Carter-Mullaly Transfer Co. v. Robertson
Carter-Mullaly Transfer Co. v. Robertson
Opinion of the Court
This appeal is prosecuted by Carter-Mullaly Transfer Company, a corporation, whose domicile ' and principal office was in Bexar county, Tex., and H. E. Hildebrand, from a joint and several judgment for $31,741.71, obtained in the trial court by appellee, Robertson, against them, together with another, John M. Roberts. Roberts neither answered in the suit, nor appealed from the judgment.
The amount of the judgment represented the balance found by the court to be due upon two notes given by the corporation to appellee, Robertson, certain certificates of stock of the corporation being attached thereto as collateral, which by their terms were payable in Galveston county, and which had been indorsed by the named individuals,' H. B. Hildebrand and John M. Roberts, who were president and secretary treasurer, respectively, of the corporation. Prior to rendition of the judgment — indeed, on the filing of the petition therefor — the court had, upon ex parte application of ap-pellee, appointed in Galveston county a receiver for the corporation.
By agreement of all the parties, the cause was tried before the court without a jury, resulting in the judgment above mentioned, the decree awarding appellee foreclosure of his lien upon the stock so held as collateral to his notes, and granting appellant Hildebrand a like judgment over against the corporation, in event appellee should collect the amount of his judgment against the corporation out of Hildebrand’s property, with the further recitation, however, that Hildebrand’s judgment over against it should in no way preclude or prevent the corporation from thereafter asserting and prosecuting any other claims or causes of action not in this suit litigated it might have against him; while immediate execution was awarded appellee against the individuals, Hildebrand and Roberts, it was further ordered that no present execution issue against the corporation in favor of either appellee or *792 Hildebrand on their several judgments against it, but that these be paid in the ordinary course of the receivership and subject to the further orders of the court.
Appellants admitted the execution and delivery of the two notes, one being for $10,-000 and the other for $15,000, and that they represented money loaned to the corporation by appellee, and, aside from jurisdictional matters and objections to the receivership, and the foreclosure upon the stock, made no defense against the obligations, except to claim that the bulk of the $15,000 loaned on that note was furnished by appellee, with full knowledge of its intended use, to appellant corporation for an unlawful purpose, to wit, with which to buy up the stock and pay the debts of its competitor in the transfer business in San Antonio, the San Antonio Transfer & Taxicab Company, and that consequently the corporation’s act in so borrowing the money and executing the note therefor was ultra vires and void, and the note never became its valid and binding obligation.
Appellee, Robertson, denied that any of the $15,000 so loaned by him was used for any such purpose, or for any unlawful purpose, or that he knew of its intended use for any such purpose, and further pleaded that, if any of it was so used, it was without his knowledge or consent, and that through the purchase therewith of its competitor’s stock, appellant corporation had acquired and used much valuable property and many advantageous contracts and other advantages, from all of which it had profited and received the benefits, and that it was consequently estopped to claim that its act in executing the $15,000 note sued on was ultra vires and not binding upon it; his continued allegation was:
“Plaintiff was wholly ignorant of the purposes for which said obligations had been given, and it was represented to plaintiff by the defendant H. E. Hildebrand, acting for the defendant Carter-Mullaly Transfer Company, and in his capacity as president thereof, that the money derived from said loan was needed in order to take up valid outstanding obligations of said defendant Carter-Mullaly Transfer Company, which if not taken up and satisfied would cause said Carter-Mullaly Transfer Company to fail and be placed in a receivership or in bankruptcy. That at said time said representations were made to plaintiff the entire capital stock of Carter-Mul-laly Transfer .Company was owned by defendants H. E. Hildebrand and John M. Roberts, the former being the president of said corporation, and the latter being the secretary and treasurer, and that said defendants H. E. Hildebrand and John M. Roberts, in their capacities as such president and secretary and treasurer, respectively, acting together and in behalf of the defendant, Carter-Mullaly Transfer Company, made said representations to plaintiff and so induced him to lend the said sum of fifteen thousand dollars ($15,000.00). If said representations so made to him by the said defendants at the time he loaned and advanced said sum of fifteen thousand dollars ($15,000.00) were untrue and incorrect, having received the benefits of the said loan, and the said plaintiff having actually paid the said money to the said defendants, and the money having been used by the defendants in the furtherance and pursuance of the business of the Carter-Mullaly Transfer Company for more than three (8) years, they cannot now assert them in any way questioning or denying the validity of said loan.”
