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(248 S.W.) agent. 2 C. J. 525, &$ 26, 27; 1 Mechem (2d was to engage in no other business in violation Ed.) 88 799, 742; 9 C. J. 510, $ 7; Swift v. of Rev. St. arts. 7796, 7798, 7799, and 7807, reErwin, 104 Ark. 459, 148 S. W. 267, Ann. Cas. lating to trusts and conspiracies in restraint of 1914C, 363; Halsey v. Monteiro, 92 Va. 581, trade, the voluntary mingling of legal and un

lawful transactions rendered the contract sub24 S. E. 258. The jury's finding that Brasher owned an ject to the laws of the state, independent of

congressional action. interest in this particular lease is unsupported by a scintilla of testimony, and the

Appeal from District Court, Hamilton further finding that he was authorized by County; J. R. McClellan, Judge. Priddy to place the land with appellee for sale at $5,000 per acre has no foundation in Action by the W. T. Rawleigh Company the record aside from his own declarations against J. F. Marshall and others. From and acts. The latter finding, being unsup- judgment for defendants in a second trial ported by the facts, is therefore an errone- after a former judgment for defendants was ous conclusion of law, necessarily based reversed and remanded, plaintiff appeals. upon the legal effect of the price list as an Affirmed. offer to sell. In so finding the jury assumed

H. E. Chesley, of Hamilton, for appellant. the prerogative of the court. In my opin

A. R. Eidson, of Hamilton, for appellees. ion the propositions insisting that the evidence is insufficient to sustain a judgment for the plaintiff should be sustained as to

BRADY, J. [1] This is the second appeal Priddy.

of this case; our opinion upon the first apFor the reasons stated, I respectfully dis- peal being reported in 220 S. W. p. 1111. The sent.

judgment of the trial court was reversed and the cause remanded for a new trial, because the court's conclusions of law, upon which it

rendered judgment for the appellees, were W. T. RAWLEIGH CO. v. MARSHALL et al. not sustained by its findings of fact. We (No. 6473.)

held, specifically, that the fact that appellee

Marshall pursued the same business methods (Court of Civil Appeals of Texas. Austin. in the sale of goods purchased from appelDec. 4, 1922.)

lant that he pursued under the former illegal 1. Monopolies ca 21-Evidence held sufficient contracts, and that he was under the imto support findings of restrictions of business pression that he was required to do so by of buyer by manufacturer of goods.

appellant, could not affect appellant;' such In an action by a manufacturer against the construction of the new contracts being erbuyer of his products to recover a balance due, roneous, and it not appearing that appellant evidence held sufficient to support findings by a induced Marshall to place such construction jury on special issues that the buyer agreed to upon the contracts, or that it had any knowlcontinue to sell the manufacturer's goods in

edge that he had done so. specified territory and in no other territory,

On the last trial the cause was submitted according to a prior contract, and that there was an agreement between the parties that the to a jury for special findings. The jury found buyer should carry on no other business.

that there was an agreement between the ap

pellant and appellee Marshall that the latter 2. Monopolies 17(2)-Contract between manufacturer and buyer of goods held monop-in a certain prescribed territory, and in no

was to continue to sell appellant's products olistic.

Under Rev. St. arts. 7796, 7798, defining other territory, under the contract sued on, trusts and conspiracies against trade, article as he had done under the contract of 1912. 7799, declaring trusts, monopolies, and con

which was the first contract between the parspiracies in restraint of trade illegal, and ar ties. The jury made the further finding that ticle 7807, providing that contracts or agree- there was an agreement and contract bements in violation of the foregoing and other tween the parties that Marshall was to liave similar statutes shall be void and unenforce. no other business but that of selling Rawable. a contract between a manufacturer and leigh products, and that the agreement en. a buyer of goods that the buyer should sell tered into in 1912 continued during the years them in a specified territory, and pursue no other business, was illegal as contrary to the 1913, 1915, and 1916, until the termination of statutes and public policy.

the contract, by, the acquiescence and per

formance of both parties. 3. Commerce Cm 40(1)-Voluntary mingling of legal and unlawful transactions held to render have concluded that it was sufficient to sup.

