Rousseau v. Everett

The court awarded judgment for the amount of the note sued on "after eliminating and excepting the $250 item and all interest that may have accrued thereon." The denial of the recovery of the $250 and interest thereon was upon the ground that it was "in part payment for stock," the sale of which stock was under a contract violating the law. The appellant and the appellee both assail the court's conclusion of law. The appellee contends that the purchase price is paid, and the balance is represented by a note to which the stock is attached as collateral security. The appellant contends that as the court determined the $250 was founded upon an illegal contract, the whole amount of the note was unrecoverable, and that the court erred in rendering judgment for that portion of the note which represented the borrowed money. In the appellee's contention it is assumed that the $250 was for money advanced at the appellant's instance and authority. According to the evidence in behalf of the appellee the appellant agreed to pay $250 in cash on the stock and $750 in a note, and the $250 cash was obtained by the appellant through the method of adding that item in the first given for $1,925. The appellant, however, denies that he agreed to pay $250 in cash, and insists that he never paid any cash for the stock, and never authorized any payment for him, and that the $250 only represented that amount of the unpaid purchase price of the stock. Appellant testified:

"I never received a check for $250 issued by the Union Trust Company; to-day is the first time I ever knew of the issuance of the check drawn in my favor. I did not authorize a delivery of that check drawn in my favor, and payable to me, to Mr. Finch."

And in view of the conflicting evidence it must be taken as a fact, as found by the trial court, that the $250 item in evidence was not for borrowed cash paid at the instance and on authority of the appellant, but merely represented that much of the unpaid purchase price of the stock. It would then be a fact, as involved in the court's finding, that the 50 shares of stock were sold to the appellant entirely on credit, payable at a future date. The court makes the further finding that:

"Said stock was duly issued to the defendant in stock certificate No. 184, bearing date the 15th day of January, 1913."

And it appears that the appellant attached the certificate to the note given for the purchase price of the stock, as collateral security for the payment of the note. The note recites:

"As collateral security for the foregoing note and other notes, if any, this day given for the stock hereinbefore named I have delivered to the Union Trust Company the following securities; Fifty shares of the capital stock of the Union Trust Company, Longview, Texas. In case of default in the payment of the foregoing and above-described note at maturity I, we, or either of us, authorize the holder of said note to sell said securities, with or without notice, at public or private sale, at the option of the holder, applying the proceeds to the payment of the above note, including the interest and attorney's fees; and the surplus, if any, remaining thereafter to be paid to the maker hereof on demand."

And the evidence would seem to show an actual delivery of the stock with the intention to have the title thereto vest in the appellant. The "holder of the note," whoever he may be, was authorized to sell the collateral security of 50 shares of stock in default of the payment of the note, and to pass title to the purchaser of such stock under the default sale. The facts, it is thought, as found by the court, show such contract of sale of stock as has been decided, we conclude, as ultra vires and void in the cases of San Antonio Irr. Co. v. Deutschmann,102 Tex. 201, 105 S.W. 486, 114 S.W. 1174, and McCarthy v. Texas Loan Guaranty Co., 142 S.W. 96, and the court did not err, we conclude, in rendering judgment for the plaintiff for the amount, as he did, which represented actual borrowed money. The purchase of the stock and the borrowing of the money are, in the evidence, severable and distinct transactions. The promise to repay the borrowed money is not vitiated by the ultra vires contract of sale of the stock. Haswell v. Blake, 90 S.W. 1125; Floyd et al. v. Patterson, 72 Tex. 205, 10 S.W. 526, 13 Am. St. Rep. 787; Morris v. Ft. Worth Life Ins. Co., 200 S.W. 1114.

The assignments of error, both of appellee and of appellant, are overruled.

The judgment is affirmed.