Huff v. McMichael , 60 Tex. Civ. App. 379 ( 1910 )

Appellee sued the appellant Huff to recover certain shares of stock in the American Consolidated Mining Milling Co., an Oklahoma corporation with a permit to do business in Texas, alleging the conversion by appellant of 8,650 shares of the stock, of the value of $10 per share; that these shares were transferred to appellant, except about 650, for the purpose and upon the representation of appellant that he could make sale thereof, and the transfer was made for that purpose. It was alleged that the appellant failed to make sale, except of 2,000 shares, and he had declined and refused to make any further sales of the stock and refused to deliver the same back to appellee. Appellee sued out an injunction restraining the appellant from disposing of the stock, and prayed for judgment recovering said stock and awarding the same to appellee.

The appellant, among other defenses, pleaded that the stock was transferred to him by the appellee for the fraudulent purpose of defrauding Eugene Early and others. An exception was sustained to this part of the answer. Verdict and judgment of the court below were in appellee's favor.

Appellant's first assignment of error complains of the action of the trial court in sustaining the demurrer to that part of appellant's answer alleging fraudulent scheme in transferring the stock to him by appellee. The answer upon this subject is as follows:

"That appellee was the owner of a considerable number of shares of stock in the mining corporation, and that he desired to sell same at an exorbitant price and far in excess of its real value. His scheme was to locate interested parties and offer to buy stock from them over the telephone and telegraph under fictitious names, offering to pay an excessive price therefor. Bahl, his confederate, was to transfer the stock to some innocent party and have this party call on the interested parties just after they had received the fictitious message, and offer to sell stock at a price considerably less than the offer contained in the fictitious message. In pursuance of this scheme, Bahl engaged the appellant to assist him, and explained to appellant that the stock was the property of Bahl, and that he, Bahl, could not afford to approach the interested parties, because he, Bahl, was an officer of the company, and it would look bad for an officer to offer stock for sale. Accordingly, appellee telegraphed Early from San Antonio under the fictitious name of 'Wainwright,' offering to pay $1.50 a share for the stock. Bahl knew when this telegram would be received, and just after it was received Bahl sent appellant to Early, with instructions to sell the stock at $1.35 a share. The stock was properly transferred to appellant on the books of the corporation and the proper certificates were issued to him. He called on Early and sold him 2,000 shares at $1.35 per share, making a total of $2,700, which was paid by Early to appellant and by appellant delivered to Bahl, agent of appellee. Appellant thought the stock belonged to Bahl when, in fact, it belonged to appellee. Early desired some more stock. Bear also wanted some. He had been worked on by the same kind of telegrams. To accommodate these demands the stock in question, which was the property of appellee, was properly transferred to appellant by cancellation of the old certificates and a reissue of new certificates. With these certificates in his possession appellant called on these parties and offered same for sale. But during this time an investigation had been made by Early and Bear, and they had ascertained that the buyer and the seller were the same party, and that it was a fraudulent scheme, and consequently refused to buy the stock from appellant. Appellant then learned of the fraudulent scheme, and became fearful that he would be prosecuted for swindling Early. He called on an attorney with reference to this matter, and also to ascertain if he had a cause of action for damages for the deception practiced upon him. The attorney advised him that the transfer was fraudulent, and that the stock could not be recovered. Appellant then refused to re-transfer the stock to appellee, and since held same as his own property."

We are of the opinion that this assignment is well taken. It alleges a fraudulent scheme upon the part of appellee, by which the stock could be floated, and that the appellant was selected as the innocent instrumentality through which this purpose could be accomplished. The scheme set out in the answer, if true, was to perpetrate a fraud, not only upon Early, but upon others, to sell the stock for more than it was worth. If the stock went into the hands of the appellant with the intent to accomplish this fraudulent purpose, the appellee would be in no position to set that transaction aside and recover back the stock. And we are of the opinion that the reasoning of the court in the case of Prude v. Campbell, 85 Tex. 5, recognizes this principle.

In disposing of the second, third, fourth and fifth assignments it is sufficient to say that if the transaction was not a fraud, as set up in the answer, and appellant agreed to gratuitously furnish his services in selling the stock, he would not be entitled to recover commissions or the value of the services so rendered; and whether there was such an agreement between him and the appellee was a question of fact for the jury. If he did not agree, as claimed by appellant, to gratuitously furnish his services, but rendered valuable services which were accepted and acted upon by appellee in disposing of the stock, he would be entitled to reasonable compensation for those services; but if, as claimed by the appellant, the transaction was a fraud, and he was entrapped and misled into the belief that the scheme was bona fide, and that the object and purpose of the appellee was to in good faith float the stock and put it upon the market, he would be entitled to recover the reasonable value of the services rendered in accomplishing that purpose. This is deemed all that is necessary to be said upon this subject, as these views will doubtless be followed by the court upon another trial, if the evidence is of a character to entitle them to consideration.

Appellant's sixth assignment of error is also well taken. It is to the effect that the court erred in permitting the plaintiff, over the objections of defendant, to introduce in evidence and read to the jury a certified copy of an indictment in case No. 453, criminal, United States v. Boyd Huff, wherein said Huff, who is the appellant, was charged with using the United States mails for the fraudulent purpose of defrauding one Howard Mann out of $50. This indictment was filed in the United States District Court for the Northern District of Texas on December 5, 1896, and a certified copy of the judgment in said cause, showing that said Huff was convicted on the indictment, and a copy of the sentence, showing that Huff was fined $100 and remanded into the custody of the marshal until the sentence was fully satisfied. It is not claimed that the appellant was convicted of a felony, but the evidence introduced was merely for the purpose of affecting his credit as a witness. The judgment of conviction is not only remote, and for this reason the trial court may have erred in admitting it (Herring v. Patten, 18 Texas Civ. App. 150[18 Tex. Civ. App. 150]); but that case, as well as Boone v. Weathered, 23 Tex. 675; Gulf, C. S. F. Ry. v. Johnson, 83 Tex. 633; Tipton v. Thompson, 21 Texas Civ. App. 144[21 Tex. Civ. App. 144]; Houston, E. W. T. Ry. Co. v. Runnels, 46 S.W. 395; Missouri, K. T. Ry. Co. v. Adams, 42 Texas Civ. App. 274[42 Tex. Civ. App. 274],114 S.W. 455, and the others named in appellant's brief, together with many others cited in the last case mentioned, are to the effect that a witness can not be discredited as to particular facts, but that he must be discredited or impeached by evidence relating to his general reputation. We conclude that there was error in admitting this evidence.

We are of opinion that the seventh assignment of error is not well taken. It does not present a case in which plaintiff was relieved of the burden of proof in such a manner as to give the appellant the right to open and conclude.

For the errors pointed out the judgment is reversed and the cause remanded.

Reversed and remanded.

OPINION ON MOTION FOR REHEARING.