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HODGES, J. This appeal is from an order ALTO COTTON OIL & MFG. CO. et al. v. made in vacation, appointing a receiver and BERRYMAN. (No. 2216.)
granting a temporary restraining order (Court of Civil Appeals of Texas. Texarkana. against the appellants. The appellee is the
owner of 20 shares of stock in the Alto CotJan. 1, 1920. Rehearing Denied Jan. 22, 1920.)
ton Oil & Manufacturing Company, a private
corporation organized under the laws of this 1. RECEIVERS C3-RECEIVERSHIPS ONLY AS state, with its domicile and place of business AUXILIARY REMEDY.
at Alto in Cherokee county, Tex. On SeptemReceiverships are created only as auxiliary ber 28, 1919, he filed this suit against the Alto to some ultimate relief for which a suit may Cotton Oil & Manufacturing Company, F. W. be instituted.
Madden, president, and H. D. Madden, secre2. RECEIVERS 35(1)--Not APPOINTED WITH- tary of the corporation, W. G. Boyle, and R.
OUT NOTICE UNLESS PLAINTIFF WOULD SUF- R. Russell. The petition alleges, in substance, FER INJURY.
that the cotton oil company had a capital A receiver should not be appointed without stock of 250 shares of $100 each, aggregating notice to the parties adversely interested, unless it is made to appear that plaintiff would $25,000, and on the 20th day of July, 1918, suffer some material injury by the delay nec
owned assets amounting to $50,000; that it
owed $3,500, and had that much cash on hand. essary to give notice.
On that date the appellee owned 135 shares 3. PLEADING ~301(3) INSUFFICIENCY OF of the capital stock. He later sold 115 of
VERIFICATION OF ALLEGATIONS UPON INFOR- those shares of stock to F. W. Madden for the MATION AND BELIEF, INSUFFICIENT TO AU
sum of $16,500, taking Madden's notes payTHORIZE APPOINTING RECEIVER.
able in four annual installments. He also Allegation and verification upon information and belief only of facts on which court must took a lien on the shares of stock conveyed. rely in determining whether the appointment of According to the appellee's information and receiver for defendant company at plaintiff's belief Madden then had no resources other instance was proper held insufficient.
than the capital stock for the payment of the
above-described indebtedness. During the 4. CORPORATIONS 320(13) APPOINTMENT
month of May, 1919, the notes of F. W. MadOF RECEIVER WITHOUT NOTICE ON UNVERIFIED PETITION IMPROPER.
den matured, and he was unable to pay them. In suit by a stockholder in a company
While negotiations were pending between the against it and directors for appointment of re
appellee and Madden for a settlement, Madden ceiver and to restrain the directors from mak-conspired and confederated with R.' R. Rusing sale of the assets of the company under an sell and W. G. Boyle, and fabricated a deed alleged fraudulent deed of trust, appointment of trust, which purported to have been executof receiver on ex parte hearing held improper, ed by the Alto Cotton Oil & Manufacturing in view of Rev. St. art. 1203, and the insuffi- Company, conveying all of its property to ciency of the verification of the petition.
Boyle as trustee to secure R. R. Russell in 5. CORPORATIONS C 320(13)-GRANT OF TEM- the payment of a promissory note executed in
PORARY RESTRAINING ORDEB WITHOUT HEAR- his favor by the Cotton Oil & Manufacturing ING ERRONEOUS.
Company for the sum of $24,461.54. The note In suit by stockholder in a company against was dated July 23, 1919, and was payable it and directors for appointment of receiver and within 30 days, bearing interest at the rate to restrain the directors from making sale of of 8 per cent. per annum from date. The the assets of the company under an alleged appellee further states that he “is informed fraudulent deed of trust, grant of temporary and believes and so charges that said alleged restraining order without hearing held errone
debt and the deed of trust securing same are cus,
largely fraudulent, and that defendant Alto Appeal from District Court, Cherokee Cotton Oil & Manufacturing Company does County; L. D. Guinn, Judge.