Although the evidence was conflicting, we commerce, Interstate in part, subject to stato law.

port the finding upon each of these issues, Where a manufacturer in another state as will be briefly indicated hereafter. The sold goods to a buyer within the state, and vice in the contract of 1912, which was adcontracted that the goods were to be sold by the mittedly illegal, was that appellant had buyer in specified territory, and that the buyer ) awarded to appellee Marshall certain ex:

For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

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clusive territory in Hamilton county, Tex., | There is also in the record a number of let. in the sale of its products, and that the agree-ters written by appellant during the years ment restricted him to the designated terri- 1915 and 1916, relating to a renewal of the tory in the conduct of his business. The yearly contracts, which specifically recognize written agreement and contract further re the existence of the original designation of quired Marshall to have no other business territory, urging Marshall to renew his conbut that of selling the products of appellant. tract in order to retain his territory, and As we have pointed out above, the jury found suggesting that the company would doubtless adversely to appellant, to the effect that these receive many applications for that territory, restrictions were continued by agreement of and urging Marshall to give more time to the parties under the later contracts, which the business, "to make good or to get out were the basis of the sales in controversy. and stay out." In the letter of January 31, Under these findings, if supported by evi. 1916, we find this language: dence, it is clear that our statutes against

"You cannot expect us to reserve for you a trusts and conspiracies against trade, found valuable territory, sell you products on credit, in articles 7796, 7798, Revised Statutes, have if you loaf around home about two-thirds of been violated, and that such acts and con- your time the first six months of the year, then tracts are expressly declared illegal by arti- get out and work a little in the last six months, cle 7799, and by article 7807 they are made when collections are good and money is the absolutely void and not enforceable, either

most plentiful." in law or in equity.

There are other letters along the same line, [2] It is contended by appellant's counsel which amply justify the inference that apthat the evidence on the second trial was no pellant was continuing to recognize Marstronger than on the first, that the new con- shall's right to enjoy and to restrict him to tracts were in form legal and free from the the territory originally allotted, and expected vices of the original contract, and that the bim to engage in no other business, while whole defense, under the evidence, rests upon under contract with it. Indeed the tenor of the erroneous impressions of appellee Mar- these letters not only indicates the undershall, with respect to exclusive territory and standing and purpose of the company to conwith respect to his right to engage in ang tinue to impose these restrictions upon other business. It is argued that Marshall Marshall and to bind itself not to award the himself testified that he thought the new designated territory to any one else, but the contracts were the same as the old, and that inference is fair that appellant had pursued he did not think the former were modified or the plan of parceling out the whole state of changed; nor was he informed by any one Texas, or a great portion thereof, into exthat there had been any modification or clusive territories to be awarded to dealers change in the contracts; and that there is with whom it could make satisfactory conno evidence in the record showing that tracts. These facts do not appear from the Marshall was prohibited from selling his face of the later contracts, but the evidence goods anywhere he pleased, or from engag- shows that the same methods were pursued. ing in any other business. We have carefully, Such transactions are in the teeth of the considered the evidence, and are of the opin- public policy of this state, and in plain violaion that it is sufficient to support the con- tion of our statutes. It must be remembered clusion that it was the understanding of both that this is not a case of agency. Appellant appellant and appellee Marshall throughout has not elected, as it might legally have done, their course of dealing, notwithstanding the to transact business in this state through form of the contracts, that Marshall should agents confined to designated territory, and not sell the products of appellant except in giving their exclusive time to the company's the restricted territory reserved for and al- business, but the system of business pursued lotted to him by appellant, which was never is with dealers, who buy the products outchanged, and that he was to have no other right and have title to the goods. Cases ilbusiness or occupation than that of selling | lustrative of the holdings of our courts upon appellant's products. The settlement report similar transactions are: Rawleigh Co. v. introduced in evidence and prepared by the Smith (Tex. Civ. App.) 231 S. W. 799; Cadtraveling auditor of appellant, and dated De-dell v. Watkins Medicine Co. (Tex. Civ. App.) cember 28, 1916, shortly after the close of 227 S. W. 227; Newby v. Rawleigh Co. (Tex, their business dealings, expressly designates Civ. App.) 194 S. W. 1173; Whisenant v. a part of Hamilton county, Tex., as the ter- Shores Mueller Co. (Tex. Civ. App.) 194 S. ritory of appellee Marshall, and in immedi- | W. 1175; Armstrong v. Rawleigh Medicine ate relation to the summary of his monthly Co. (Tex. Civ. App.) 178 S. W. 582; Watkins balances during the years 1914, 1915, and Medical Co. v. Johnson (Tex. Civ. App.) 162 1916. This report was compiled and indors S. W. 394; and Texas Brewing Co. v. Temed by the traveling auditor, who was the pleman, 90 Tex. 277, 38 S. W. 27. same person who originally specified the ex The views stated lead to the conclusion

