First National Bank of Cuero v. San Antonio & Aransas Pass Railway Company et al., 97 Tex. 201

GAINES, Chief Justice. This is a Avrit of -error to a judgment of the Court of Civil Appeals of the First Supreme Judicial District, Avhich affirmed judgment is in favor of the defendant rendered by the District Court of De Witt County in a suit brought by plaintiff in error against the defendant in error, the San Antonio & Aransas Pass Railroad Company. We can not give a better statement of the case than that made by the Chief Justice of the Court of Civil Appeals in the opinion delivered by that court on the appeal.

It is as folloAvs: “This action was brought by the First National Bank of Cuero against the San Antonio & Aransas Pass Railway Company for the conversion of 222 bales of cotton. The appellant alleged that it held the bills of lading for the cotton and that the appellee had refused upon demand to deliver the same. It sought to recover the value of the cotton as the owner thereof upon the liability of the appellee in the alternative as common carrier and as Avarehouseman.

It also alleged, that, if it vrere not the absolute owner of the cotton, nevertheless said bills of lading were pledged to it to secure an indebtedness of $6241.86 owed to it by the firm of Koenig & Van Hoogenhuyze. Appellee made the members of the firm of Koenig & Van Hoogenhuyze and the Cuero Cotton Compress Company parties defendant and prayed judgment over against each of them. There was a trial by jury. After the evidence was all in the appellee took a nonsuit as to the Cuero Cotton Compress Company.

The case was then submitted to the jury, and resulted in a verdict and judgment in favor of the appellee. “At the beginning of the cotton season of the year 1899 the appellant bank and the firm of Koenig & Van Hoogenhuyze entered into an arrangement by which the appellant agreed to advance Koenig & Van Hoogenhuyze money for the purpose of buying cotton, both locally at Cuero and also at different points on the San Antonio & Aransas Pass Railway west of Cuero.

As security for the money to be advanced by the appellant, Koenig & Van Hoogenhuyze deposited with them as a margin six shares of the stock of the Cuero Compress Company and agreed that the appellant should have a lien on the local cotton purchased by them, and that they would turn into the bank the bills of lading for the cotton shipped in by railroad.

The stock was deposited as agreed and the course of dealing in carrying out the agreement for the advancement of the money, by the bank to pay for the cotton purchased by Koenig & Van Hoogenhuyze was that the cotton bought in Cuero was paid for by the bank upon checks draAvn against it by Koenig & Van' Hoogenhuyze and was sold by them and the proceeds were deposited by them to their account with the bank.

And cotton bought by Koenig & Van Hoogenhuyze at points on the railroad was shipped to Cuero on bills of lading to order of the sellers, with directions to notify the buyers, and the bills of lading were attached to drafts of the sellers on Koenig & Van Hoogenhuyze for the price of the cotton, and the drafts with the bills of lading attached were sent to the bank at Cuero for collection.

On presentation of the drafts and bills of lading to Koenig & Van Hoogenhuyze they paid them with their checks on the appellant bank, which were accepted as cash by the collecting banks and the drafts and bills of lading were delivered to them. The checks of Koenig & Van Hoogenhuyze were charged by the appellant to their account and they turned in the bills of lading to the bank. The checks were paid on presentation, without waiting for the delivery of the bills of lading, which were afterwards either turned in by Koenig & Van Hoogenhuyze themselves or sent by them to the bank.

The cotton represented by the bills of lading was sold by Koenig & Van Hoogenhuyze without consultation with the officers of the bank, and whenever a sale was effected Koenig & Van Hoogenhuyze would send to the bank for the bills of lading for the cotton sold and the bank would deliver them to Koenig & Van Hoogenhuyze. The bank did not require the proceeds of a sale to be deposited before giving up the bills of lading, but trusted Koenig & Van Hoogenhuyze to turn them in, which they usually did.

