Opinion
No. 4235.
July 14, 1932. Rehearing Denied September 1, 1932.
Appeal from Rains County Court; J. H. Foster, Judge.
Suit by J. M. Felton against the Texas Cotton Co-operative Association and others, wherein named defendant filed a cross-action against plaintiff and others. Judgment was entered for defendant Missouri, Kansas Texas Railway Company of Texas, and in favor of plaintiff against the other defendants. From a judgment in favor of named defendant on its cross-action against cross-defendants J. M. Gray and G. R. Kerr, it appeals.
Affirmed.
J. M. Felton sued J. M. Gray and G. R. Kerr on two promissory notes of $198 and $25, respectively, and for foreclosure of a chattel mortgage lien given to secure the payment of the same. The Texas Cotton Cooperative Association and the Missouri, Kansas Texas Railway Company of Texas were afterwards by amended petition made parties defendants upon the ground that they were asserting some claim or title to the cotton in controversy, but that such rights, if any, were inferior to that of the plaintiff. At the time the suit was filed on September 28, 1930, J. M. Felton sued out a writ of sequestration, claiming that the mortgagor, J. M. Gray, was attempting to dispose of twelve bales of the mortgaged cotton and remove them out of the county. The sheriff, under the writ of sequestration, took into his possession thirteen bales of cotton, one bale of the cotton being in the cotton yard at Point, and the twelve bales being on the platform of the railroad company. The Texas Cotton Co-operative Association filed a cross-action for damages against the plaintiff, J. M. Gray, G. R. Kerr, the sheriff, and M. L. Allen and Leo Allen, composing the firm of M. L. Allen Son, setting up, among other things, that they were guilty of conversion by wrongful sale of the twelve bales of cotton.
It was shown by the evidence that in 1930 J. M. Gray was a share cropper on the farm of G. R. Kerr, who as the landlord was to have one-half of all the cotton raised on the premises. On February 18, 1930, J. M. Gray with joinder by the landlord, G. R. Kerr, executed a chattel mortgage to J. M. Felton on a cow and calf and the entire corn and cotton raised on the premises during the year. J. M. Felton was a merchant doing a general merchandise business in Emory. The mortgage was to secure the payment of supplies and provisions to be furnished to J. M. Gray to enable him to make a crop on the premises. The mortgage was duly filed for registration in the county clerk's office on March 21, 1930. The mortgage expressly authorized J. M. Felton to sell the mortgaged cotton "at public or private sale, with or without notice" and apply the proceeds of sale "first to the above described indebtedness and all expenses incurred in seizing and selling said property, with ten per cent. additional as attorney's fees, and the balance, if any, to be paid over to me, my order or legal representative." The mortgage further provided "that when any of the property herein is taken out of the County this mortgage becomes due and J. M. Felton has a right to foreclose same at once." The notes and accounts sued upon evidence the value of the supplies and provisions actually furnished to J. M. Gray. J. M. Gray raised the twelve bales of cotton in suit in the year 1930 on the farm of G. R. Kerr.
Between thirty and forty days after the sheriff took over the cotton under the sequestration writ, the plaintiff J. M. Felton and the two defendants, Kerr and Gray, in the view of settling the suit, acting through their attorneys agreed to terminate the litigation by J. M. Gray's paying the amount sued for, less $9.75, and all the court costs out of the proceeds of the mortgaged cotton. The cotton was then sold to M. L. Allen Son in Emory on October 15, 1930, for the sum of $563.15, which, as admitted, was the full market value of the cotton. As testified by the attorney: "The cotton brought $563.15 of which $300.00 was paid to J. M. Felton, and one half the remaining amount was paid to G. R. Kerr as rent. Mr. Kerr was supposed to get one half the money derived from the sale of the cotton." G. R. Kerr testified: "I did not join in the sale (to M. L. Allen Son). I did not take a cent out of the sale. There is $130.05 in the bank in my name, but it is not mine. I do not know who it would belong to. I did not talk to J. M. Felton about selling the cotton except that he said J. M. Gray had sold it to M. L. Allen Son. He gave me a duplicate deposit slip." The title and possession of the cotton, however, was not seemingly vested on the agreed private sale. The court on the trial of the case entered a final decree of foreclosure and sale of the cotton under the stipulation of the mortgage.
It appears that J. M. Gray entered into a marketing agreement in the standard form with the Texas Cotton Co-operative Association and in keeping with his agreement, on September 26, 1930, placed the twelve bales of cotton in suit on the depot platform of the Missouri, Kansas Texas Railway Company of Texas at Point, and had issued to him a bill of lading for the twelve bales of cotton consigned to shipper's order, notify the Cotton Co-operative Association, care Houston Compress Company, at Houston, Tex. A draft for $554 was drawn by him on the Cotton Co-operative Association. The railway company was in possession of the cotton at the time the sheriff executed the writ of sequestration. The cotton association later paid the draft drawn by J. M. Gray for $554, the amount agreed to be advanced by the association. Out of the $554, it seems, J. M. Gray paid the cost of ginning the cotton and then paid to G. R. Kerr "one half the money which amounted to about $277.00," and himself used the balance of the money. J. M. Felton did not receive and was not paid "any of the money that was paid to J. M. Gray by the Texas Cotton Co-operative Association." J. M. Felton did not know, as he says, of the marketing agreement until the trial of this cause. Neither did M. L. Allen Son, it appears, know of such marketing agreement of J. M. Gray. G. R. Kerr testified: "Mr. J. M. Felton had a mortgage on the entire crop of Mr. Gray. I signed the mortgage with Mr. Gray. I was standing good for Mr. Gray to get supplies for the year. Mr. Gray told me he was going to sign an agreement to pool or sell his cotton to the Texas Cotton Co-operative Association. I did not consent to his signing the agreement. He sold the cotton, I suppose, to the Association and brought back $554.00, less the ginning. He afterwards gave me one half the money, which amounted to about $277.00, less the ginning. I was opposed to selling the cotton to the Cotton Association."
