Wilson v. Shear Co.

284 S.W. 654, 1926 Tex. App. LEXIS 489

• Court: Court of Appeals of Texas
• Decided: April 1, 1926
• Docket: No. 302.
• Status: Published

Opinions

STANFORD, J.

This suit was filed by the Citizens’ National Bank of Waco against the Shear Company as sole defendant, and, as set out in its amended pleading, alleged that on May 23, 1921, C. W. Wilson was the owner of certificate No. 16 for 25 shares of the capital stock of the Shear Company, and on said date, in order to secure a loan of $4,,-000 from said bank, pledged and delivered said certificate of stock to it; that the said C. W. Wilson failed to pay said loan when due, and said bank sold said certificate of stock under its collateral agreement with C. W. Wilson, and became itself the purchaser thereof; that it then presented said certificate of stock to the Shear Company for cancellation, and demanded that said company issue to it a certificate of stock for the same amount, which it refused to do. The Shear Company filed its original answer, which was, in effect, a bill of interpleader', in which it disclaimed any interest in said 25 shares' of stock sued for, but alleged that T. C. Phillips and Mrs. Nettie L. Wilson were asserting claim to said stock, and prayed that T. C. Phillips and Mrs. Nettie L. Wilson, together with her husband, C. W. Wilson, be made par-’ ties to the suit, and that the rightful ownership of said stock be determined. T. O. Phillips answered by way of cross-action against the bank, the Shear Company, and Mrs. Wilson alleging that on about May 23,1920, O. W. ■Wilson executed and delivered to him a note for $5,000, and, 'to secure same pledged said certificate No. 16 for 25 shares of stock in the Shear Company, and that afterwards, without fault or negligence on his part, he lost the note and certificate of stock; that same being found was returned to C. W. Wilson ; and that Wilson thereafter fraudulently and wrongfully negotiated the stock to plaintiff, the Citizens’ National Bank, and he (Phillips) sought judgment establishing the priority of his title and lien to said certificate of stock. Mrs. Wilson answered in the suit by way of cross-action, and asserted title to the 25 shares of stock heretofore mentioned, and also to an additional 25 shares, the whole of which she alleged had been issued in lieu of old certificate No. 112 for 50 shares of stock in the Botan Grocery Company (the predecessor of the Shear Company), which 50 shares of stock in the Botan Grocery Company she had previously acquired as her separate property, and sought to recover against the Shear Company said stock or its v value, with 6 per cent, interest from October 1, 1916. After the filing of the answer of Mrs. Wilson, the Shear Company inter-pleaded Mrs. Grace J. Witherspoon, Andrew J. Witherspoon, and B. O. Silvers, alleging they claimed an interest in the stock in question, Pending the suit, Mrs. Wilson was divorced from her husband, C. W. Wilson, and he was dismissed from the suit. There were other pleadings and supplemental pleadings, the case finally resolving itself into two cases, or two main issues, one between T. C. Phillips and the Citizens’ National Bank as to their respective rights to certificate No. 16 for 25 shares of stock in the Shear Company; the other was between Mrs. Wilson and the Shear Company, as to whether or not Mrs. Wilson was entitled to recover of the Shear Company certificate No. 112 for 50 shares of the Botan Grocery Company, purchased in 1913, and alleged to have been her separate property, or the value of said shares.

The issues and the; facts bearing upon same will appear more fully in the course of our opinion. The court instructed a verdict in favor of Mrs. Grace Witherspoon’, B. O. Silvers, T. C. Phillips, and the Citizens’ National Bank as against Mrs. Wilson, and submitted the case on special issues as between T. C. Phillips and the Citizens’ National Bank, and also as between Mrs. Wilson and the Shear Company. In view of the disposition we have decided must be made of the case as between T. C. Phillips and the Citizens’ National Bank, it is unnecessary to set out the findings of the jury as between said par- • ties.

To the issues submitted as between Mrs. Wilson and the Shear Company the jury made the following findings:

“(9) The defendant Mrs. Nettie L. Wilson did, on or about February 3, 1913, or subsequent thereto, acquire as her separate property 50 shares of stock in the Botan Grocery Company, evidenced by certificate No. 112 in said corporation.