not owe the said R. R. Russell any such sum
as is apparently evidenced by said note, but a Action by H. H. Berryman against the Alto vastly less sum, to wit, not exceeding $13,000.” Cotton Oil and Manufacturing Company and He further charges that in June of 1919 a others. From an order in vacation, appoint- stockholders' meeting was held secretly and ing a receiver and granting temporary re- without notice to him, who was at the time straining order, defendants appeal. Judg
a record owner of 20 shares of the capital ment reversed, and judgment rendered, vacat- stock of the corporation; that the “mortgage ing appointment of receiver and restraining was executed without the authority of the order, and case remanded.
stockholders of the corporation or any legal Kampmann, Burney & Browne, of San board of trustees, or was authorized by such Antonio, and S. M. Adams, of Nacogdoches, stockholders or directors as were present at for appellants.
a secret meeting of which the plaintiff had Perkins & Perkins and Norman, Shook & no notice;" that those facts were evidence Gibson, all of Rusk, for appellee.
of a conspiracy and a scheme on the part of
For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes
F. W. Madden, together with R. R. Russell | This petition contained the following veriand Boyle, to convert to their own use and | fication: benefit all of the assets of the corporation,
"Before me, the undersigned notary public or to use the same to the destruction of the in and for Cherokee county, Tex., on this day plaintiff's property in the 20 shares of capital personally appeared H. H. Berryman, who, bestock, which was of the value of at least ing by me duly sworn, upon his oath deposed $1,200, and to the destruction of his security. and says that he is plaintiff in the above and In pursuance of this conspiracy and with in- foregoing petition, and has read and fully un. tent to destroy the appellee's property w. derstands the contents thereof, and that the G. Boyle, at the request of Russell, on the that the matters therein alleged as of infor
matters therein alleged as true are true, and 9th day of September, 1919, advertised the mation and belief he verily believes to be true." property of the Cotton Oil & Manufacturing Company for sale, in accordance with the The petition was presented to the judge of terms of the deed of trust, claiming an indebt-that judicial district, in vacation, and without edness for the full amount of the note pre- notice to the appellants an order was entered, viously described, the interest thereon and appointing F. F. Florence as receiver upon attorney's fees, the sale to take place in the his giving a bond in the sum of $10,000, and town of Rusk in Cherokee county on the 7th directing that he take charge of all the assets day of October following. It is further al- of the Cotton Oil & Manufacturing Company leged that
in accordance with the prayer in the plain“By reason of the plaintiff not having the tiff's petition, and that the defendants be inopportunity to attend the stockholders' meet- joined as prayed for. It further appears from ing of said corporation, he is unable to say ex- the record that the receiver on the following actly how much of said debt claimed by the day filed a bond, which was approved. It said Russell is fraudulent, but is informed and seems that the ultimate purpose of this suit believes and so charges that said debt does not is to dissolve this corporation, sell all of its exceed the sum of $13,000.”
property, and pay off its indebtedness. The
receivership and the injunction sought are The directors of the corporation are F. W. only ancillary to that end. Article 1203 of Madden, R. R. Russell, and H. D. Madden. the Revised Civil Statutes provides that, It is charged that H. D. Madden is wholly under the influence of F. W. Madden and R. R. who own twenty-five per cent. of its stock, or
"Stockholders of any insolvent corporation Russell, and is unable, if disposed to do so, creditors of any such insolvent corporation who to protect the plaintiff's interest. If the afore- own twenty-five per cent. of its indebtedness, said trustee's sale is consummated, it will may institute and prosecute a suit for the dissobe for an inadequate price, because no other lution of such corporation; provided, that bethan defendants knew, or could know, the fore any petition is filed * * by stockvalue of the property, and the defendants holders or creditors, as provided in this chapwill have a wholly unfair advantage in bid- ter, leave therefor shall be first granted by the ding on the same; that the Cotton Oil & presiding judge of the court in which the proManufacturing Company will be rendered in- tion of any petition it shall be the duty of such
ceeding is to be instituted; and, on presentasolvent by such sale, and plaintiff will be judge before granting leave to file the same to without adequate remedy in law for the pro- carefully examine the same, and he may also tection of his rights. The prayer of the peti- require an examination into the facts; and it tion is as follows:
shall be made to appear with reasonable cer
tainty from said petition, or from the petition “Premises considered, plaintiff prays that a and the facts, as the case may be, that the rereceiver be appointed forthwith to take charge lief sought should be granted; and it is furof said property and all assets, books, accounts ther provided, that any such corporation proand documents of said corporation, procure fire ceeded against shall have ten full days notice insurance on said property, and make a report prior to the day set for the hearing, on an apof his action in the matter forthwith to the plication for the appointment of a receiver." court, and hold same subject to the orders of this court; that defendants R. R. Russell and
(1-5] Receiverships are created only as auxW. G. Boyle be restrained from making such iliary to some ultimate relief for which a suit sale, and defendant Cotton Oil & Manufacturing Company, R. R. Russell, w. G. Boyle, and may be instituted. Houston & B. V. Ry. Co. all other officers and agents and attorneys, be
v. Hughes, 182 S. W. 23; Style v. Landtrip, enjoined from interfering with the possession 171 S. W. 786. If it was the purpose of this of such receiver, his agents and attorneys, in suit to wind up the affairs of the corporation taking possession of such property, assets, and terminate its existence, the appellee did books, accounts, and documents of the defendant not allege a status which authorized him to Alto Cotton Oil & Manufacturing Company; maintain such a proceeding; and, had he done that a sale be made of the entire assets and so, the court was without power to appoint good will of defendant Alto Cotton Oil & Man- a receiver until ten full days' notice had been ufacturing Company, and a liquidation of its affairs be had under proper orders of this court; given to the corporation. But if it can be said for citation; and for such other and further re- that the purpose of the suit is to enjoin perlief as plaintiff may be entitled to in the prem- manently the sale of the corporate property ises."
because the debt claimed was partially ficti.
NOT BUY NON DELIVERY BY SELLER
FROM ITSELF ON
(218 S.W.) tious, there was no occasion for appointing provided in the contract, and limit damages to a receiver upon an ex parte hearing. It has the difference in cost of shipping from the two been repeatedly held in this state that a re- places, but may stand on his contract, and receiver should not be appointed without notice cover as though the seller had refused to make
any delivery. to the parties adversely interested, unless it should be made to appear that the plaintiff | 5. SALES W418(7) — BUYER MAY in the suit would suffer some material injury by the delay necessary to give notice.
AND HOLD SELLER FOR DIFFERENCE IN PRICE, Arnold et al. v. Meyer, 198 S. W. 602. No A buyer cannot, on failure of the seller to such situation is presented by the petition in deliver, buy other goods of itself, trading under this case. Moreover, it appears that the ma- . ference between the price paid and the contract
another name, and hold the seller for the difterial facts upon which the court must rely price. in determining that the appointment of a receiver is proper are here alleged upon infor-6. APPEAL AND ERROR 854(2) — JUDGMENT
AUTHORIZED BY PLEADING AND EVIDENCE mation and belief, and are sworn to in the
NOT REVERSED BECAUSE OF WRONG THEORY. same form. We think such an affidavit fol. lowing such averments is insufficient. Gin. theory of measure of damages, will not be re
Judgment for plaintiff, though on a wrong ther v. Zabalgoitio, 170 S. W. 793: Pullen v. versed; the petition authorizing recovery on Baker, 41 Tex. 420. We are therefore of the the proper the and the evidence showing opinion that the court should not have ap- plaintiff entitled to an amount equal to the pointed a receiver in this case upon an ex judgment. parte hearing. We are further of the opin- 7. SALES O 418(6) COMMON-LAW ion that the temporary restraining order
NOT EXCLUDED BY RIGHT GIVEN BY CONTRACT should not have been granted without a hear IN CASE OF NON DELIVERY. ing, if then.
Provision of contract of sale giving purThe judgment will therefore be reversed, chaser, in case of nondelivery, right to buy and judgment here rendered, vacating the ap- other goods in the open market and hold the pointment of the receiver and the restraining seller for the difference between the contract order, and the case remanded to the court price and the price paid, not being mandatory,
does not furnish the exclusive remedy, but the below for further appropriate proceedings.
buyer may have his common-law remedy of re-
Appeal from District Court, McLennan
County; H. M. Richey, Judge. (Court of Civil Appeals of Texas. Austin.