Appellants present the case to the court upon ten assignments of error, numbered in their brief as 1 to 8, inclusive, and 11 and 12. But appellee has filed a motion asking that this court strike out and not consider the assignments so numbered 3, 4, 5, 6, 7, 8, and 11, and reciting as follows:
“Eor grounds of this motion this appellee respectfully shows to the court that since the rendition of the judgment appealed from, all of the questions raised and presented by the foregoing assignments of error have become and are mere moot questions and only academic in their nature, and that as to the same there is no real issue now pending between the parties hereto,, because of the fact that on the 24th day of' April, 1916, the appellant H. E. Hildebrand, together with the San Antonio Hotel Company, Arnold, Cosby & Peyton, and Ed. Steves & Son, filed in the District Court of the United States for the Western District of Texas at its San Antonio Division, their petition in involuntary bankruptcy against the appellant, Carter-Mullaly Transfer Company, praying that the same be duly adjudged a bankrupt, and that its affairs be administered by the bankruptcy court according to the ordinary course and principles of bankruptcy; and because on the 24th day of February, 1917, by an order duly entered by the said District Court of the United States for the Western District of Texas, upon said petition the said Carter-Mullaly Transfer Company was duly and legally adjudicated, adjudged and declared a bankrupt, and on the same day the matter of its bankruptcy was by said court referred, in accordance with the bankruptcy laws of the United States, to Hop. Frank H. Booth, referee in bankruptcy for said division of said court, and on the 16th day of March, 1917, the first meeting of the creditors of said Carter-Mullaly Transfer Company was held before said referee in bankruptcy, and at such meeting A. O. Burnett, of San Antonio. Texas, was duly elected and appointed trustee of the bankrupt estate of said Carter-Mullaly Transfer Company, and duly qualified as such, and was directed to take possession of the assets and property of said bankrupt, from Harry T. Rand, the receiver appointed by the order of the court below in this cause, and on the 28th day of March, 1917, the district court of Galveston county, Tex., for Tenth judicial district, being the court from which this appeal is prosecuted, entered its order upon an application therein filed by the said trustee in bankruptcy, directing and commanding the said Harry T. Rand, as its receiver, to turn over and deliver all of the assets and property of the said Carter-Mullaly Transfer Company in his hands to the said trustee in bankruptcy; and because the said adjudication of bankruptcy and the taking possession of the estate and assets of said Carter-Mullaly Transfer Company by said bankruptcy court and its trustee relate back to and are effective as of April 24, 1916, the date of the filing of the petition for adjudication of bankruptcy, and all of the matters and things complained of in the assignments of error, herein moved to be stricken out, having occurred after the filing of said bankruptcy petition, have now become immaterial and raise only moot and academic questions.”
By proper exhibits the facts alleged are made to appear. It is our conclusion that this motion is well taken and should be granted.
The situation here presented, that is, the extinguishment pendente lite of the state court’s power and control over the property and assets of the corporation by the superseding authority of the bankruptcy court, as effectively as if they had been in fact destroyed, is in legal result and effect analogous, we think, to those cases where, in such circumstances, the subject-matter of the controversy between the parties has actually ceased to exist, as where the term of an office has expired before determination of the title to it, or where a bridge, the use of which had been enjoined, was destroyed pending appeal from the judgment granting the injunction. S. W. Tel. & Tel. Co. v. Galveston County, 59 S. W. 589; Robinson v. State, 87 Tex. 565, 29 S. W. 649; McWhorter v. Northcutt, 94 Tex. 86, 58 S. W. 720; Lacoste v. Duffy, 49 Tex. 768, 30 Am. Rep. 122.
We think the principle stated in those cases is equally applicable here; but appellants reply that, even if the adjudication of bankruptcy of the corporation did in effect settle and dispose of all questions relating to the state court’s receivership as against it, still the matters in controversy growing out of that same receivership as between appellant Hildebrand and appellee, Robertson, were nevertheless unaffected thereby, and are still as live and undetermined as they ever were; but just how this may be is not pointed out, and no way has independently occurred to us.
While not indicating in just what manner any substantial right of the individual Hildebrand in relation to the corporation’s property could now be properly determined upon this appeal, in the face of the exclusive control and administration of it by the bankruptcy court, which that individual himself invoked prior to the rendition of this appealed from judgment against him, appellants in general opposition to the motion cite and rely upon the recent case of H. & B. V. Ry. Co. v. Hughes, 182 S. W. 23, decided by this court. But, when properly applied, we do not think that decision inveighs against the conclusion we have stated. In that ease there was an appeal by the corporation from an ex parte order appointing a receiver for its properties; the appellee moved to dismiss the appeal because at a later hour on the same day as that on which the order appealed from was entered, a receiver for the property of the appellant corporation was appointed by the United States District Court upon the application of a bondholder of the defendant corporation, and because it appeared that the defendant corporation had, impliedly at least, consented to such an appointment by the United States District Court. It was held that the facts so appearing did not make the question of the validity of the prior order of the district court of Brazoria county, appointing a receiver, a mere moot question, because the corporation appellant had the right to have the validity of the order appointing the receiver by the state court reviewed, and that it made no difference that after the entry of such order another court had also appointed a receiver. The distinction is obvious. In the Hughes Case there was a conflict in jurisdiction between the state and federal courts, the former having first acquired jurisdiction. If the order appointing the receiver in the state court was not appealed from, or the appeal therefrom dismissed, or if the order was left in force, it is plain that under the general rule of comity existing between courts, the state receiver would have retained jurisdiction over the subject-matter of the suit and have proceeded to administer the affairs and control the assets of the corporation. The instant case is entirely different, in that the functions of the re *794 ceiver appointed by tbe order of tbe court below have been entirely superseded, and all of Ms powers and of tbe powers of tbe court itself over tbe assets of tbe corporation bave been destroyed by operation of lav? through tbe action of tbe bankruptcy court in taking jurisdiction of tbe assets of the corporation. Tbe motion is therefore granted, and tbe assignments enumerated in it are stricken out, and will not be considered.
There but remain for consideration assignments 1, 2, and 12.
Finding no reversible error, the trial court’s judgment is affirmed.
Affirmed.
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Reference
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- CARTER-MULLALY TRANSFER CO. Et Al. v. ROBERTSON Et Al.
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