“(10) Said stock at the time of •the alleged sale was owned by H. H. Shear.

“(11) Did the Shear Company, at the date of the issuance to C. W. Wilson of certificates Nos. 13 to 16, inclusive, in the Shear Company, through its president, H. H. Shear, or its other officers, have knowledge or notice that the stock evidenced by certificate No.- 112 in the Botan Grocery Company was the separate property of the defendant Mrs. Nettie L. Wilson? (Not answered.)

“(12) At the time of the purchase of the stock evidenced by certificate No. 112, Mrs. Nettie L. Wilson did request Mr. H. H. Shear, as president, to enter said defendant Mrs. Nettie L. Wilson’s name as. holder and owner of said shares of the capital stock in said Botan Grocery Company on the books of said company.

“(13) The failure or refusal of said company to enter the name of Mrs. Nettie L. Wilson as a holder and owner of the 50 shares of capital stock on the books of said company was not a proximate cause for C. W. Wilson’s disposing of same.

“(14) Mrs. Nettie L. Wilson, defendant, at the time of the puz-ehase of said stock evidenced by certificate No. 112, did request the said H. H. Shear, as president, to issue said certificate in her name.

“(15.) Such failure or refusal to issue said certificate in the name of Mrs. Nettie L. Wilson was not a proximate cause of the disposal of said stock by C. W. Wilson.

“ (16) The reasonable market value per share of the capital stock of the Botan Grocery Company on February 3, 1913, was $300 per share.

“(17) The reasonable market value per share of the capital stock of the Shear Company on October 1, 1916, was -about $300.

“(18) The reasonable market value per share of the capital stock of the Shear Company on October 21, 1916, was about $300.

“Special issue No. 7, requested by the Shear Company; Did The Shear Company, at the time it issued certificates Nos. 13 to 16, inclusive, to O. W. Wilson, know, or did it have notice, that C. W. Wilson was not entitled to have certificate No. 112 of the Botan Grocery Company canceled, and said new certificates of stock in the Shear Company issued in his name in lieu thereof? (Not answered.)’’

“Special issue No. 9, requested by the Shear Company: Mrs. Nettie L. Wilson was negligent in the exercise of control and possession of certificate No. 112 of the Botan Grocery Company, and also such negligence was the proximate cause of the issuance of new certificates in the Shear Company in lieu of cer tificate No. 112 of the Rotan Grocery Company to C. W.' Wilson.”

- The court entered judgment in favor of the Citizens’ National Bank and against T. C. Phillips and Mrs. Wilson, and also in favor of the Shear Company against Mrs. Wilson. We will consider the latter branch of the case first.

Opinion.

Under Mrs. Wilson’s first assignment, she contends that, by virtue of the answers of the jury to special issues 9, 12, 14, and 16, she was entitled to judgment against the Shear Company for the value of certificate No. 112 for 50 shares of stock in the Rotan Grocery Company. It is true the jury, in response to said issues, found that said stock, purchased on February 3, 1913, became her separate property; that she requested H. H. Shear, as president of the Rotan Grocery Company, to have her name entered on the books of said company as the owner of said stock; that she did request H. H. Shear; as president of said company, to have said certificate issued in her name; and that said 50 shares were of the value of $300 per share. Were these findings sufficient to authorize the trial court to disregard other findings unfavorable to her and render judgment for her on said favorable findings?