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(248 S.W.) the evidence, and that judgment was proper- chattel mortgage was to be executed and rely entered denying appellant a recovery. We corded to protect the indorser, but that the have examined all the assignments, and find notes were executed and old ones canceled at that no reversible error was committed; defendant's instance in consideration of an ex

tension of time to afford the maker an opportherefore the judgment will be affirmed.

tunity to pay the debt. [3] On the first appeal, the writer indicated that the case probably fell within the rule 3. Bills and notes 444-Creditor need not

resort to collateral security before recovery announced in Albertype Co. v. Feist, 102 Tex.

against surety, in absence of express contract. 219, 114 S. W. 791. Upon further considera

A creditor need not resort to collateral se. tion of this point, we are of the opinion that curity or any particular security precedent to the case is ruled by Fuqua v. Pabst Brewing recovery on a note against the indorser unless Co., 90 Tex, 298, 38 S. W. 29, 750, 35 L. R. he has expressly contracted to that effect. A. 241. While the transactions were in part 4. Bills and notes 519-Evidence in action interstate commerce and not subject to state

against indorser held to show that vendor's regulation without the consent of Congress, lien on maker's property had ceased to be the parties by agreement voluntarily went available for security. further, and dealt with the subject after it In an action on notes indorsed by defendhad ceased to be an article of interstate com- ant, evidence held to show that a vendor's lien merce, so as to impose and to continue to on property for which the notes were given by impose illegal restrictions upon the pursuit the maker, who became bankrupt after the suit of business wholly within the state. The case without plaintiff's fault ceased to be available

was filed, and later died leaving no estate, had fast cited holds that such voluntary inter- for security; the property not being listed in mingling of legal and unlawful transactions the bankruptcy schedules or accounted for in renders the contract subject to the law of the record. the state, independent of congressional action. We think the principle is applicable Appeal from Dallas County Court; T. A. here. The same holding was made by the Work, Judge. San Antonio Court of Civil Appeals in the Action by the Polk-Genung-Polk Company case of Caddell v. Watkins Medicine Com- against George S. McGhee. Judgment for pany, 227 S. W. 226. It should be added that defendant, and plaintiff appeals. Reversed in the Albertype Co. Case, the restrictions and rendered. which were held by the Court of Civil Ap

Burgess, Burgess, Sadler, Christman & peals to be illegal, under the Texas laws, did Brundidge, of Dallas, for appellant. not relate to any restraint upon the business

Davis, Johnson & Handley, of Dallas, for of the purchaser to be transacted within the

appellee. state, but were wholly upon the Albertype Company, the vendor. This, perhaps, is a HAMILTON, J. Appellant sued appellee sufficient differentiation of that case from for the recovery of judgment upon a series Fuqua v. Brewing Co., supra; but, in any of seven promissory notes which were signed event, we think the latter case is directly in by Geo. P. Turner and indorsed by appellee. point and controlling.

The defense pleaded by appellee was in Afirmed.

substance that appellant, in the year 1916, sold and delivered to Geo. P. Turner certain silos and similar wares, for a portion of the purchase price of which appellant demand

ed and received from Turner certain notes; POLK-GENUNG-POLK CO. v. MCGHEE.

that these notes were renewed by the execu(No. 8737.)

tion of the note sued upon; that at the time (Court of Civil Appeals of Texas. Dallas. each set of notes was executed Turner fur. Jan. 13, 1923. Rehearing Denied nished appellant other security for them; Feb. 10, 1923.)

that at the time appellee indorsed both the 1. Evidence 441(11)-Evidence of payee's

original notes and the renewal notes it was

understood that appellant either had or would agreement to procure mortgage securing notes sued on inadmissible in action against obtain a mortgage on the wares in part pay

ment for which the notes had been executed, Evidence of a parol agreement between the and that appellant either had filed, or would payee and indorser of notes sued on that the file, such mortgage for record in the county former bad or would obtain and record a chat- where the property was located. It was altel mortgage securing them held inadmissible leged that these representations and promas varying and adding to written agreement. ises induced appellee to sign all of the orig2. Bills and notes 518(2)--Evidence held inal and renewal notes. not to show payee's agreement to secure

It was further alleged that, subsequent to mortgage to protect indorser.

the above-described understanding, Turner In an action on notes indorsed by de- became a bankrupt, and his estate was adfendant, evidence held to show, not that a ministered for the benefit of his creditors in

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Indorser.