The officers of the bank kept themselves informed as to the condition of the account by noting the daily balances and the number of bales of cotton shown to be on hand by the bills of lading in its possession and the amount of local cotton that appeared to be on hand, which would be ascertained by a casual inspection in riding by the back yard of Koenig & Van Hoogenhuyze’s place of business, where it was usually stored. Koenig & Van Hoogenhuyze were also engaged in business as general merchants, and made deposits of money and did their banicing business with appellant bank.

Their merchandise and cotton accounts were kept separately, but in some instances credits were transferred from the cotton to the merchandise account, the state of the account and the amount of security on hand appearing to the officers of the bank sufficient to authorize the transfer. “The account foi a balance due upon which this suit is brought began September 1, 1899, but by a deposit on September 2d this balance was reduced to $550.55.

Hp to September 27th, when they became bankrupt and the account was closed, the total amount loaned Koenig & Van Hoogenhuyze by the bank, including interest on overdrafts, etc., was $87,934.05.

They had paid to the bank an amount sufficient to reduce the balance to $6241.05, which should be credited with the proceeds of the compress stock, December 22, 1900, $384. “The several bills of lading, seven in number, upon which suit is based were issued by the railroad company for several lots of cotton, amounting in all to 222 bales, sold to Koenig & Van Hoogenhuyze by parties at Karnes City and Bunge stations on the San Antonio & Aransas Pass Bailway. They were issued to the sellers of the cotton as the shippers thereof.

The cotton was to be carried to Cuero and was consigned to shipper’s order, notify Koenig & Van Ho.ogenhuyze, Cuero, Texas, and the bills had noted thereon a memorandum, ‘compress in Cuero.’ The sellers of the cotton drew drafts on Koenig & Van Hoogenhuyze for the price of the cotton and attached to them the bills of lading indorsed in blank and sent them to banks in Cuero other than appellant bank for collection.

The several drafts, with the bills of lading attached, were presented to Koenig & Van Hoogenhuyze for payment and were paid by their checks on the appellant bank, which were cashed on presentation and charged to the account of the drawers. The bills of lading and the receipted drafts of the sellers of the cotton on Koenig & Van Hoogenhuyze were delivered to the latter by the collecting bank upon the receipt of their checks on the appellant.

The bills of lading were not attached to the checks of Koenig & Van Hoogenhuyze on the bank, but they were afterwards delivered to it and were in its possession when Koenig & Van Hoogenhuyze failed and were produced by it at the trial below. The original receipted drafts remained in the hands of Koenig & Van Hoogenhuyze and never went into the possession of the bank. The purchases of the cotton were made September 19th and 20th, and the cotton was immediately shipped and delivered by the railroad to Cuero Compress Company, September 24th and 25th, except probably three bales, which arrived on September 27th.

The drafts for the price of the cotton were paid, as" severally presented, on September 20th to September 25th. “On September 25th Koenig & Van Hoogenhuyze sold to Inman & Reed 146 bales of the cotton which had arrived on the 24th, and on the 26th they sold them 79 bales, making 225 bales in all, but which included three and probably five bales that were not covered by bills of lading sued on.

This cotton was all marked in the marks of the several shippers and was capable of identification and is fully identified as the lot covered by the bills of lading in the possession of the appellant, except as to the three bales mentioned. It was delivered by Koenig & Van Hoogenhuyze to Inman & Reed on the cotton platform of the compress and was shipped out of Cuero on the 24th and 26th days of September over the line of another railroad.

Of the proceeds of the first sale of 146 bales, amounting to $4398.24, Koenig & Van Hoogenhuyze paid the entire amount to the appellant, and of the proceeds of the second sale they paid the appellant $1979.36. The second sale was for 79 bales of cotton, and amounted to $2468.26.

Koenig & Van Hoogenhuyze filed an application in the Federal court of San Antonio for adjudication and discharge as bankrupts on September 27, 1899, and were afterwards discharged.” Our approval of the statement should probably be qualified by the remark that if the court mean by saying that “the bank did not require the proceeds of a sale to be deposited before giving up the bills of lading, but trusted Koenig & Van Hoogenhuyze to turn them in, which they usually did,” that the undisputed testimony showed these facts, we are not fully prepared to concur; but deem the matter unimportant for reasons hereinafter given.

