Allen v. Long , 80 Tex. 261 ( 1891 )

We make the following extracts from the conclusions of fact found by the court as we find them in the transcript in order to present the points at issue:

"1. Some time in 1868 the Lamar County Agricultural and Mechanical Association was organized as a joint stock company for the purpose of holding fairs in said county, and consisted of a large number of members who took shares in said association and to whom certificates of stock to the amount of their respective shares were issued. All of the shares of the capital stock agreed upon were taken and assessments were then made on the members thereof until the whole stock thus taken was paid up. Said association acted and transacted its business through a president and directors annually elected by the members. It acquired the land in controversy and used it for the purpose of holding fairs thereon until about 1875. 'Said association' in that year 'ceased to hold fairs and never did elect any president or other officers after that time, or perform any other act or do any other business in pursuance of the purpose for which it was organized.'

"2. About the year 1883 a meeting was called by notice in a newspaper by the person who was the last president of the said association for the purpose of reorganizing the said association, but no actual notice was given to a number of the members of the original association (of) the purpose to reorganize the old association, and a number of them, among whom was the defendant, had notice. Some of (the) old members, together with a large number of persons who had never been members of the association which ceased to do business about 1875, met and organized a joint stock company under the name of 'The Lamar County Agricultural and Mechanical Association;' elected a president, directors, and other officers; issued a large amount of stock, which was sold; bought, sold, and improved at great expense another and different tract of land, and thereby became largely indebted. That to pay such indebtedness said association last organized, by its authorized agent, sold and conveyed the land in controversy to W.T. Gunn, under whom plaintiff claims. That the organization of the last association, the receiving of new members, issuing and selling of new capital stock, the contracting of said indebtedness, and the sale of the land in controversy was all done without the assent or knowledge of a number of (the) members of the first association, one of whom was the defendant. That he owned twenty-three shares of paid up stock in the original association, and was in possession of the land in controversy at the time it was so sold, and had been for several years.

"3. The court finds as a matter of fact that the two organizations or joint stock companies above mentioned were not the same.

"4. The court finds against plaintiff's plea of estoppel."

Upon the above conclusions or findings of facts the court concluded as a matter of law that the two associations were not the same; that the last one had no right to convey the land, and that no title, legal or equitable, passed by the sale and deed to Gunn, unless it might be the individual members of the old association who joined the new; that the land in controversy belonged to the members of the old association as tenants in common, and if the interest of the members who belonged to both the old and the new association did pass by the deed to plaintiff's vendor, the plaintiff is only a tenant in common with defendant G.E. Long and can not maintain this action, and for these reasons gave judgment for defendant George E. Long.

The assignments of error may be summarized and stated in the following propositions:

1. That the court erred in holding the association to be a joint stock company instead of a corporation. Appellant contends that it was at least a de facto corporation.

2. In holding that the association of 1883 was a new and distinct company from the original one of 1868, appellant contending that the former was but a reorganization and continuation of the latter.

3. In holding that plaintiff could not recover upon the possessory title of the association of 1883 (claimed to be identical with that of 1868) against the defendant Long, whom appellant contends is a mere trespasser on the land.

4. In holding that defendant is a tenant in common with plaintiff and the other stockholders of the original association in the land in dispute, and that therefore plaintiff can not maintain the suit.

5. In not sustaining the plea of estoppel and ratification interposed by Gunn and the Lamar County Agricultural and Mechanical Association (new).

In addition to the facts already enumerated by us in the preceding synopsis as well as those found by the court below, another may be recited in this connection. The association of 1883 appears to have consolidate or connected itself with a race track company and continued the connection until May, 1884, when it severed its relation with that company. This was a feature unknown to the original organization, and the connection was without the consent of a number of the stockholders who objected to this arrangement. Some of them refused to join the new association on this account. It does not appear how long the original association was to continue. The articles of agreement are not found in the record. So far as the record shows there was no incorporation or attempt at incorporation under the forms of law.

