Opinion
No. 3716.
June 30, 1938. Rehearing Denied July 14, 1938.
Appeal from Hunt County Court; O. C. Mulkey, Judge.
Action by the International Shoe Company against E. E. O'Neal and another to recover a balance alleged to be due for goods, wares and merchandise. Judgment for defendants, and plaintiff appeals.
Reversed and rendered.
Appellant, a corporation, brought this suit against appellees, E. E. O'Neal and J. S. McWhirter, to recover a balance alleged to be due for goods, wares and merchandise. Upon trial without a jury judgment was rendered for the defendants.
For sometime prior to January 10, 1934 appellees were merchants, doing business under the partnership name of O'Neal McWhirter. Upon and for sometime prior to the date mentioned the partnership was insolvent. Other than their stock of merchandise they were without non-exempt assets subject to the payment of their general creditors. On the date mentioned appellees concluded it would be advisable for them to go into bankruptcy. The Wolfe City National Bank was one of their largest creditors and held a mortgage on the fixtures and furniture of their business. Appellees consulted with the Bank and the latter suggested that if the creditors would make a settlement for 33 1/3 per cent of their claims it would give the creditors more than they would realize through the bankruptcy court, and further suggested that appellees get in touch with Zuber Zuber, of Dallas, commercial adjusters, who could possibly assist them in the best plan of liquidating their business. Appellees acted upon this suggestion and employed the firm of Zuber Zuber to take the matter up with their creditors and effect a settlement. Charles Zuber handled the matter for his firm. The Bank agreed to loan Mrs. McWhirter, wife of defendant J. S. McWhirter, a sufficient amount to buy the stock of merchandise, the defendant O'Neal intending to retire from the business. It was the intention of the defendants to take the benefit of the bankruptcy law unless all of the creditors agreed that the stock of goods should be sold in bulk for sufficient to pay 33 1/3 per cent of the claim of each creditor, and that each creditor would agree to accept that amount in full settlement of his demands. If this was not done, it was the intention of appellees to go into bankruptcy.
Zuber Zuber wrote the various creditors submitting the proposition stated. The letter advising the creditors the proposed sale in bulk was intended to be made January 22, 1934. Shortly after the mailing of the letter above mentioned Mr. Roberts, attorney for appellant, communicated with Charles Zuber. Zuber testified: "Mr. A. J. Roberts of McNees Roberts communicated with him with reference to the Robert, Johnson Rand account and told him that he had received a letter from the client, the International Shoe Company, the owner of the account, and that they had instructed him to file an injunction enjoining the sale and that he already knew that the International Shoe Company did not accept compromise settlements. That the International Shoe Company had a policy which they did not violate and that was to the effect that they did not accept a compromise settlement only through bankruptcy, and that several days after this conference he had another conference with Mr. A. J. Roberts, attorney for the International Shoe Company, and that it was agreed between himself and Mr. Roberts, representing the International Shoe Company, that the claim would be filed for dividends only and that they would not require a release from the International Shoe Company, if they would not file the injunction and stop the sale and that Mr. Roberts filed the International Shoe Company's claim and that the sale was consummated with Mrs. J. S. McWhirter and that he obtained the cashier's checks payable to each of the creditors, including the International Shoe Company account, and that the International Shoe Company's check was $381.84, and that he turned over this check to Mr. Roberts which he accepted under the arrangements that they had agreed to, to the effect that the International Shoe Company would file their claim and accept the dividend but would not give a release of any kind or character for the balance of the claim. After the conversation with Mr. Roberts, attorney for Roberts, Johnson Rand, and with the consent of Roberts, Johnson Rand, through its attorney, the stock of goods was sold to Mrs. J. S. McWhirter and out of her money paid for the stock of goods, I purchased a cashier's check for 33 1/3 per cent of the sum owing each of the creditors and delivered a cashier's check to Mr. Roberts. * * * He did not remember whether or not he communicated with O'Neal McWhirter and Mrs. J. S. McWhirter the information with reference to the objection raised by the International Shoe Company or told them that they would not accept the 33 1/3 per cent offered in full settlement in the first conference at the time the plan was first worked out by making the sale and offering the 33 1/3 per cent, that he knew that the International Shoe Company had a policy which they invoked in their business to the effect that they would not accept a compromise settlement other than through the bankruptcy courts, "and he further testified that during one of the conferences he had with Mr. Roberts with reference to the filing of the account" that Mr. Roberts told him that the International Shoe Company would not agree to give any kind of a release for the balance of the account but that sometimes the International Shoe Company did not file suit for the balance of the account, but that he could not tell him what they would do in this particular case."