The record discloses that said stock had been issued to H. H. Shear by the Rotan Grocery Company on January 3, 1913, and that H. H. Shear was the record owner of said stock; that, before the purchase of said stock, Mrs. Wilson and husband borrowed $13,000 from the Citizens’ National Bank, and executed their joint note therefor, with the agreement with said bank that said stock, when purchased, would be pledged with said bank to secure said note, said $13,-000 to be used in paying for said stock. It is further shown, without any conflict, that the Citizens’ National Bank, in order to use said stock as collateral, required same to be indorsed in blank by the record owner; that Mrs. Wilson and husband, C. W. Wilson, were husband and wife,'and had been so for many years, and so continued to be up until 1923, each having full faith' and confidence in the other; that, at the time said certificate was purchased, both Mrs. Wilson and husband were present, and Mrs. Wilson directed Mr. Shear to deliver said stock to her husband, to be by him delivered to the Citizens’ National Bank as collateral security for said $13,000 note. Said certificate of stock No. 112 was indorsed in blank by H. I-I. Shear, and delivered to C. W. Wilson, and by him delivered to the Citizens’ National Bank, and attached to said $13,000 note as collateral security, wdiere it remained for about three years; said note being renewed probably a dozen times, both Mr. and Mrs. Wilson signing each of said renewal notes and said stock attached to each of said renewal notes. About October 1, 1916, the Ro-tan Grocery Company, by an amendment to its charter, increased its capital stock $100,-000, and changed its name to the Shear Company. C. W. Wilson subscribed for 150 shares of this increase stock, and paid the cash therefor, and at the same time presented certificate No. 112 for 50 shares of the Rotan Grocery Company, indorsed in blank by H. H. Shear, the record owner, and requested the Shear Company to issue to him 200 shares of the Shear Company stock, and said company did issue to C. W. Wilson certificate No. 13 for 100 shares, certificate No. 14 for 50 shares, certificate No. 15 for 25 shares, and No. 16 for 25 shares. C. W. Wilson then sold 175 shares of said stock to T. S. Wither-spoon for $50,000, and from the money thus obtained made the final payment of $3,065.-95, liquidating said $13,000 note to the Citizens’ National Bank. Mrs. Wilson had permitted her husband to have the exclusive control and management of said certificate No. 112 and of the matter of collecting dividends on said original certificate No. 112 in the Rotan Grocery Company, and the stock issued in lieu of same by the Shear Company, from February 3, 1913, up until about the time this suit was filed, January-1, 1923, and had received from her husband, according to her evidence, dividends on said stock-amounting to about $6,500. She was present at the time the final payment was made on the $13,000 note at the Citizens’ National Bank, but never at- any time attempted to ■take possession or control of said stock. There is no evidence in the record of any fraud or collusion on the part of the Rotan Grocery Company or the Shear Company with C. W. Wilson or any one else in reference to said certificate, and no evidence that either of said corporations did reap, or attempted to reap, any benefit whatever from said stock after its sale in February, 1913; but the record indicates that both corporations and H. H. Shear acted in the utmost good faith in reference to said stock. H. H. Shear died before this controversy arose, and so his evidence was not available.

As we understand, Mrs. Wilson’s first contention is that the failure of H. H. Shear to comply with, her request, on the purchase of certificate No. 112 on February 3, 1913, to have her name entered on the books of the Rotan Grocery Company as the record owner of said stock, and his failure to have a new certificate issued in her name, amounted, in effect, to a conversion of said stock by the Rotan Grocery Company. There are several reasons why we think this position is untenable. Article 1168, Vernon’s Sayles’ Statutes, provides:

“The stock of any corporation created under this title shall be deemed personal estate, and shall be transferable only on the books of the corporation in such manner as the by-laws may prescribe.”

In pursuance of this article and the bylaws of the Kotan Grocery Company, said corporation had printed jin the face of all its certificates of stock, including certificate No. 112, the following:

“Transferable only on the books of the company in person or by attorney upon the surrender of this certificate properly indorsed.”

There is no evidence that certificate No. 112 was ever tendered to the Kotan Grocery Company for surrender and cancellation with request for a new certificate by any one. It was shown to be the custom on the sale of stock for the record owner to indorse same in blank and deliver it to the purchaser, whereupon title to same would pass from hand to hand by delivery, and any holder had the privilege of surrendering and having it canceled and a new certificate issued in his name. After this certificate had been indorsed in blank by H. H. Shear and delivered to C. W. Wilson, he or his wife could have surrendered same, and had it canceled and a new one issued to Mrs. Wilson or her husband, and, we think, this was the only regular and proper way for either of them to become the record owner of said certificate, as per the printed indorsement on the face of same. Again, if a new certificate had been issued to Mrs. Wilson, and she thereby became the record owner, according to the evidence, in order to use same as collateral at the bank, she would have been required to indorse same in blank, and so would not probably have been in any better position to protect her stock, if it was hers.