Action by the Early-Foster Company
against the Dallas Waste Mills. Judgment
for plaintiff, and defendant appeals. Af1. CONTRACTS 145—MADE WHERE ACCEPT-firmed. ANCE OF OFFER IS GIVEN. A contract is made where the acceptance of
C. M. Smithdeal, of Dallas, for appellant. the offer is given.
Sanford & Harris, of Waco, for appellee. 2. CORPORATIONS 503(2) ACTION BREACH OF CONTRACT MAY BE BROUGHT IN
KEY, C. J. Early-Foster Company, a priCOUNTY WHERE CONTRACT WAS MADE; "PART vate corporation, brought this suit against OF CAUSE OF ACTION.”
Dallas Waste Mills, another private corporaWithin Vernon's Sayles' Ann. Civ. St. 1914, tion, and recovered a judgment for $1,181.68, art. 1830, subd. 24, authorizing suit against a for an alleged breach of a contract; and the private corporation in the county in which the defendant has appealed. cause of action, “or a part thereof arose," the
The contract was in writing, and read as making of a contract constitutes part of the
follows: cause of action in suit for its breach.
"Ft. Worth, Texas, Feb. 29, 1916. 3. EVIDENCE 457–AMBIGUOUS PROVISIONS OF CONTRACT MAY BE EXPLAINED.
"Contract No. 1148. Testimony is admissible as to the meaning “Early-Foster Co., Waco, Texas, Buyers. of provisions of a written contract of sale of “Dallas Waste Mills, Dallas, Texas, Sellers. linters, they being ambiguous, in the sense that their meaning is not clear to one not familiar
“Gentlemen: Referring to 'phone conversawith the preparation of and dealing in cotton tions and exchange of telegrams to-day between seed mill products.
Mr. Foster of the Early-Foster Co., Waco, Tex
as, and Mr. Glarner of the Dallas Waste Mills, 4. SALES 177—BUYER ENTITLED TO STAND Dallas, Texas, and ourselves:
ON PROVISION OF CONTRACT AS TO PLACE OF “We beg to confirm having this day sold to DELIVERY.
Early-Foster Co., Waco, Texas, for account of The purchaser of goods is not required to the Dallas Waste Mills, millrun Linters made accept delivery of them at a place other than | from sound cotton seed and free from damage,
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at the price of five dollars eighty-two and one- Crushers' Association.' The Texas Cotton Seed half cents ($5.8242) per hundred pounds f. o. b. Crushers' Association is an association gotten cars Texas Common Point Mills.
up by the millmen, brokers, and dealers, where "Shipment: Immediate.
we all get together and formulate and make rules “Terms: Demand draft with B/L attached. to trade under. It existed in the state of “Routing: Buyers' option.
Texas, and is at present in existence with bead"This contract is made in triplicate, one copy quarters at Dallas. They had theretofore, probeing sent to each buyer and seller and the mulgated certain rules which were the rules we original retained in our office on file, which has traded under and the rules referred to in this been duly stamped.
contract. There is another provision in the “This sale is made subject to the Rules of contract which reads: We beg to confinn the Texas Cotton Seed Crushers' Ass'n.
having this day sold to Early-Foster Co. for “Commission: Twenty-five cents (25¢) per bale account Dallas Waste Mills, Dallas, Texas, 250
to be paid by the seller, payable at Fort bales clean millrun linters made from sound Worth, Texas.
seed and free from damage, at the price of "Yours truly, Kyser-Ruble Brokerage Co., $5.8242 per hundred pounds f. o. b. cars Texas
"Per [Signed) C. R. Ruble. Common Point Mills. As to what is meant by "CRR/LH (As Brokers Only).” the word 'mills,' I will say it is the mill that
produces or manufactures linters. The letters The plaintiff, whose place of business was 'f. o. b.' mean free on board railroad cars. in Waco, McLennan county, Tex., accepted 'Texas Common Point Mills' is a term that is the terms of the contract at that place, as applied-meaning the same freight rate would they had previously done by telephone. A apply to Chicago or points that are shipped to
from Texas points where the same rate applies. rule of the Texas Cotton Seed Crushers' As-As to what is meant by a common point on railsociation prescribes that all trades in cotton roads, I will say that is a point where the seed products may be for either immediate, rate is the same as a number of points or a prompt, or specified dates of shipment, and certain territory-in groups you might call it. that the word "immediate," as therein used, Texas common point rates would protect within means within five working days. Another the radius of Waco north, Temple north to say
150 miles. That would be the same rate of rule of that association reads as follows:
freight to New Orleans or Memphis or to Chi“Should a buyer fail to give shipping instruc-cago or to Kansas City. I mean the same rate . tions for linters or to receive them when ship- of freight would apply from any of those points, ped in accordance with the terms of the con say to New Orleans, Chicago, Memphis, etc. tract, the seller may after 48 hours' notice to Those calculations are commonly known in the the buyer cancel the contract or sell the linters railroad world and the business world. Waco in dispute through a recognized broker for the in McLennan county at that time was such a buyer's account, and any loss sustained will be common point. When I use the word 'mill,' a valid claim against the buyer. Conversely, a that means a mill located at one of these combuyer may protect himself in case of nondelivery mon points. We could not force them to deof linters bought."
