unincorporated. Mr. Doe desires to increase the volume of his undertaking business, and to that end he organizes a corporation chartered to do an advertising business, which we will call Doe, Inc., and of which he becomes president and principal stockholder. Doe, Inc., and Doe Funeral Home (unincorporated) enter into a contract whereby the funeral home agrees to furnish its merchandise and services at cost plus ten per cent to all persons subscribing for literature, information and service rendered by the corporation. The funeral home also agrees to conduct its business in accordance with the plan advertised by the corporation, and in order to insure that it does in fact operate according to the advertised plan, the corporation is given the right to inspect and audit its business, thus safeguarding the truth of the advertising. The corporation then solicits the general public and sells what we shall designate as certificates for lack of a better word. By the certificates, the corporation undertakes:
“(a) To furnish the purchaser literature and information concerning cost of funeral merchandise and funeral service, thus informing the subscriber of the wares and services offered for sale by the funeral home.
“(b) To render the information thus furnished of practical value to the purchaser by agreeing to act as his agent in negotiating contracts for such funeral merchandise and services as the subscriber may desire to purchase.
“(c) The information which" the corporation furnishes is not limited to the printed literature, but includes such additional information as the subscriber may request, and having obtained the information desired, the corporation will deal with the funeral home of the subscribers choice, as his agent, regardless of whether the Doe Funeral Home is chosen or not.
“(d) In order to insure the protection of the subscribers, or certificate holders, the corporation agrees to cooperate with them in forming an organization, and in selecting a cost committee which has a right to audit the books and inspect the business of Doe Funeral Home.
“Constituting a part of the certificate, is a written agreement signed by the Funeral Home (not the corporation) whereby it undertakes to furnish such funeral merchandise and services as the holder may order at cost plus ten per cent, and to permit supervision and inspection by the cost committee selected by the certificate holders. The certificate contains an unequivocal statement that the corporation shall not be responsible for the breach of Doe Funeral *808 Home’s contract, or any other contract negotiated by it.
“The Funeral Home thus benefits by the publicity given its merchandise and plan of operation in the literature and certificates distributed and sold by the corporation, its business is augmented to the extent of each funeral ordered by certificate holders, and on each such transaction it realizes a ten per cent profit.
“The Corporation profits to the extent of the purchase price of the certificates sold.
“The Certificate holders, or subscribers, obtain the benefit of the information and service furnished by the corporation, and in addition are enabled to purchase such funeral merchandise and services as they may need at cost plus ten per cent, from a funeral home which is subject to auditing and inspection by a' cost committee of their own choice.”

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Related

GC Murphy Company v. Lack
404 S.W.2d 853 (Court of Appeals of Texas, 1966)
Reynolds v. City of Alice
150 S.W.2d 455 (Court of Appeals of Texas, 1940)
State v. Guardian Foundation of Texas, Inc.
128 S.W.2d 880 (Court of Appeals of Texas, 1939)
Wylie v. State
115 S.W.2d 979 (Court of Appeals of Texas, 1938)

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Bluebook (online)
112 S.W.2d 806, 1938 Tex. App. LEXIS 762, Counsel Stack Legal Research, https://law.counselstack.com/opinion/state-v-guardian-foundation-of-texas-inc-texapp-1938.