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bankruptcy, and that in the course of the ad- property above described shall be transferred ministration of the estate in bankruptcy ap by indorsement of this note to any person or pellee discovered that no mortgage had been corporation to whom this note may be astaken by appellant covering the property sold ' signed.

[Signed] Geo. P. Turner." to Turner, and that none had been filed for

The contractual terms of all the notes record. It was alleged that the security had

were identical. become worthless, and the property which

Appellee testified that appellant sold Geo. should have been covered by a mortgage duly P. Turner certain silo forms for which the recorded had become a part of the estate in original notes indorsed by him were executbankruptcy by reason of the failure to re- ed, and that an authorized agent of appelcord the mortgage, and that through such cir- lant, through whom the sale was made and cumstances the security which would have the transaction wholly executed, was in Waexisted by virtue of the recorded mortgage co in 1916 at the time of the sale and execuhad been lost to appellee, and thus his rights tion of the notes; that both this agent and had been violated without his knowledge or Turner then agreed with appellee that a nien consent.

would be retained by appellant on the silo The issue having been joined by this an- forms and that appellant would record the swer to appellant's petition declaring upon lien to protect the indorsement. He testified the notes, the evidence was adduced, and the that about July 1, 1917, when he indorsed tlie case submitted to a jury upon special issues, renewal notes, the renewal notes were in the and, in accordance with the findings of the form of the original ones reciting that apjury, judgment was rendered for appellee.

pellant retained a lien on the silo forms, The issues submitted to the jury and the and, as appellee understood it, this transacrespective answers thereto were as follows: tion was simply an extension, and carrying

"When George S. McGhee indorsed the orig- out of the original agreement inade in 1916 inal notes given by Turner in 1916, did he do with appellant's agent. He furtuer testified so with the understanding with agent for plain- that he made no effort to procura or save tiff that a mortgage would be taken on forms the silo forms either at the time or after sold to Turner, and that said mortgage would Turner went into bankruptcy, but notified be filed for registration in McLennan county, Tex.? Answer: Yes.

the attorneys of appellant that he wou'd ex"When George S. McGhee indorsed the re- pect them to do this, as appellant held a newal notes given in 1917, did he do so with mortgage on the property. the understanding that mortgage had been

The execution of the notes sued upon foltaken on forms sold to Turner and that said lowed a period of correspondence between mortgage had been filed for registration in Mc- l appellant and appellee extending from earl Lennan county, Tex.? Answer: Yes."

in January, 1917, to early in July, 1917, aftThe first of the notes sued upon matured er the first series of notes had become due October 1, 1917. The others matured at in- and Turner had failed to pay them. tervals of three months. Each of them was

Throughout this correspondence appellant for the sum of $100, except the last, which was insisting upon payment by appellee, and was for $97.50. The note first maturing was appellee, at no time denying full and comas follows:

plete liability, but acknowledging his liabil

ity, was imploringly soliciting, appellant to "$100.00.

July 1, 1917. "October 1, 1917, after date, I promise to pay be able to settle the indebtedness by making

grant more time in order that Turner might to the order of Polk-Genung-Polk Co. one hundred and no/100 dollars, with interest at six small payments from time to time. Appellee per cent. per annum, from maturity and until throughout the correspondence assured ap paid, and with attorney fees. Negotiable and pellant that he was unable on account of payable at Ft. Branch, Ind., without any relief business reverses to make payment, and that, from valuation or appraisement laws, for value if indulgence were accorded Turner, the latreceived. The drawers and indorsers severally ter would be able to discharge the liability waive presentment, demand for payment, pro- completely, and would discharge it. Appellee test, and notice of protest and nonpayment of gave assurance that he would exert influence this note.

