Cockrell v. Craugh

ARCHER, Chief Justice.

This suit was brought by H. V. (Bee) Cockrell, Jr., against J. M. Craugh, an individual, and J. M. Craugh and Company, a Texas corporation, jointly and severally, on a note dated April 11, 1952 in the amount of $23,000 with the typewritten signature of J. M. Craugh and Company on the note, and the written signature of J. M. Craugh on the note, and was also brought by the plaintiff against the said defendants jointly and severally for an amount of $14,500 cash money loaned by the plaintiff to the defendants. J. Gilmer Blackburn, Trustee, intervened,1 claiming to own the note for $23,000. Previous to the trial of the cause, plaintiff and intervenor advised all parties in open court that there was no conflict of interests between the plaintiff and interve-nor. At the conclusion of the testimony, all parties moved the Court for an instructed verdict and the Court thereupon rendered judgment in behálf of plaintiff and inter-venor against J. M. Craugh and Company, in the amount of $39,575, which is the principal and attorney’s fees due on the note and the $14,275 debt, but denied any recovery against J. M. Craugh individually.

The appellant has made seventeen assignments of error and are that the court erred in overruling plaintiff’s Motion for instructed verdict against the defendant Craugh individually; in sustaining Craugh’s Motion for instructed verdict; in finding that Cockrell agreed to accept and did accept a $2,000 check from J. M. Craugh & Company and a note for $23,000 from J. M. Craugh & Company in return for his sixty shares of stock;, in finding that the $23,000 note was only a corporate note and not the personal obligation of J. M. Craugh; in finding that no fraud was committed by J. M. Craugh in the transactions involving the loans; in finding that J. M. Craugh & Company had regular directors’ and stockholders’ meetings; that Cockrell knew on April 11, 1952 that the corporate defendant was without funds to pay the $25,000 and would be for a considerable time; in holding that the note for $23,000 is barred by the four year statute of limitation against J. M. Craugh; that there had been no fraudulent conduct on the part of J. M. Craugh; in failing to disregard the corporate entity as of fact as well as of law; in failing to render judgment against J. M. Craugh for the full amount sued for.

Both the demand note for $23,000 and the oral promise to pay $14,275 became due and payable April 11, 1952, and suit was filed November 18, 1958. Appellants Craugh and Craugh & Company plead the two and four year statutes of limitation. By supplemental petition Cockrell plead that the enforcement of the debt was not barred by limitations because J. M. Craugh, president of the corporation, had orally acknowledged the debt and because the ledger book of the corporation contained the account and note payable items showing the amount owing to Cockrell.

Cockrell’s complaint is that the Court should have granted his Motion for instructed verdict against J. M. Craugh, individually.

Craugh contends that the Court was correct in refusing judgment against him as an individual, but erred in rendering judgment against the corporation because the debts were barred by the statutes of limitation.

J. M. Craugh & Company was engaged in the cotton business from 1947 to 1952, ceasing operation in 1952 because of several financial losses. The company has been kept in existence by the payment of franchise taxes by Craugh.

Cockrell was elected vice president of the company in 1949 and during the subsequent three years loaned money to the company, *519the exact dates are not shown, hut there is no issue as to the loans or the amount. . The last entry on the books of the company relative to the indebtedness was a credit of $225, reducing’ the account to $14,275 in December, 1956.

Cockrell sold his sixty shares of stock for a total consideration of $25,000, the down payment by a check drawn on the company’s account for $2,000. A demand note for $23,000 was signed by typewritten signature of J. M. Craugh & Company and thereunder the written signature of J. M. Craugh, without words of his capacity as agent. The stock was transferred to the corporation by endorsement.

J. M. Craugh has never made any payments on the loan or note, or made any statements in writing acknowledging his liability to pay these claims.

We believe that the loans were made by Cockrell to the company and not to Craugh, but in any event the enforcement of the debts against Craugh are barred by the statutes of limitation. , Articles 5526 and 5527, Vernon’s Ann.Civ.St.

Since we believe that the debts are due by tim company, Craugh could not be held by an oral promise, if one had been in fact made. Article 3995, Sec. 2, V.A.C.S.; Hoffer v. Eastland National Bank, Tex.Civ.App., 169 S.W.2d 275.

We do not believe that there is evidence in the record to show fraud on the part of J. M. Craugh, or that the corporate entity of the company should be pierced.

The corporation was duly organized and had its board of directors which met annually, and for special meetings, and the stockholders held meetings until 1952 when the company, having had several losses, ceased to operate. Hartnett Co. v. Shirah, 116 Tex. 154, 287 S.W. 902; National Hotel Co. v. Motley, Tex.Civ.App., 123 S.W.2d 461, er. dism., cor. judgm.

Cockrell testified that Craugh orally several times promised to pay both the demand note and the amount of the loan but could not fix the exact time and place when such promises were made.

Craugh denied that he ever made any promises to repay the note or the loan and such a promise if made to perform some act in the future does not amount to fraud, even though the promise is subsequently broken without excuse. Fox v. Miller, Tex.Civ.App., 198 S.W.2d 776, er. ref., N.R.E.; Collier v. Bankston-Hall Motors, Inc., Tex.Civ.App., 267 S.W.2d 898.

We do not believe that the debts of J. M. Craugh & Company are barred by limitation.

Mr. Craugh acknowledged in his testimony that the debts are presently valid obligations of the company' and' would be. paid if ever the corporation became able. Hanley v. Oil Capital Broadcasting Ass’n, 141 Tex. 243, 171 S.W.2d 864; Small v. Lang, Tex.Civ.App., 239 S.W.2d 441, er. ref., N.R.E.

The judgment of the Trial Court is affirmed.

Affirmed.

. Appellant states in its brief that “By Supplemental Petition, Cockrell pleaded that enforcement of the debt was not barred by limitations because appellant’s President had orally acknowledged the debt and because appellant’s ledger book contained account and no , payable items showing the amount owing to Cockrell.” No record reference is given to this pleading and we fail to find it in the transcript.