In impaneling the jury the defendant railroad company and codefendant, the compress company, and Koenig & Van Hoogenhuyze as a partnership, were each allowed six peremptory challenges, over the objection of the plaintiff, and this action is assigned as error. Here, as has been seen from the statement previously made, although the defendants had a common cause as against the plaintiff, there was a controversy between the railroad company and the compress company and also between the former and Koenig & Van Hoogenhuyze.

This made the two defendants company and the partnership each a separate party to the suit and under the rule recognized in this court entitled each to six-peremptory challenges. McLaughlin v. Carter, 13 Texas Civ. App., 132. The case does not fall within the rule laid down in Hargrave v. Vaughn, 82 Texas, 350, and in Jones v. Ford, 60 Texas, 127. But it was further objected to the mode of impaneling the jury, that the defendants were permitted to consult and to act_together in exercising their challenges and in striking the objectionable names from the jury lists.

The statute does not prohibit such action, and we are of the opinion that the court did not err in allowing it. Upon the trial the defendant railroad company urged three defenses to the action.

First, that -since the bills of lading were not delivered to the bank at the time it paid Koenig & Van Hoogenhuyze’s checks for the purchase money of the cotton the former had no lien upon the bills or the cotton represented by them; second, that if the bank had a lien it had authorized Koenig & Van Hoogenhuyze to sell the cotton without procuring from them or producing the bills of lading; and third, that, if not authorized to sell, after the attempted sale, Koenig & Van Hoogenhuyze had paid to the bank the money for which the cotton had been sold.

Exceptions were interposed to so much of the answer as asserted the first defense and were overruled in the court. The court also instructed the jury, in effect, that if Koenig & Van Hoogenhuyze paid the drafts of the sellers of the cotton and received the accompanying bills of lading, they became the absolute owners of the cotton; and that if they subsequently delivered the bills of lading to the bank with intention of giving a lien, that the bank was entitled to hold the cotton; but if such was not their intention, then the bank had no lien and the defendants were entitled to a verdict.

The Court of Civil Appeals held-that there was error both in overruling the exceptions and in giving the charge complained of. We concur in that conclusion and refer to the opinion of that court for the grounds upon which it is based. Bank v. San Antonio & A. P. Ry. Co., 6 Texas Ct. Rep., 388.

The Court of Civil Appeals, however, held also that the error was harmless for the reason that the undisputed testimony showed that Koenig & Van Hoogenhuyze had authority not merely to negotiate a sale, but to sell the cotton, and that therefore under the evidence no other judgment would have been properly rendered except one for the defendants. We incline to differ with the court upon that point; but deem it unnecessary to decide it. The court’s charge was divided into paragraphs which were numbered.

In the second paragraph the court submitted to the jury the question as to the authority of Koenig & Van Hoogenhuyze to sell the cotton covered by the bills of lading sued on; and instructed them in case they found they had such authority from the bank, to return a verdict for the defendants. In the third paragraph the jury were told, in effect, that if they found that Koenig & Van Hoogenhuyze did not have authority to sell the cotton, and they should also find that they had paid the proceeds to the bank, they should deduct the amount of such proceeds-from the amount they should find otherwise due the plaintiff.

The fourth and sixth paragraph's of the charge contained the instruction mentioned-above, to the effect, that if by the delivery of the bills of lading to the bank Koenig & Van Hoogenhuyze did not intend to give a bank a lien upon the cotton, a verdict should be returned for the defendants.

But further in instructing the jury as to the form of their verdict they were charged as follows: “If you find for the defendant your verdict will be: 'We, the jury, find for the defendant under subdivision -,’ or 'subdivisions--of the court’s charge,’ indicating in order under what subdivision or subdivisions, if any, you find in favor, of the defendant.” The verdict of the jury was as follows: “We, the. jury, find for the defendant under subdivision two of the court’s charge.