' Again, the amendment to what is now article 4621, enlarging the rights of married women to control over their separate property, did not take effect until March 21, 1913, so, under said statute as it existed in February, 1913, the sole possession, control, and management of the wife^s separate property, both real and personal, was, by statute, given to her husband. She could not make a contract even affecting her separate personal property, except for necessaries, without the consent of her husband. Under the old statute in effect in February, 1913, by her marriage she lost all right to the possession and control of her property, except by permission of her husband,' and then it was his control through her as agent. So at the time certificate of stock No. 112 was purchased by the Wilsons from H. H. Shear, Mrs. Wilson, if the stock so purchased did become hers, could not make su.eh purchase, except with the consent and approval of her husband, and by virtue of the authority conferred by him upon her to do so. National Fire Ins. Co. v. Wagley (Tex. Civ. App.) 68 S. W. 819; Coleman v. First Nat. Bank, 17 Tex. Civ. App. 132, 43 S. W. 938; Coleman v. First Nat. Bank, 94 Tex. 605, 63 S. W. 867, 86 Am. St. Rep. 871; Bledsoe v. Fitts, 47 Tex. Civ. App. 578, 105 S. W. 1142 (writ denied). So, we think, if said stock was hers, although Mrs. Wilson requested H. H. Shear to have her name entered on the books of the corporation as the owner of said stock, and to have a new certificate issue‘d in her name, yet her husband, as the sole manager of her property, under the statutes then in force, had the right to waive compliance with said requests, and did waive same by accepting said certificate indorsed in blank by H. H. Shear; and especially is this true in view of the fact that he immediately delivered said certificate to the bank as collateral, as his wife instructed, and she received the benefit of said certificate as collateral to said $13,000 note for nearly three years, and received dividends on said stock and other stock issued in lieu of it, and, as we think, was chargeable with notice of the manner in which it was indorsed. In addition to the finding of the jftry to the effect that Mrs. Wilson did request H. H. Shear, president of the Botan Grocery Company, to have her name entered on the books of said corporation as the owner of said stock, the jury found, further, that the failure of said corporation to have her name so entered on the books of the corporation was not a proximate cause of C. W. Wilson’s disposing of said stock, and, in addition to the finding that Mrs. Wilson did request H. H. Shear, as president, to have said stock issued in her name, the jury also found that such failure or refusal to have said certificate issued in her name was not a proximate cause of the disposal of said stock by C. W. Wilson. In view of these findings adverse to Mrs. Wilson, we think the trial court was not authorized to disregard said adverse findings and to render judgment for her on said favorable findings. As we view the case, there are no facts arising out of the transaction of 1913 in the purchase of the stock from H. H. Shear that could constitute any basis for a recovery by Mrs. Wilson against the Shear Company, and that said transaction is unimportant, except in so far as it may, if it does so, affect the transaction of October, 1916, hereafter discussed. We overrule appellant Mrs. Wilson’s first assignment.

Under other assignments, appellant Mrs. Wilson contends the trial court committed reversible error in entering judgment for the Shear Company without the jury having answered special issue No. 11 and special issue No. 7 requested by the Shear Company. The case was tried on the theory, on the part of Mrs. Wilson, that the Kotan Grocery Company converted her stock, first, by refusing to issue said stock to her and in her name in February, 1913, and, second, the Shear Company converted said certificate No. 112 on October 1, 1916, by canceling said certificate and reissuing to C. W. Wilson, having notice at said time that said stock belonged to her. The principal theory of the defense, as we understand it, especially as to the transaction of October, 1916, was that the Shear Company at said time had no knowledge that certificate No. 112 of the Rotan Grocery Company belonged> to Mrs. Wilson; and that, if it was her ‘stock, by reason of the negligence of Mrs. Wilson in the x>ossession and control of her stock-— having clothed her husband with all the in-dicia of ownership — the Shear Company was led to believe it was C. W. Wilson’s stock, etc. The written indorsement on the face of said certificate, under the facts of this case, was equivalent to a written order by H. H. Shear, the record owner of said certificate, to said corporation to cancel -said certificate when presented therefor and reissue to the holder, and, when O. W. Wilson presented said certificate, duly indorsed in blank, for cancellation and reissue, if it had no notice of Mrs? Wilson’s ownership, if any, it was the legal duty of the Shear Company to comply with said request, and it could not be guilty of any negligence in so doing, unless said corporation at said time had notice that Mrs. Wilson was the equitable owner of said certificate. U. S. Fidelity & Guaranty Co. v. Ramey (Tex. Civ. App.) 261 S. W. 503. As above stated, in addition to finding that the failure of H. H. Shear to have Mrs. Wilson’s name entered on the books of the Rotan Grocery Company as the owner of said certificate was not the proximate cause of C. W. Wilson’s disposing of same, and the failure of H. H. Shear as president of said company to have said certificate issued in the 'name of Mrs. Wilson was not the proximate cause of the disposal of said stock by C. W. Wilson, the jury, in response to special issue No. 9 requested by the Shear Company, found that Mrs. Wilson was negligent in the exercise of control and possession of said certificate No. 112, and also that such negligence was the proximate cause of the issuance of new certificates in lieu of No. 112 to C. W. Wilson. These findings, construed in the light of the issues as made by the pleadings and evidence, we think, are inferentially and indirectly equivalent to a finding that the Shear Company, at the time it reissued said stock to C. W. Wilson in October, 1916, did not have notice of Mrs. Wilson’s equitable ownership of same, and we think if the two unanswered issues, issue No. 11 and requested issue No 7, had been answered by the jury favorable to Mrs. Wilson, then indirectly and inferentially, the answers to said last-mentioned issues would have been contradictory of the answers that were made to issues 13, 15, and requested issue No. 9.

