Witherspoon & Lane v. Texas Pacific Railroad Co., 48 Tex. 309

Moore, Associate Justice. This suit was brought by appellants, in the District Court of Harrison county, against appellee, to try title and recover possession of a lot and several blocks of land in the city of Marshall, which appellants claim to have acquired by purchase at constable’s sale, under writs of venditioni exponas, on a judgment of the County Court of said Harrison county in favor of John F. Witherspoon, administrator of H. W. Earns, against the Southern Pacific Railroad Company, as a sold-out company, in a suit brought against the trustees of said sold-out company, as appellants maintain, under and in pursuance with the provisions of

section 9 of the statute of December 19,1857, entitled “

An act supplementary to, and amendatory of,

an act to regulate railroad companies,” approved February 7, 1853.

As appellants do not claim or pretend to hold any title to the land in controversy, except as purchasers at said constable’s sale, they frankly admit, if any of the numerous exceptions taken by the appellees in the court below to the validity and sufficiency of this title should have been sustained, they have no sufficient ground to ask for a reversal of this judgment; for, evidently, if they acquired no title as purchasers at this sale, whatever errors may have been committed by the court, worked them no injury, and afford no ground for protracting a bootless litigation.

The only material question, therefore, for our determination is,—Did appellants acquire a valid title to the lot and blocks of ground for which they sue, by their purchase at the sale made under authority of this judgment of the County Court of Harrison county against the Southern Pacific Eailroad Company as a sold-out company ?

Ei considering this question, we shall take it to be an admitted fact—at least for the present disposition of the case— that both- parties deraign title, as appellants claim, from said Southern Pacific Eailroad Company; and hence, if appellants acquired the title which was vested in said company previous to the alleged sale of its franchises and chartered rights and privileges, the judgment, in the aspect in which it is being now considered, is erroneous.

It is shown, by the record, that a meeting of the stockholders of said Southern Pacific Eailroad Company was held in the city of Marshall, Texas, on the 5th of May, 1868 ; that at said meeting the following-named persons were elected directors of said company, to wit: E. B. Hall, Wm. Garvin, Wm. A. Hauser, John S. Long, Joseph Monks, Charles Cobb, W. C. Hall, Thomas Coleman, E. W. Longhery, and Martin Polly; that only two of said parties—E. B. Hall and E. W. Longhery—were present at said meeting, or, so far as is known, were at the time within the State of Texas.

All of them, except Longhery and Hauser, are shown to have been non-residents of the State. The parties thus elected by the stockholders never met and organized as directors of said company; and it does not appear that they ever transacted any business whatever, either as directors or as trustees of said company, or even claimed the right to do so.

On the same day on which this election was held, and some hour or hour and a half thereafter, “the road-bed, track, franchises, and chartered privileges ” of said Southern Pacific Railroad Company were sold by the sheriff of Harrison county, in pursuance of levies previously made thereon, by virtue of twenty-seven executions in his hands, issued on judgments theretofore rendered in favor of different parties against said company. At this sale, said E. B. Hall, one of the parties elected as a director by said stockholders, became the purchaser of said property, franchises, and chartered privileges.

In September, 1868, John F. Witherspoon, as administrator of H. W. Earns, deceased, filed a petition in the County Court of Harrison county against said parties, who were elected directors of said company on said 5th of May, as previously stated, as trustees of said Southern Pacific Railroad Company, as a sold-out company, for the recovery of a debt alleged to be owing by it to the estate of his intestate. None of the alleged trustees of said sold-out company, with the exception of E. B. Hall and E. W.

Longhery, were cited to answer the plaintiff’s petition, and no effort whatever seems to have been made to have any of the others given notice of the suit. And although they were made parties in the first instance, at a subsequent term of the court the plaintiff dismissed as to the trustees not served, and Hall and Loughery not appearing, took judgment against said sold-out company by default.

It is evident, from this recital, that unless said Southern Pacific Bailroad Company could be legally sold out under execution, as was attempted to. be done, the judgment in favor of Witherspoon is a nullity; or if said sale was valid, unless the parties elected at said stockholders’ meeting were the directors of ’said company at the date of said sale; or if they were, unless a valid judgment can be rendered against a sold-out company, where there are ten trustees, and only two of them are before the court, appellants, by their purchase under said judgment, acquired no title to the property for which they sued.