Mr. Roberts, attorney for appellant, testified: "That on or about the 17th day of January, 1934, that he received a letter from the general attorney for the International Shoe Company, Roberts, Johnson Rand branch, addressed to McNees Roberts, attorneys, pertaining to the account of O'Neal McWhirter of Wolfe City, Texas, in which communication they advised that they had received a letter from Zuber Zuber which set forth the letter purported to be the dealers' financial condition and set forth an offer of 33 1/3 per cent, which, of course, was not acceptable to the International Shoe Company, and that he immediately got in touch with Mr. Charlie Zuber of Zuber Zuber, and that Mr. Zuber agreed with him that he would hold up making the sale on January 22nd, until further communication and that on January 22d 1934, he received a telegram from the attorney for the International Shoe Company in St. Louis, Missouri, directing him to enjoin the sale, and that he again communicated with Mr. Charlie Zuber, the same party who had written the letter of January 10th, offering the 33 1/3 per cent settlement to the creditors, and that Mr. Zuber agreed with him that if he would not enjoin the sale and allow the same to be made that the International Shoe Company might file their claim showing the amount due and receive the 33 1/3 per cent and not give any kind of a release for the balance of the account, and after this agreement with Mr. Charlie Zuber regarding the filing of the account without giving a release, he filed the same with Mr. Charlie Zuber accompanied by a letter stating that he was filing the same for dividend only and did not give any release for the balance of the account of any kind or character. That sometime thereafter Mr. Charlie Zuber turned over to the firm of McNees Roberts a check for $381.84, which he understood to be accepted as a payment or dividend and that there was no further communication between him and Mr. Zuber, other than the first agreement which he made that the amount would be accepted as dividend only without any re lease as to the balance."
In rebuttal Zuber further testified: "He did not know for sure whether or not he told either Mr. McWhirter or Mr. O'Neal about the trouble that he was having with the International Shoe Company or the arrangements that he had made with reference to the filing of the claim for dividend only without a release, but that he was under the impression that he did not tell them about it and that he did hold up making the sale on the date specified in the letter until after making the arrangements with Mr. Roberts, attorney for the International Shoe Company, but that they were to file their claim for dividend only; that the statement made by Mr. Roberts that sometime the International Shoe Company did not file suit on claims of this kind for the balance was not, in my opinion, an agreement to release the balance and Mr. Roberts was not attempting, in my opinion, to bind the International Shoe Company when he made this statement."
The testimony of the defendants shows that Zuber did not advise them of the agreement under which he had delivered to Mr. Roberts the check in favor of the appellant for 33 1/3 per cent of its claim.
The evidence supports the view that Zuber Zuber exceeded their authority in delivering the check without an agreement on the part of appellant to accept the same in full settlement of its claim.
McNees Roberts, of Dallas, for appellant.
Mayo W. Neyland, of Greenville, for appellees.
The undisputed evidence as reflected by the foregoing statement shows there was no agreement by the appellant to accept the payment of 33 1/3 per cent of its claim in satisfaction of its demand. The evidence conclusively rebuts the view that there was a composition agreement made by the appellant. Appellees do not contend that such an agreement was made by appellant, but in support of the judgment submit two propositions. Briefly stated, they are to the effect, first, that since appellees were insolvent, which fact was known to appellant, and the appellees contemplated going into bankruptcy, of which the appellant was advised, and the appellees forbore going into bankruptcy, there is a sufficient consideration to support an agreement on the part of appellant to accept the payment made in satisfaction of its entire demand; second, Zuber Zuber were appellees' special agents with limited authority and acted without authority in making the payment to the appellant without an agreement on the part of the latter to accept the same in full satisfaction of its demand.
The first proposition of the appellees is irrelevant because the evidence raises no issue of an agreement on the part of the appellant to accept the partial payment in full settlement of its demand.
As to the second proposition, appellant is not suing to recover upon any contract made by Zuber Zuber which the latter were not authorized to make. Appellant is suing upon the original contract of sale. Conceding the materiality of the authority of Zuber Zuber, the second proposition affords no ground of affirmance. Zuber Zuber were employed by the appellees to negotiate with their creditors. They delivered the cashier's check to the attorney for the appellant under an agreement simply that appellant would not sue to enjoin the proposed sale of the stock of goods in bulk. In so doing Zuber Zuber acted within the apparent scope of their authority and any secret limitation upon their authority is not binding upon appellant. The evidence is insufficient to charge appellant with notice, actual or constructive, of the want of authority on the part of Zuber Zuber to make the agreement with it that they did make in appellees' behalf.
The trial court held appellant was estopped to deny that the payment to it was in full satisfaction of its claim. The evidence raises no issue of an estoppel against the appellant.
The judgment is reversed and judgment here rendered in favor of the appellant for $758.72, with interest from January 1, 1934 at the rate of 6 per cent per annum.
Reversed and rendered.