Ordinarily, it is the duty of a corporation to exercise ordinary care to protect its .stockholders in the ownership of stock in such corporation, and, if such corporation negligently fails to exercise such care, it becomes liable. U. S. Fidelity & Guaranty Co. v. Ramey (Tex. Civ. App.) 261 S. W. 503; 14 C. J. 772, §§ 1174, 1175; Fletcher Cyc. Corps. § 3844; Baker v. Wasson, 53 Tex. 150. But in this case both corporations handled certificate No. 112, including the cancellation and reissuance to C. W. Wilson, strictly in accordance with the by-laws of said corporation, printed on the face of said certificate, and there is no evidence of any negligence on the part of the Shear Company in canceling and reissuing said certificate to C. W. Wilson on October 1, 1916, unless at said time the Shear Company had knowledge that Mrs. Wilson was at said time the equitable owner, and, if said company had such knowledge at said time, this fact of itself would, we think, render said company liable, regardless of the question of negligence. And so we think the ultimate controlling issue in this case which should determine the liability or nonliability of the Shear Company is whether or not said company, on October 1, 1916, at the time it canceled and reissued certificate No. 112 to O. W. Wilson, had notice' that Mrs. Wilson was the equitable owner of said certificate. The matters set forth in requested issue No.'. 9 with reference to Mrs. Wilson’s exercise of possession and control of said certificate, and, in fact, her entire conduct with reference to said certificate, are matters proper for consideration by the jury in determining the question of notice, if any, of the Shear Company at the time it - canceled and reissued to C. W. Wilson, in that said matters, we think, were proper for consideration in determining whether the Shear Company was thereby led to believe that C. W. Wilson, on October 1, 1916, was the owner of said certificate on said date, even if the Rotan Grocery Company had learned in February, 1913, that Mrs. Wilson was then the equitable owner; but we think these matters were probably only evidentiary in their nature, and did not present any ultimate controlling issue. If issue No. 11 and requested issue No. 7 had been answered by the jury, regardless of whether answered in the affirmative or negative, then we think the answer to requested issue No. 9 would have been unimportant. So, we think that, these two issues having been submitted, and presenting material issues, the trial court should have required them to be answered, and for the error of the court in rendering judgment in favor of the Shear Company without requiring these issues to be answered this branch of the case will have to be reversed and remanded. On another trial, if the evidence should be practically the same as on the last, and the court decides to submit same on special issues, then we think the court, in addition to submitting the issues as to whether or not certificate No. 112, by the purchase of February 3, 1913, became the separate property of Mrs. Wilson or the com munity property of herself and husband, and whether said certificate at the time of said sale was the property of the Rotan Grocery Company or H. H. Shear, should also, in addition to these and other issues that maybe necessary, by appropriate issues hg.ve the jury find whether or not at the time the Shear Company canceled certificate No. 112, and reissued same to C. W. Wilson about October 1, 1916, said corporation knew that said certificate belonged, if it did, to Mrs. Wilson, and, in this connection, we think the trial court ■ should instruct, in effect, that, if they find that certificate No. 112 in the Rotan Grocery Company was the property of H. H. Shear, then and in that event no information acquired by H. H. Shear while engaged in the sale of said stock, as to its becoming Mrs. Wilson’s separate property, if it did so, could be chargeable or imputed to the Rotan Grocery Company, and that no notice or information of such fact, if any, acquired by any officer or agent of the Rotan Grocery Company could be imputed to said corporation, unless such notice or information was acquired by said officer or agent while in the performance of his duties to said corporation. Kauffman & Runge v. Robey, 60 Tex. 308, 48 Am. Rep. 264; Irvine v. Grady, 85 Tex. 120, 19 S. W. 1028; Texas Loan Agency v. Taylor et al., 88 Tex. 47, 29 S. W. 1057; Smith v. Smith, 23 Tex. Civ. App. 304, 55 S. W. 546; Cooper v. Ford, 29 Tex. Civ. App. 253, 69 S. W. 487; Teagarden v. R. B. Godley Lumber Co., 105 Tex. 616, 154 S. W. 975.