In keeping with the verdict of the jury and the evidence, the court entered a judgment in favor of the plaintiff against J. M. Gray and G. R. Kerr for the amount of the debt sued for and 10 per cent. attorney's fees with foreclosure of its mortgage lien against the defendants and the Texas Cotton Co-operative Association. The judgment was in favor of the railway company upon its disclaimer of any interest in the suit. The judgment was in favor of the Texas Cotton Co-operative Association on its cross-action against J. M. Gray and G. R. Kerr, jointly and severally, for the sum of $554, which was the amount of the draft paid as advance purchase price, and that it take nothing against J. M. Felton, M. L. Allen Son, and the sheriff as for conversion.
C. K. Bullard and E. F. Kucera, both of Dallas, for appellant.
W. W. Berzett and Rodes Garrett, all of Emory, for appellees.
The appeal is rested chiefly on the point that judgment should have been rendered in favor of the Texas Cotton Co-operative Association on its cross-action for damages as for conversion, not only against J. M. Gray and G. R. Kerr, but also against the sheriff, J. M. Felton, and M. L. Allen Son. It is urged that as the cotton was seized under writ of sequestration, a cause of action for conversion was conclusively established in the fact of private sale of the same without judicial process. The principle of law sought to be invoked by the appellant is well established, American Mortgage Corp. v. Wyman (Tex.Civ.App.) 41 S.W.2d 270, but there is doubt that liability for conversion upon that ground or otherwise was established by the evidence. It is believed that the private sale of the cotton should, in the circumstances, be considered, as the trial court evidently concluded should be, as intended to be made of final effect by decree of the court of foreclosure and sale under the mortgage stipulation. The final decree of foreclosure and sale was in effect an approval of the agreed private sale, made for the purposes of ending the litigation. By such decree the rights of all the parties, including the appellant association, in relation to the cotton seized were adjusted. The seizure of the cotton in the first instance under the writ of sequestration was merely in the incidental purpose of preventing the cotton's being moved by the mortgagor into another county.
And it is thought the conversion may not be predicated on the proof as made in the case. The mortgage contained the stipulation expressly authorizing the seizure and sale of the cotton in the county where grown and mortgaged without legal proceedings at all. In virtue of this contractual right the mortgagee would be empowered to take into possession the mortgaged cotton if he deemed himself insecure and to hold and dispose of the same in the character of a mortgagee. And the evidence clearly goes to show that in point of fact the disposition of the cotton to M. L. Allen Son was made purely in purpose and intention in keeping with the provisions of the mortgage and not otherwise. The cotton was fairly sold for its full value, and the proceeds of the sale was applied first to the full payment of the mortgage indebtedness, and the remaining amount, as we must take the fact to be, "was paid to G. R. Kerr as rent." Both the mortgagee Felton and the landlord Kerr received only, and no more than, that which each of them were legally entitled to have paid out of the value of the cotton, and did not assert ownership over any portion of the cotton or the proceeds of sale than they were to have and receive. The evidence is conclusive of the fact that at the time the tenant J. M. Gray undertook to pass the twelve bales of cotton to the Cotton Cooperative Association the twelve bales of cotton were subject to the prior mortgage of J. M. Felton, and the prior right of the landlord G. R. Kerr to one-half the cotton. It was therefore allowable to deduct both the mortgage indebtedness and the landlord's rights from the value of the property. In so doing, after deducting the landlord's one-half, the mortgage indebtedness was beyond and exceeded the tenant's due proportion of the cotton and its value. There can be no conversion where one takes only what he is entitled to receive and does not assert ownership over a portion more than is permissible for him to do, and that is the situation shown in the case.
The factual element further appears, as may under the circumstances be concluded, that the Cotton Co-operative Association was not in the relation of absolute owner in immediate possession of the cotton at the time of execution of the writ of sequestration on September 29, 1930, at 11 o'clock a. m. Houston, Tex., was contemplated to be the place of delivery of the cotton and the possession and control of the Cotton Co-operative Association to be upon the arrival of the cotton at Houston, Tex. The title remained in the shipper up until the bill of lading was turned over to the cotton association upon payment of the draft. The draft does not appear to have been paid before the levy of the writ, though it was paid on the same day as the levy of "September 29, 1930." In this view, therefore, considering all the circumstances, it is concluded that there may not be predicated error on the part of the trial court in denying judgment as for conversion against the sheriff, M. L. Allen Son, and J. M. Felton. It appears that the court allowed a recovery to the Cotton Co-operative Association against the landlord and tenant of the money advanced in payment of the cotton, and this was seemingly the proper remedy, as the enforceable rights, of the cotton association in the case, in the light of all the circumstances shown.
The judgment is affirmed.