267 S.W. 973 | Tex. Comm'n App. | 1925
This case has been before the Amarillo Court of Civil Appeals twice, and two original opinions and two opinions on motion for rehearing and one opinion on dissent have been written by that court. These opinions may be found in 239 S. W. 300, and 255 S. W. 471.
On May 1, 1920, Vern Witherspoon and three associates sold to W. H. Terry and his sons, ,J. G. and R. A. Terry, a garage in Hereford, Tex., for a consideration of $5,-000 cash and a. note for $6,695, executed by the'three Tferrys, due November 1,1920, and secured by a chattel mortgage executed by J. G. and R. A. Terry on all the tools, fixtures, and appliances of the garage and further secured by a deed of trust given by W. H. Terry on certain lands in Gaines county. A short time prior to October 20, 1920, W. H. Terry advised Witherspoon and his associate, E. W. Kinney, that he 'would not be able to pay the note at maturity, and about that time had a conversation with them in .reference to. their assisting him in selling the garage, and on October 20, 1920, J. G. and R. A. Terry executed to Witherspoon and his associates a bill of sale to the entire stock of merchandise located in the garage, consisting of tires, tubes, engine parts, bolts, tap screws, automobile accessories, and also one acetylene welding outfit and burning-in stand, and contemporaneous with the bill of sale plaintiffs and defendants, J. G. and R.. A. Terry, executed this contract:
“This agreement made and entered into this the 20th day of October, 1920, by and between Roy Terry and Guy Terry, parties of the first ■part, and Vern Withei'spoon, Geo. Beams, G. E. Webb, and E. W. Kinney, parties of the second part:
“Whereas, first parties are indebted to the second parties, which is evidenced by a promissory note, and whereas for the purpose of aiding in the discharge of the said indebtedness first parties have this day given second parties a bill of sale to certain personal property now located in the Renfro building in Hereford, Texas:
“Now, therefore, it is hereby agreed that said bill of sale is not to be received in discharge of the indebtedness, nor is it to in any way affect the other securities of the said indebtedness, but it is agreed that second parties will take charge of the property named in the said bill of sale, and will use their effort in selling said property and turning same into cash or into other property which second parties are willing to accept as cash, and the proceeds of said property are to be used as follows: First the necessary expenses of the same are to be paid, including reasonable pay for the services of either member of the second parties who attends to same; then all above what is necessary to pay on said expenses, shall be applied to reduce the' said indebtedness to second parties.”
And from that date for about 20 days defendants and plaintiffs together carried on the business of the garage; after about the 10th of November, the Terrys had nothing more to do with running the business of the garage, and on the 23d of November, plaintiffs brought suit against all the defendants for their note and for a foreclosure of their two chattel mortgage liens, the bill of sale being treated as a chattel mortgage, and the deed of trust lien, and pleaded that from the time they took possession of the garage up to the time of the trial, which was June 2, 1922; they had run it for the use and benefit of defendants and made an accounting of all moneys received and paid out by them during that time, and further pleaded that the services of the plaintiffs while in charge of and running said business were reasonably worth the sum of $150 per month for each month so employed' in connection therewith, and also pleaded that they went into possession of the garage under.an agreement with the defendants that they would use their best efforts in trying to find a purchaser for it, and that plaintiffs should keep the same open and á going concern for tfie purpose of applying the proceeds that might be obtained ’ from the sale of said business or from conducting the ^same to the payment of the notes of defendants, and that it was agreed that the plaintiffs should be paid a reasonable compensation for their services in assisting in and conducting the said business.
Defendants, answered, denying that they had entered into an agreement with plaintiffs that plaintiffs either jointly with defendants or by themselves might take charge of said business and run it as a going concern, and in their cross-action asked for damages against pláintiffs for conversion of the entire stock of goods, fixtures, tools, and appliances of the garage.
In answer to speciál issues the jury found that on or about the 18th of October, 1920, W. H. Terry consented or agreed that Witherspoon and Kinney or either of them
In Zadek v. Burnett, 176 Ala. 80, 57 So. 447, from the Supreme Court of Alabama, we find this language:
“Independently of any provision in the mortgage, the rule seems to be. established that a chattel mortgagee, in lawful possession of the mortgaged property, is entitled upon an accounting to be credited with all reasonable and actual expenses incurred in earing for it. 7 Cyc. 91, and eases' cited. This we take to be true, however, only where the mortgagee holds possession as bailee or trustee for the mortgagor, and not where he assumes to hold in his own right and for his own uses.”
In Chambers v. Mauldin, 4 Ala. 477, is this statement with reference to the status of the mortgagee in possession: “But if a mortgagee take possession, he is considered in equity, in some measure, in the light of a trustee, and accountable for the profits.”
In Merritt-Allen Co. v. Torrence (Iowa) 102 N. W. 154, the defendant agreed to take over the property of the corporation, sell it to the best advantage, pay himself out of the proceeds the amount owing him and the oth- or indebtedness, and if anything was left, to return it to the corporation to be divided among the stockholders. A bill of sale was accordingly executed to the defendant and he proceeded to operate the business, which was a wood working plant, in the regular way for. several months, and then sold it as a whole. Suit was brought against the defendant for an accounting, and the court, in discussing! the case, made this observation:
“Conceding that the statute as to trusts is applicable to personal property, yet the evidence is such as. to show that defendant took the entire property as security for the indebtedness owing him, and not absolutely, and that the transaction, was, in effect, a mortgage.”
The jury found that Terry Brothers were the owners of the stock of goods and fixtures, and found that their father, W. H. Terry, agreed that plaintiffs in error might take possession of the fixtures and merchandise and conduct or assist in the management of the business, for the purpose of securing them, and applying the proceeds derived from such business on the payment ,of the note and the necessary expense in conducting the business. In view of the- fact that the contract between Terry Brothers.-and-plaintiffs in error is not entirely clear as to whether the business was 'to be conducted as a going concern or sold as a whole, we think the issue as to what the agreement was between Terry Brothers and plaintiffs in error on this question should be submitted to the jury. If it be found that the owners of the property agreed that plaintiffs in error should take charge of it and conduct it as a going concern, then plaintiffs in error were in possession of the property under a contract wholly independently of their rights under the mortgage, and which specially provided that the property was not received in discharge of the indebtedness, and.that its reception was to in no way affect the rights of plaintiffs in error under the mortgage. While the above authorities are not exactly in point, yet, as we understand them, plaintiffs in ; error,- under the. conditions mentioned, would be in possession of the property as bailees or trustees of the Terrys, and that so long as they acted honestly and diligently in carrying out the trust they could not be held for conversion, and they would not be precluded from protecting their rights under the mortgage because they were acting, in such capacity.
If the Terrys had placed the business in the hands of third parties to conduct as a
We recommend that the judgment of the Court of Civil Appeals be affirmed.
The judgment recommended in the report of the Commission of Appeals is adopted, and will be entered as the judgment of the Supreme Court.