On the other branch of this case, between T. C. Phillips, appellant, and the Citizens’ National Bank, the appellee Citizens’ National Bank has presented a motion to dismiss the appeal of appellant T. C. Phillips upon the ground that said appellant’s appeal bond was not filed within 20 days, as required by our statutes under the facts of this case. This cause was tried in the court below at the April term, 1925, and final judgment rendered on May 30, 1925, and the motion of appellant Phillips for a new trial was overruled May 30,1925. The April term, 1925, of the Seventy-Fourth district court, the court in which this case was tried, as fixed by article 30, subd. 74, Vernon’s Sayles’ Ann. Civ. St. Supp. 1918, began oil. the second Monday in April, 1925, same being the 13th day of said month, and adjourned on Saturday, June 6, 1925, at which time said term expired by limitation of law; the June term of said court beginning on the second Monday of June, same being the 8th day of June, 1925. So it will be observed, and, we think, it is the duty of this court to take judicial notice of said fact, that the April term, 1925, of said court could not by law continue more than 8 weeks, and did not, in fact, continue more than 8 weeks. ■ This being true, in order to confer jurisdiction upon this court of his appeal, it was the duty of appellant T. Q. Phillips to file his appeal bond within 20 days after the expiration of said April term of said court, which he failed to do; said bond not being filed until June 29, 1925. Appellant contends, in substance, that, inasmuch as some terms of the Seventy-Fourth district court may by law continue more than 8 weeks, that all terms of said court, in the matter of filing appeal bonds, should be treated as terms that may continue in session more than 8 weeks. We cannot agree with this contention. We think the statute fixing the terms of the district court, Seventy-Fourth judicial district, by necessary implication, made the calendar of years, months, and days following such enactment a part of the statute, and the courts, as well as litigants, are chargeable with notice of the number of weeks which any term of the court may by law continue, as though such time were expressly stated in the statute. 23 G. J. 164, § 1990,' and cases cited. The Legislature, in enacting the law fixing the terms of court for the Seventy-Fourth judicial district, necessarily intended, we think, that some terms of the court could not by law continue more than 8 weeks, while others could. In the face of the plain provisions of the statute, and the law with reference to the calendar being a part of the statute, this court will not assume that the Legislature did not intend that the length of each term of court should not be determined by the calendar. This court, being chargeable with notice that the April term, 1925, at which this case was tried, could not by law continue more than 8 weeks, and the record disclosing that appellant’s appeal bond was not filed within-20 days after the expiration ’ of said term, it is apparent this court has never acquired any jurisdiction of appellant’s appeal. Brazell v. Irene Independent School District (Tex. Civ. App.) 276 S. W. 1108, and cases cited. Appellee’s motion to dismiss is sustained, and, as between the Citizens’ National Bank and T. C. Phillips, the appeal is dismissed.

The judgment as between Mrs. Nettie L. Wilson and the Shear Company is reversed and remanded, and as to all other parties the judgment of the trial court is affirmed.