“This note is given as the evidence of the upon Turner to have him make small payconsideration of the following described person ments designated by appellee, provided this al property, to wit: Part payment on one 16- arrangement should be acceded to by appelfoot and one 14-foot Polk System machine with lant, and he assured appellant that Turner chutes No. 1041 and No. 1042, this day condi- was engaged in activities from which he was tionally sold by Polk-Genung-Polk Co. to maker obtaining revenue sufficient to meet payof this note. It is expressly agreed by the ments in the amounts and on the respective maker of this note that the title to the above- dates indicated in the notes sued upon. described property shall be and remain in the These terms, finally having been acceded to above-mentioned sellers thereof, and that the title to said property shall not pass to, or vest by appellant in compliance with appellee's in, said maker of said notes, until the said note solicitations and insistence, were precisely and all accumulated interest shall have been reflected in the notes involved in this suit. fully paid. It is further expressly agreed by

During the course of this correspondence

(248 S.W.) appellant inquired of appellee as to the loca- / would result to him from a suit upon the tion of the property upon which the lien re-original notes. He was involved and emtained in the face of the notes existed. It barrassed financially on account of business received no reply from appellee to this in- reverses. He had other creditors. He feared quiry. The inquiry subsequently was repeat that the institution of suit would precipitate ed to appellee, and in response the latter ad- his other creditors into an attitude of disvised appellant that he was informed by Tur- affection which he could not overcome. ner that Turner had the property stored with Hence he represented that the proposed arone of his friends in the country near Waco. rangement would not only afford an opporIn none of this correspondence preceding the tunity for Turner to pay the debt without execution of the second series of notes did the liability ultimately falling upon appellee, appellee in any way intimate that he was but would obviate difficulties with other credrelying upon any mortgage other than that itors and possible disaster to his plans of expressed in the terms of the conditional sale business recovery; and he expressly stated contained in the notes, but, as above stated, in the course of the correspondence with aprecognized his unqualified liability as a sure- pellant that, if Turner failed to pay the debt ty. Only after the new notes had been ex- under his urgings, he himself would endeavecuted, and after default had been made by or to make settlement. both Turner and appellee, and steps had been [3] Even, however, if appellee should be taken to enforce collection against appellee, regarded strictly as a surety, his contention did he assert the existence of an agreement that he became released from liability bethat a chattel mortgage was to have been cause appellant did not recover or foreclose taken and filed for record when the first se- upon the property, upon which a lien was reries of notes was executed.

tained in the notes, would be unsound. A The transaction which resulted in the exe- creditor is not required to resort to collateral cution and delivery of the second series of security, or any particular security, precenotes, the record conclusively indicates, was dent to recovery against a surety, unless he entirely between appellant and appellee. has expressly contracted to that effect. It is After the agreement had been reached Tur- only when the terms of the contract indicate ner merely acquiesced in it at the instance of such to be the agreement that the surety will appellee. The correspondence between the be held not to be liable until the security has parties to this suit conclusively reflects that

been exhausted. The terms of the notes it alone expressed the dealings which result- themselves disclosing nothing to indicate ed in the delivery of the second series of

such an understanding, and, the letters notes and the cancellation of the original notes

, and there is no intimation to the effect through which the negotiations were had that any part of the negotiations extended which resulted in the execution of the notes beyond what is expressed in the letters which clearly negativing that any such intention the record contains as having passed between ever existed with reference to this particular appellant and appellee.

transaction, the defense is not available to [1, 2] These letters not only contain no in-appellee. timation that a mortgage was to be executed [4] Turner became a bankrupt after the and recorded to protect appellee, but they suit was filed, and later he died. He seems to conclusively exclude that idea. The note have had no estate either at the time of itself is void of any expression to indicate bankruptcy or at his death. These facts any such agreement. There is no allegation were alleged by appellant. The schedules of fraud, omission, or mutual mistake, and of personal property in bankruptcy did not even if a parol agreement had existed, as ap- list the property for which the notes were pellee contends, we think proof of it could given. The property is unaccounted for in not have been received, because the effect of the record of this case. The record as a such evidence would have been to vary and whole indicates that the security, without add to a written agreement, and this very any fault whatever of appellant's had ceased objection was fully urged by appellant. Be- to be available for security, as alleged by apsides, the effect of the uncontradicted evi-pellant. dence is to make the execution of the notes The findings of the jury are unsupported sued upon the primary undertaking of ap- by legal evidence. Liability was conclusivepellee

. It was at his instance that these ly established against appellee, and the pernotes were executed and the old ones can- emptory instruction to find for appellant celed. The consideration for the execution of ought to have been given. the new notes was the extension of time af The judgment is reversed, and judgment fording Turner an opportunity to make pay- is rendered for appellant for the full amount ment and saving appellee the embarrassment, the terms of the notes stipulate. humiliation, and loss he estimated and stated Reversed and rendered.

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