Brown v. American Freehold Land Mortgage Co.

The Court of Civil Appeals of the Third District has submitted the following statement and questions in the above cause:

"R.L. Brown and J. Gordon Brown sued the American Freehold Land Mortgage Company of London, Limited, R.B. King and T. Mallinson, to recover $150,000 damages. The trial resulted in a verdict and judgment for the plaintiffs for $100, and they have appealed.

"The appellees have filed cross-assignments, and having reached the conclusion that appellants' brief points out reversible error, we desire to certify to the Supreme Court certain questions presented by the cross-assignments, which questions are material to the rights of the parties and to a proper disposition of the case.

"The plaintiffs' original petition was filed June 27, 1901, and the amended petition, on which the plaintiffs went to trial, was filed February 23, 1903. The latter petition reads as follows:" [From the petition certified we condense the allegations which we deem necessary to answer the questions submitted, as follows]: After making the formal allegations of the parties, their residences, etc., the petition alleges in substance that R.L. Brown and J.G. Brown, under the firm name of Brown Bros., had established at Austin and at the city of Waco a business as loan agents, which transacted business throughout the State, and had, from 1888 to the year 1898, conducted the business of lending money on behalf of foreign corporations, receiving for their services a per cent of the annual interest as it accrued upon the loans made; that the plaintiffs had established a good reputation as business men for honesty, promptness and reliability, and as men who could command money for lending to those who might apply to them to borrow, and, in the transaction of the business of loan agents, had established business relations with many people in Texas who were borrowers of money, who had confidence in plaintiffs and would have continued to do business with them except for the interference of defendants. Plaintiffs allege that they were appointed agents of the American Freehold Land Mortgage Company of London, Limited, hereafter called the defendant company, in the year 1888 and continued to transact business as such agents for that company until the year 1898, during which time a profitable business was done for the said defendant company, from which the plaintiffs received annually $8000.

The petition alleges that the plaintiffs were, at the same time, agents for the English and Scottish Land Mortgage and Investment Company, Limited, a foreign corporation, which business was satisfactory to the said corporation and was profitable to it and plaintiffs until said English and Scottish company was induced by the false representations of defendants to take the business from plaintiffs.

It is alleged, that, in the year 1898, the defendant company determined to change the manner of doing business in Texas so as to pay salaries instead of commissions as it had done with the plaintiffs, and determined that it would secure for itself the agency for the English and Scottish Land Mortgage and Investment Company, Limited, which the plaintiffs then had and would have continued to hold but for the wrongful acts of the defendants. It is alleged that by reason of the transactions which the plaintiffs had carried on as agents, lending money for the said two corporations as well as for others, they had established a valuable business, having loaned money to many persons, which loans were about to mature, and said persons would require to renew the loans or to borrow money to pay them; that plaintiffs would have been able to control that business as agents of other companies after the agencies for the said two companies had been taken from them, and to prevent this and to secure the plaintiffs' business for themselves the defendants, the said defendant company, R.B. King and T. Mallinson, who are alleged to be agents of defendant company, fraudulently and maliciously combined, confederated and conspired together for the purpose of weakening and destroying plaintiffs' business influence, financial credit and standing, to break them up and run them out of business, and, for the purpose of causing the English and Scottish company to transfer its business to the defendant company, the defendants made certain false and malicious representations to the said English and Scottish company as to the management of its business by the plaintiffs, which caused the said last named company to take the business agency in Texas from the plaintiffs, and that by means of the fraudulent combination and their acts done and performed, alleged specifically in the petition, the said defendants succeeded in preventing the plaintiffs from continuing their business with a large number of their clients who needed to borrow money and whose loans in the other companies were maturing, and, by the fraudulent and false representations and manner alleged in the petition, defendants prevented the said persons from making application to the plaintiffs for such loans and succeeded in causing the English and Scottish company to take its business from the plaintiffs, and thereby weakened and in a large measure destroyed the business of the plaintiffs. It is alleged in the petition that the defendants, for the wicked, malicious and fraudulent purpose before charged, circulated and published reports and statements to the effect that the plaintiffs were insolvent and unable to accommodate their customers who might apply for loans, and by the various methods alleged interfered and prevented many persons from applying to the plaintiffs for loans; also, by such means and by such false and fraudulent representations, prevented the plaintiffs from acquiring agencies for other companies, which otherwise they could have done, so as to enable them to furnish money to those persons who applied to them for loans. The petition alleges that the business of the agency made a return annually of $15,000 profits, and would have continued for many years to produce that amount if it had not been for the wrongful and malicious acts done and performed by the defendants; but that by their interference with plaintiffs' business and the circulation and publication of false and fraudulent statements with reference to their honesty, their business integrity and solvency, the plaintiffs were damaged in the sum of $150,000. The petition alleges with great particularity and in detail the many acts, statements and publications done and performed by the defendants for the purpose of accomplishing the conspiracy charged against them which it is unnecessary for us to set out. This statement of the contents of the petition will be a sufficient basis for the answer to the questions hereinafter copied.

"The trial court sustained exceptions to the sixth, seventh and twenty-third paragraphs of the petition, overruled other exceptions, and held that the petition stated a cause of action upon a conspiracy to injure the plaintiffs in their business, and submitted the case to the jury upon that issue.

"Appellees' first cross-assignment of error complains of the action of the court below in overruling their special exception number 23, which exception was both general and special and challenged the petition for the reason, among others, that it showed no cause of action against the defendants. Under the assignment referred to, appellees contend that when the object of a conspiracy is not actionable, nor the means to accomplish the object actionable, no cause of action exists. They also maintain that this case falls within the rule asserted by them, the contention being that it was not unlawful for them, as competitors, to conspire to obtain the business which the plaintiffs had, thereby breaking plaintiffs up in business, unless in so doing they committed wrongs which were actionable in and of themselves, which they assert the plaintiffs' petition fails to show; and they rely upon the case of Delz v. Winfree,80 Tex. 400, as supporting their contention.