We also find in favor of the defendants William Van Hoogenhuyze and Carl Koenig.” It is apparent from the verdict that the jury either did not pass upon the issue or issues submitted in paragraphs 4 and 6, or that they found the issues there presented in favor of the plaintiff. The logical effect of their finding is that the bank had a lien but had waived it by authorizing Koenig & Van Hoogenhuyze to sell the cotton. Therefore no harm could have resulted to the defendant, either by the refusal of the court to sustain the exceptions in question, or by the error in the court’s charge if it were error.

But the evidence disclosed that after the failure of Koenig & Van Hoogenhuyze the agents of the bank went to the office of the railroad company to ascertain whether the cotton represented by the bills of lading was still in possession of the carrier, and that three or four bales were found—which the agent offered to deliver upon surrender of the bills of lading. Since he had no right to demand such surrender (Dwyer v. Railway Co., 69 Texas, 707), this was a conversion of the property.

It is not claimed that these remaining bales were a part of the cotton which was sold; but it is urged on behalf of the defendant in error, that they were not shown to be a part of the cotton represented by the bills in controversy; and also, that if identified as such, there was no evidence to justify the jury in finding their value. The point that the plaintiff in error should have had a recovery for the three bales was distinctly made in the motion for a rehearing in the Court of Civil Appeals.

That, court in disposing of the motion held, in effect, that there was not sufficient evidence to go to the jury as to the value of the cotton and that therefore it was not error to refuse a recovery therefor. We think the testimony of the agent of the railroad company shows that the three bales were a part of the 222 bales covered by the bills of lading. It was agreed by counsel for the purposes of the trial, that the whole 222 bales were worth the sum of $6866.50. Then if the three bales were average bales of the lot, they were worth 3-222ds of that sum.

But because it appeared from the allegations of the petition that the 223 bales were of different weights and classification, and it was not shown what the weight and classification of these bales were, it was held that the evidence was not sufficient to prove their value. In this we can not concur. There would be some reason for the ruling if the three bales had ever been in possession of the plaintiff 'in error. But they were in the hands of the defendant in error, and if either of the bales was worth less than the average bale of the entire lot it was incumbent upon the company to show it.

It is qf frequent occurrence for judgments to be affirmed in this court in similar cases— notably for damages to cattle in course of transportation where the evidence of the damage is much less satisfactory than that adduced in this case. It also seems to us, that in so far as the plaintiff received the proceeds of the cotton covered by the bills of lading, which were sold by Koenig & Van Hoogenhuyze, that it would in any event be precluded from a recovery for any of the cotton so sold, except as to so much of it as was represented by the proceeds which it did not receive.

This is especially so in view of the fact that the testimony of its president and cashier both show beyond question that Koenig & Van Hoogenhuyze were authorized to "negotiate a sale”—that is to say, to fix a price and agree upon a sale—and that, according to the usual course of business between them and the bank, they had theretofore sold cotj;on consigned in the same manner, received the money and paid it to the bank. The bank had a lien upon the proceeds of the sale, and in so far as it. received such proceeds its claim upon the cotton was satisfied.

The point was also made in the argument in this court, that even if there was not sufficient evidence of the value of the three bales of cotton, yet the plaintiff was entitled to receive nominal damages, which would have carried the costs of the suit. We need not decide the question, since we hold there was evidence as to the value of these bales. But we suggest, that it occurs to us, that where it is sought to reverse a judgment merely to recover the costs, that it is too late to raise the question in this court.

The point ought at least to be made in the Court of Civil Appeals in the brief and in the motion for a rehearing—and probably in the trial court. For the error with reference to the bales of cotton which were not sold by Koenig & Van Hoogenhuyze, we think the judgment ought to be reversed as to that cotton. But since the jury have found specifically that Koenig & Van Hoogenhuyze were authorized to make the sale, we are of the opinion that the judgment with reference to the cotton which was sold by them should not be disturbed.

The judgment is accordingly affirmed as to the cotton so sold, but as to that which was still in the possession of the railroad company the judgment is reversed, and as to that matter the cause is remanded for a new trial. Affirmed in part and reversed and remanded in part.