liver f. o. b. a common point where there was
no mill. That means a mill located at one of W. M. Foster, who was president and gen- | these Texas common points on the railroad. I eral manager of Early-Foster Company, testi- did not ever actually receive from the Dallas fied, among other things:
Waste Mills any of the cotton linters under
this contract. I did rely on the Dallas Waste "The matter in controversy here is covered Mills to deliver said linters within the five by a written contract dated February 29, 1916, days provided in the contract and under the covered a purchase by Early-Foster Company rules. We did go into the market and buy 250 of 250 bales of linters from the Dallas Waste bales of cotton linters on March 6, 1918. We Mills. I handled this transaction for Early bought the 250 bales from the Waco Cotton Foster Company. As to what is meant in the Linters Company and paid therefor 634 cents contract by demand draft with B/L attached,' per pound f. o. b. Texas common mill point. I will say there was to be a draft drawn on demand payable upon presentation, not at sight, say I have it 27,755; I think that is correct.
About 27,000 pounds is what we received. You but a demand draft with bill of lading attached We had a customer to whom we had sold the sent to Waco, and we were to pay it on presenta linters and expected to deliver them these tion. It was a cash item. The draft was to linters; that is what we bought them for. We be paid in Waco, in McLennan county. As tò bought these linters from the Waco Cotton what is a 'bill of lading,' will say we had a Linters Company for the purpose of filling our shipment of 250 bales of linters. They secured
contract." a bill of lading from the railroad company for 250 bales of linters, attached the same to the draft and forwarded same to Waco to be paid.
It was also shown by Mr. Foster's testimony They would obtain that bill of lading from the that on March 3, 1916, the defendant tenderrailroad company whenever they had the linters ed to plaintiff delivery of 250 bales of linters, loaded in the cars, and the agent then signed at Galveston, Tex., and drew a draft on the it. The Dallas Waste Mills would draw the plaintiff for the contract price, not with bill of draft. By 'draft' I mean an ordinary custom- lading attached, but with warehouse receipts ers' draft drawn through the banks. The draft would reach Waco through the banks in the attached. Mr. Foster testified that there was ordinary course of bank collection.
no cotton seed mill at Galveston, and that it tract has this language in it: "This sale is made was not a common point or shipping place subject to the rules of the Texas Cotton Seed within the terms of the contract. So, the
(218 S.W.) plaintiff declined to accept the linters at Gal- question referred to, we make the following veston, refused to pay the draft referred to, extended quotation from it: and in due time notified the defendant that
"The Act of March 20, 1848, ‘organizing jusit would buy in other linters and hold the de tices courts, and defining their powers and jufendant responsible for the difference in mar-risdictions' (Pasch. Dig. p. 285), provided that ket price. Mr. Foster testified that the no person shall be sued before any justice of course referred to was pursued; that he plac- the peace, except in the precinct of his residence, ed the matter in the hands of Kyser-Ruble or in the precinct where the cause of action acCompany, brokers; and that they purchased crued, if in the same county (Pasch. Dig. art. for the plaintiff 250 bales of linters, at the 1188). No corresponding provision is made in prevailing market price, which was 69 cents court,' of 1846 (Pasch. Dig. p. 346, art. 1423).
the 'Act to regulate proceedings in the district per pound. He also stated that the brokers In 1874 an act was passed to 'fix the venue in bought the linters referred to from the Waco certain cases,' which provided substantially that Cotton Linters Company, which was owned public or private corporations, created by the by the plaintiff, Early-Foster Company. In laws of this or any other state, may be sued other words, he stated that the plaintiff did in any court in this state, having jurisdiction business under two names, one being Early- of the subject matter, in any county 'where the Foster Company, and the other being the cause of action, or a part thereof, accrued.'