It is only necessary, in the opinion of the court, to consider the last of these propositions. The

section of the statute under which appellants insist that Witherspoon was authorized to sue said trustees, reads as follows : “ Whenever a sale of the road-bed, track, franchise, and chartered powers and privileges is made, as hereinbefore provided, (unless other persons shall be appointed by the Legislature, or by some court of competent authority,) the directors or managers of the sold-out company at the time of the sale, by whatever name they may be known at law, shall be the trustees of the creditors and stockholders of the sold-out company, and shall have full powers to settle the affairs of the sold-out company, collect and pay the outstanding debts, and divide among the stockholders the money and other property remaining in their hands, after the payment of the debts and necessary expenses; and the persons so constituted trustees shall have authority to sue by the name of the trustees of such sold-out company, and may be sued as such, and shall be jointly and severally responsible to the creditors and stockholders of such company, to the extent of the property and effects which shall come to their hands; and no suit pending for or against any railroad company at the time the sale may be made of its road-bed, track, franchise, and chartered privileges shall abate, hut the same shall be continued in the name of the trustees of the sold-out company.” (Paschal’s Dig., 4916.) The statute, in thus providing for the settlement of the affairs of sold-out railroad companies, was enacted on the supposition that the existing directory were more familiar with the business of the company, and, if not superseded by legislative or judicial action, could more readily and satisfactorily wind up and adjust their unsettled business than any other parties.

They are designated trustees, because, in discharge of the duties imposed upon them, they do not act under authority of the franchise and charter of the company, but merely as the representatives of its stockholders and creditors; while the purchaser and his associates, by virtue of the franchise and chartered rights and privileges acquired by them, could elect director’s for the company. To have used the same name for the designation of these different bodies, would lead to confusion.

The language of the statute plainly indicates that the power conferred upon them as trustees is to be exercised collectively, and in -their aggregate capacity as a body, and not as individuals.

To give to each of the directors distinct and independent power to wind up and settle the business of the company, would evidently lead to confusion and a conflict of action, which would be injurious to the interest of the parties for whose benefit they are made trustees; nor would it be consistent with reason or justice that the trustees should be made jointly and severally responsible for property coming into their hands, unless it come to them in their collective capacity.

Certainly, a valid judgment could not be rendered against, them in their aggregate capacity, as a body of trustees, unless they were all parties to the action, and were all individually or collectively, as an aggregate body, cited to appear and answer to the plaintiff’s demand. Evidently, the aggregate body, or board of trustees, cannot be bound by a judgment against a single trustee. If a suit against an individual trustee can be maintained, it will unquestionably only bind him; or, at most, such a judgment could only be enforced by the sale of property of the company in his hands.

In this case, it is shown that no property of the company came into the hands of the supposed trustee who was named in the execution under which appellants purchased. It seems to us quite evident, that the powers and responsibilities given and imposed upon trustees of a sold-out railroad company, by this statute, could not be thrust upon them merely by reason of their being directors of the company when sold out; and, therefore, it must be shown in some way that they have accepted the trust thus conferred upon them, before they can be held responsible for the discharge of the duties of such trustees.

The most reasonable and appropriate manner of their doing so, would appear to be by the organization of the hoard of directors as trustees. If this was done, possibly the provisions of the statute, providing for service of process upon the corporation before it was sold out, might be found sufficiently comprehensive to bring before the court the trustees, in their aggregate capacity, as representatives of the stockholders and creditors of the corporation. They are apparently authorized to act, in a certain sense, in a quasi corporate capacity.

But it is unnecessary, at present, to decide whether this is so or not, or to determine how such trustees must be served. All that it is necessary for us to say in this case, and this we unhesitatingly do, is that a judgment founded upon service on only two of the trustees, where there are ten, and the presumption is as great that all have accepted and are as competent to act as the two served, will not warrant the seizure and sale of the property of the company, not in the possession or under the immediate control of the trustees who were cited.

There is no error in the judgment of which the appellants can complain, and it is affirmed. Affirmed.