1 and 2. We think that the evidence taken as contained in appellant's brief amply sustains the conclusions of the court below, in which it finds as a matter of fact that the associations of 1868 and 1883 were distinct and not identical. Most material changes had been made without the consent of "a number of the stockholders" of the original concern. In fact all of the findings are supported, except perhaps the one that the defendant did not have notice of the new organization. He admits that he was present thereat, but as a mere spectator. We do not, however, deem it important to determine the legal effect of his notice vel non in the disposition we shall make of the case. An accurate lexicographer of law defines a joint stock company to be "An association of individuals for the purpose of profit, possessing a common capital contributed by the members composing it, such capital being commonly divided into shares of which each member possesses one or more and which are transferable by the owner. The business of the association is under the control of certain selected individuals called directors. * * * A quasi partnership, whereof the capital is divided, or agreed to be, into shares so as to be transferable without the express consent of all the copartners." 2 Bouv. Law Dic., 9. If incorporated it seems that in this country it is to be regarded as at least a quasi corporation. 10 Wall., 566. But here there was no incorporation, etc., as we have seen. It is only where there has been an effort to conform to the forms of law in establishing a corporation and some formal defect exists merely as to the mode of complying with the law and the body is dealt with and acts as a corporation that it is regarded as one defacto. 4 Am. and Eng. Encyc. of Law, 197, 198, and notes; Pars. on Part., *544. Here one indispensable element of a corporation is lacking, viz.: Succession, or, as sometimes called, perpetuity, which had not been extended by the government and which of course in this State could only be grated for a term of years. We think that the association was an unincorporated joint stock company which is governed by the general principles of law applicable to partnerships. Pars. on Part., 541. But we do not see that appellant's position as to the validity of the deed to Gunn, etc., would be any stronger should we regard the association originally organized as a de facto corporation and as such not dissolved or terminated by mere non-user. Mora. on Corp., secs. 51-54, 230, 239, 662; Waterbury Co. v. Laredo, 60 Tex. 519; Pearch v. Railway, 21 How., 441; Mora. on Corp., secs. 635-637.

We think that the association of 1883 was, as found by the court below, a new company and not merely a continuation of the old with all of its rights and property. Pars. on Part., *406et seq.; Id., *546, 547; Id., *408; Story on Part., secs. 125, 213; Pars. on Part., sec. 384; Mora. on Corp., sec. 239. While it may be true that the mere transfer of his stock by a member of a joint stock company to an outsider would not work a dissolution or termination of the concern (Pars. on Part., *545, 546), still a great deal more than that was done, as we have attempted to show. Besides the old association had been allowed to expire by disuse. There remained nothing to do but to wind up the concern and divide the assets among the stockholders, there being no debts. From 1875 to 1883 it had ceased to hold meetings, elect officers, or to operate its business. Pars. on Part., *347. It had thus to all practical purposes abandoned its venture and fallen into a stat of "innocuous desuetude" — if not entirely "collapsed," as contended by appellee. Lea v. Hernandez, 10 Tex. 138. If it were in fact still a living body at the reorganization of 1883 it presents a remarkable case of suspended animation. This new association could not, as we think, legally take charge of and dispose of the land of the old company, especially without the consent of all of the stockholders, and to pay the debts incurred solely by the new concern. Pars. on Part., *168, 408.

The associations being distinct, the last could no more seize, appropriate, and dispose of the property of the first than B could in law assume to transfer that belonging to A. Professor Parsons, speaking of the effect of changes in the condition of a partnership, says inter alia: "One firm succeeds the other, and if the latter firm chooses to adopt the name of the earlier this does not make them one and the same. And if one member of the old firm comes into the new firm this does not make them one; and if all remain but one, or all remain and a new one is added, here also is a new firm, which can no more have the effects of the old nor be liable for the debts without a new and distinct agreement between all parties interested therein than if the change were entire and the name also. Pars. on Part., *408. In the present instance the change was almost entire in every respect, and a great many members were admitted into the new association who were not members of the old, and a considerable number of the stockholders of the original company refused to join or participate in the new one organized in 1883. We conclude that the deed made by the officers of the new association to Gunn was null and void and conferred no right or title upon him that lie could convey to plaintiff in the land in controversy. Being absolutely void it could not be ratified so as to pass title, had there been any ratification in fact, which there wits not. Moody's Heirs v. Moeller, 72 Tex. 635; Land Co. v. Laigle,59 Tex. 339. See also as to the conveyance of the interest of those officers, Alexander v. Kennedy, 19 Tex. 493.