Gen. Laws 1874, p. 31. Subdivision 21, art. Waco Cotton Linters Company, and he ad- 1198, of the Revised Statutes, adopted in 1879, mitted, cross-examination, that they provided that suits against a private corporabought the linters from themselves.
tion, etc., might be commenced in any county The trial was without a jury, and no con- in which the cause of action, or a part thereclusions of law and facts were filed.
of, arose, etc. Such is the law as it now stands. [1, 2] The defendant filed a plea of privi- The jurisdiction in this case rests upon the lege to be sued in Dallas county, and the first fact whether the cause of action, or a part assignment of error complains of the action thereof, arose’ in Howard county, Tex. The
cause of action is that in which the plaintiff's of the trial court in overruling that plea. remedy has its origin, the fact or facts giving Subdivision 24 of article 1830, Vernon's him the right to bring the suit. In cases like Sayles' Texas Civil Statutes, prescribes that the present-a suit for damages growing out of suits against any private corporation, associ- the alleged breach of a contract-the cause of ation, or joint-stock company may be main-action must be predicated on some right extained in the county in which the cause of the defendant towards the plaintiff by reason
isting in the plaintiff, and some duty resting on action, or a part thereof, arose, etc. The of that right, which duty the defendant has original contract in this case was made by failed to perform, or has negligently performed. telephone. The defendant, through its agent, The facts showing the defendant's failure to the brokers, made an offer to the plaintiff at perform this duty constitute what we term the its place of business, in Waco, McLennan
breach of the contract, and are no more
part of the cause of action than those facts county, and the plaintiff accepted that offer which entitle the plaintiff to its performance. at that place; and the same may be said in In other words, those facts which show the reference to the written contract. A contract plaintiff's primary right in the matter are as is made where the acceptance of an offer is much a part of the cause of action, and are as given. Ins. Co. v. Harris, 94 Tex. 25, 57 s. necessary as a foundation for the suit, as are
those facts showing a violation or invasion of W. 635, 86 Am. St. Rep. 813; Cuero Cotton his right, ordinarily termed a breach of the Oil Mfg. Co. v. Feeders' Supply Co., 203 S. W. contract or covenant by the defendant. Every 79, and authorities there cited. So it follows cause of action, it is said by Mr. Pomeroy, that the contract involved in this case was consists, when subjected to analysis, of two sepmade in McLennan county, where the suit arate and distinct elements, the primary right was brought. But it does not follow that wrongful act or omission violating it. Our stat
and duty of the parties respectively, and the this conferred jurisdiction upon the courts of ute (section 21, art. 1198) seems to recognize McLennan county, unless it be that the mak- the fact that the cause of action consists of ing of the contract constituted, in part, the two distinct elements, as it provides that the cause of action sued upon. The plaintiff sued jurisdiction of the court shall attach where 'a for a breach of that contract, and, if the part thereof arose.' making of the contract constituted part of tions between appellant's agent and appellee in
"The proof certainly shows that the transacthe plaintiff's cause of action, then the cause Howard county, with reference to the shipment of action arose, in part, in the county where of the wool to appellant at St. Louis, formed a the suit was brought. That precise question part of the cause of action (without these facts, was presented to and decided by our Supreme which the proof disclosed, plaintiff showed no Court, in Western Wool Com. Co. v. Hart, 20 right of recovery); and it is difficult to underS. W. 131. The opinion in that case was stand the meaning of the language giving juwritten by Judge Hobby, of the Commission risdiction 'where a part thereof arose' if it of Appeals, and was adopted by the Supreme present. This language last quoted was not in
was not intended to embrace a case like the Court; and as it seems never to have been the law prior to 1874. It was incorporated in officially reported, and as it contains an illu- the law in 1874, the language being 'where the minative and satisfactory discussion of the cause of action, or a part thereof, accrued.'