"Under the second cross-assignment of error, appellees complain of the action of the court in overruling special exceptions to paragraphs numbers 9, 9b, 10, 10b, 11, 12, 13, 14b, 15, 16, 17, 18 and 19, by which exceptions they pleaded the one year statute of limitations as to the matters complained of in said paragraphs of the petition.

"As to the questions certified, and showing that they are properly presented for decision, reference is here made to the first seven pages of appellees' brief on their cross-assignments of error.

"With the foregoing statement and explanation, the Court of Civil Appeals of the Third District certifies to the Supreme Court for decision the following questions:

"1. Eliminating the sixth, seventh and twenty-third paragraphs of the plaintiffs' petition, to which paragraphs the court sustained exceptions, does the petition state a cause of action against the defendants, and did the trial court err in overruling the defendants' demurrer thereto, as charged in the first cross-assignment of error?

"2. If the petition states a cause of action, does the one year statute of limitations apply to the case, and did the trial court err in overruling the special exceptions referred to in the second cross-assignment of error?"

We answer that the plaintiffs' petition states a good cause of action against each of the defendants and the demurrer was properly overruled.

The allegations which charge a conspiracy between the defendants to perpetrate the wrong set up in the petition are immaterial in this case, for the reason that the petition charges that each defendant, with the purpose to accomplish the injury to plaintiffs, participated by performing jointly and individually the various acts which caused injury to the plaintiffs; that the acts done separately by each was for the purpose of accomplishing the aim of all and contributed thereto, and if the facts alleged show a right of action then the defendants are liable jointly and severally for the injury produced by their acts, whether performed jointly or severally. 15 Enc. of Pl. and Prac., 558; Cooley on Torts, 145.

Appellees contend that it was lawful for them to break the appellants up in their business and to run them out of business "by lawful means." We agree to that proposition as being correct, even if it be true that the parties thus acting by lawful means were actuated by malice. If, for instance, the appellees, in the transaction of the business of lending in competition with appellants, had offered money for loan at a rate below that which the appellants could furnish it and thereby induced the customers of the appellants to borrow from the defendant company, and by reason thereof Brown Bros. were unable to maintain their business and were broken up and compelled to quit, then no cause of action would exist in favor of the appellants against the defendants, because, however malicious the motive, the means used would be lawful. But the facts alleged do not make such a case; for instance, it is alleged against all of the defendants that "on divers occasions and in the presence of different people in the city of Waco, Texas, and in other parts of McLennan County, Texas, they stated in substance that plaintiffs had done a bad business for the defendant company, which, in consequence thereof, had taken its business from plaintiffs, and that plaintiffs had been inattentive and neglectful of its business, and had conducted it in a way very unsatisfactory and unprofitable to defendant company, and had been guilty of fraudulent conduct as such agents; and further, in said McLennan County at various times and in Austin at various times in the fall of 1898 and 1899 and in the spring of 1900, made other statements to the effect that the plaintiffs were financially insolvent and irresponsible, and that they would make them bankrupt when they liked, and that the plaintiffs were going out of business, and that plaintiffs had been guilty of fraudulent conduct as agents." There are numerous charges of like character against the defendants in the petition, which enters minutely and elaborately into a statement of the various acts and statements of the several defendants done and made for the accomplishment of the purpose charged, of breaking them up and driving them out of business. It can not be said that it is fair competition to deal with a competitor in the manner shown by the facts alleged in this petition, for if the facts be true, and we must take them as such in this investigation, they manifest wicked persecution of the appellants by the defendant company, through its agents and officers, with the purpose of destroying appellants' business and of securing the benefits to defendant company which legitimately belonged to Brown Bros. It can hardly be said that the purpose of breaking a man down in business and driving him out of business is a lawful purpose, even when accomplished by lawful means. The best that can be said of such transaction is, that the law affords no remedy for such wrong.

In Delz v. Winfree, 80 Tex. 400, this court quoted from Walker v. Cronin, 107 Mass. 562, as follows: "Every one has a right to enjoy the fruits and advantages of his own enterprise, industry, skill and credit. He has no right to be protected against competition, but he has a right to be free from a malicious and wanton interference, disturbance or annoyance. If disturbance or loss come as a result of competition, or the exercise of like rights by others, it is damnum absque injuria, unless some superior right by contract or otherwise is interfered with. But if it come from the merely wanton or malicious acts of others, without the justification of competition or the service of any interest or lawful purpose, it then stands upon a different footing." If the allegations of the petition in this case be true, it was not a matter of competition on the part of the defendant company and its agents, but a malicious pursuit of appellants by means wholly without justification in law or morals; therefore, having produced the wrong as charged in the petition, the defendants may be justly held liable for the damage occasioned by the destruction of the business which the plaintiffs by their energy and care had built up for themselves. Delz v. Winfree, before cited.

The cause of action alleged by the plaintiffs and upon which they sought recovery is, the destruction of their business as loan agents by the unlawful and malicious acts of the defendants. The various acts which are charged in the petition — for instance, the representation that plaintiffs were dishonest and unreliable and that they were bankrupt and insolvent — were simply allegations showing the methods by which the defendants accomplished the purpose of destroying their business. It was not sought to recover upon the allegations constituting libel or slander, but the facts stated were the evidence by which the cause of action would be established. The statute of limitations of one year does not apply to the cause of action set up in this case.