3. From what has been already said in reference to the deed to Gunn it is clear that if the original association had actual possession of the premises that appellant was not connected therewith in such way as would enable him to maintain the action, even if defendant should be regarded as a mere trespasser. But it does not appear that he was a trespasser against the rights of the original association or stockholders thereof to whom the land belongs. He claims, and his testimony without contradiction shows, that lie is holding the land for himself and the other stockholders of the original association. The new association is not shown to have had possession of this land, and after 1875 the original association occupied it only by inclosure. The defendant took possession in 1880, apparently without any lawful authority except that of being a stockholder. Gunn conveyed the land to plaintiff in 1886. It may be conceded that prior actual possession with which the plaintiff is connected, or which lie has himself, is sufficient against a mere trespasser on the premises (Caplen v. Drew,54 Tex. 496), but here both of these facts are wanting. The defendant's right to the possession of the premises is, to say the least, as strong as that of the plaintiff or Gunn, under whom the plaintiff claims. If neither of them have any right to the possession then the legal sequence is that the decision must be rendered for the defendant, as was done; nor would this conclusion be altered by defendant having asked for affirmative relief in addition to the plea of not guilty. This did not have the effect of relieving the plaintiff of the burden of showing a, right to recover in himself.

4. The court below held that if plaintiff had acquired (which it did not decide) the right or title to the land of such of the stockholders of both the old and new associations as bad consented to the conveyance of the laud by the latter association to Gunn, then the original parties to the suit would only be tenants in common of the land, and that consequently plaintiff could not maintain the suit under the facts of the case. The first proposition is presumably based on the hypothesis that in such case the defendant would in effect derive whatever right or title he might have through the members of the original, not the subsequent association. In neither proposition do we find any error of law. The first association was, as we have endeavored to prove, functus officio and practically at an end. There were no creditors with claims upon its assets, etc. The land had been conveyed to this association as firm or partnership property, to be used by it as such for the benefit, of the concern — to constitute its fair grounds. Speaking of a partnership as a body and of its relation to its members, creditors, and property, the same learned author we have quoted above says: "After this relation is exhausted or after this work is done there is a resolution of this body into its elements. * * * If the joint debts have been so paid in full there are no joint creditors, and they who were partners, own the remaining property, free from all incumbrance, except each other's rights, and they share this remainder between them." Pars. on Part., *347. If land is conveyed to partners in fact as a partnership * * * they will hold as tenants in common. Id., *375.

The court below does not assign its reasons for deciding that the plaintiff could not maintain the suit against defendant as a, cotenant, but this was evidently because the court did not regard the claim or possession of the defendant as adverse to the original association, or any one claiming under it, nor as amounting to an ouster of the old association or of its stockholders, or of the plaintiff if he can be regarded as claiming any interest in the land under the original association or any of its members. We have seen that the court was justified may the record in these conclusions. While one tenant in common may sue another in case of actual ouster, he can not when the possession of his co-tenant is not adverse to his own interest nor to the title under which they must both claim if at all. To authorize the suit for recovery of possession (not partition), the ouster and adverse holding must be of such character as would put the statute of limitation in motion. Portis v. Hill, 3 Tex. 273; Alexander v. Kennedy,19 Tex. 493.

5. There were no facts to support the plea, of estoppel against, the defendant. He did not mislead nor deceive the plaintiff nor his vendor, nor induce, them to buy the land.

We think the judgment ought to be affirmed, but without prejudice to the right, if any, of the members of the new association who were also stockholders in the old, or to the interest, if any, of the plaintiff in the land acquired from any of the members of the original company under the deed to Gunn, or to the rights of the other stockholders of that company, etc. The suit not being for settlement nor partition and the proper parties not being before the court, we are not called upon to and do not decide these questions.

Affirmed.

Adopted March 17, 1891.