El Paso Ice Refriger. v. Consumers' Ice , 141 S.W. 551 ( 1911 )

I do not agree with my associates in the affirmance of this case. The trial court, among other findings of fact, found as follows:

"Third. That plaintiff and defendant are corporations incorporated under the laws of the state of Texas.

"Fourth. That plaintiff and defendant entered into the two contracts of date March 5, 1904, attached to defendant's pleadings.

"Fifth. That prior to entering into said two contracts plaintiff and defendant for several years had followed a practice under which plaintiff iced all cars going out over the Texas Pacific Railway, the tracks of said railway being near plaintiff's ice plant in the city of El Paso, Tex., and defendant iced all cars going out over the Southern Pacific Railway, the tracks of which were near defendant's plant in said city, and that in icing said cars plaintiff and defendant performed the business separately, and each for itself accepted the profits and losses of its performance of the business.

"Sixth. I find that the same arrangement was carried into the contracts of March 5, 1904, and that it was contemplated by plaintiff and defendant that, as had been the previous practice, plaintiff should ice cars under said contracts going out over the Texas Pacific Railway, and have the profits and losses of that undertaking, and that defendant should ice cars going out over the Rock Island and Southern Pacific Railways, and have the profits and losses arising out of that undertaking.

"Seventh. That with the exception of the one-half of the switching charges on 113 cars switched over to the Texas Pacific tracks, to be iced by the plaintiff, amounting to $282.50 as hereinabove found, there was no agreement or understanding between plaintiff and defendant whereby plaintiff in any way bound itself to pay the other switching charges and trucking charges claimed by defendant in its pleading.

"Eighth. That there was no agreement or understanding between plaintiff and defendant whereby they were to equally share the profits and losses arising out of a joint performance of the contracts of March 5, 1904.

"Ninth. That there was no agreement of partnership or in the nature of partnership or joint undertaking between plaintiff and defendant, either express or implied, whereby one became bound by the acts of the other in the nature of copartners in the performance of the contracts of March 5, 1904."

And also found, among other conclusions of law, the following:

"First. Plaintiff and defendant, being Texas corporations, could not under the law form such a copartnership as is alleged and relied upon by defendant.

"Second. That they could not lawfully agree to share the profits and losses of a joint undertaking so that one of the parties might be bound to the other for contribution on account of the losses incurred by such other in its performance of the joint contract; for the reason that such a copartnership or joint obligation would subject the assets of the corporation to loss through an agency beyond the power and control of its Boards of Directors, and would, therefore, be contrary to public policy and invalid.

"Third. In view of the testimony and the consideration that an agreement to share the profits and losses of a joint performance of the contracts of March 5, 1904, would be invalid, I construe said contracts as providing for, and hold that the parties contemplated that plaintiff and defendant should sever in the performance of said contracts, and I conclude that it was contemplated that each should receive the profits and sustain the losses incident to the separate performance by it of its share of the business under said contracts, and that it should not be bound to the other for the losses arising out of the performance by the other of its share of the contracts. In other words, that the plaintiff should ice cars going out on the Texas Pacific Railway under said contracts and enjoy the profits and sustain the losses, if any, arising out of such performance, and that defendant should ice cars going out on the Southern Pacific and Rock Island Railways and enjoy the profits and sustain the losses, if any, growing out of such performance of the contracts, and that neither should be liable to the other for the losses arising out of such other performance of the contracts or the expenses incurred by such other party in the performance of its part of the contract."

It appears from the foregoing findings of fact and conclusions of law that the trial court expressly held the contracts of March 5, 1904, void and against public policy, and accordingly excluded them from consideration in arriving at the verdict. I think this action of the trial court reversible error.

Article 651, subd. 7, Rev.St. 1895, expressly provides that private corporations may enter into any obligation or contract essential to their authorized business. In this case, it is undisputed that the undertaking as an enterprise of itself was within the corporate power and purpose of each corporation, From a reading of the contracts, which are fully set out in the majority opinion, there is to my mind no element of partnership or of mutual agency which extends to the control or management of the affairs of either corporation. There is no agreement to become partners, no partnership name adopted, no firm name could be signed, no authority given whereby the one could use or sign the name of the other, no mutual agency, no control or management of the corporation is provided for. The only element of partnership which could be claimed is that of the sharing of profits and losses. This has been held to be insufficient to make the contracts void. It is not the element of partnership in carrying out a joint undertaking, which undertaking being within the corporate power and purpose of corporations, that the law protests against, but the loss of control of its own affairs by the corporation. I think the contracts valid and binding upon the parties. Markowitz v. Greenwall Theatrical Circuit Co., 75 S.W. 74; Bates v. Coronado Beach Co., 109 Cal. 160,41 P. 855. The trial court having excluded said contracts from its consideration in arriving at the verdict committed reversible error. I think the error is as fatal to the verdict as if the cause had been one tried by jury, and the court had instructed the jury that it should not consider the two contracts because they were void, and were not binding upon the parties. The fact that the trial court erroneously excluded from his consideration the contracts, such action is presumed to have been injurious to the defendant, and the burden is upon the appellee to demonstrate that appellant was not injured by the error. G., C. S. F. Ry. Co. v. Greenlee, 62 Tex. 349; G., C. S. F. Ry. Co. v. Johnson, 91 Tex. 569, 44 S.W. 1067; G., H. S. A. Ry. Co. v. Parish, 93 S.W. 682; T. M. Ry. Co. v. Lewis, 99 S.W. 577; Ft. W. D.C. Ry. Co. v. Lynch, 136 S.W. 580.

I also differ with the majority of this court as to the proper construction to be placed upon the second paragraph of the first contract. It is to be presumed that, the contract being in writing, it embodied all the terms of the agreement. This being true, I construe the two contracts simply to mean that the cars were to be iced promptly, and that any deviation from the established practice in icing the cars was to be made only when no additional time would be suffered by the shipments in question or as a result of any diversion, and, if a diversion became necessary in order to ice the cars promptly, the expense for same was to be borne by the ice companies jointly and severally, and, further, that, if diversion became necessary in order to ice the cars, certain notice should be given and arrangements made in advance for the express purpose of avoiding confusion or delay on the part of the transportation companies handling the cars or on the part of the agents of the owners of the refrigerator cars who were parties of the second part in said contracts. What intimation is there that this paragraph holds that the established practice meant the sharing of the profits and losses, or as to how the labor and expense in complying with the conditions of the contracts were in any manner to be divided as between the parties of the first part? If there is any relation as between the term "established practice" with the division of the profits and losses or sharing of the labor and expense in the performance of the contract as between the two ice companies, I fail to detect it. It seems to me to be plain and clear that the established practice which is mentioned in the two contracts meant the manner of icing the cars. It meant that the cars should be iced promptly and on the lines of the railroad that the cars were to be sent over; and, if for any reason it became necessary to divert the car or cars, the expense of such diversion should be borne by the ice companies jointly and severally and that the diversion should be made without delay or confusion. It further appears that the Armour Car Lines and the Continental Fruit Express, as parties of the second part, were not in any manner concerned as to the division of the profits and losses as between the contracting ice companies, nor were they concerned as to which one performed the labor and furnished the ice for the icing of the cars. They were concerned, however, as to the manner of the icing of the cars, and that said cars should be iced promptly and without delay or confusion to them. I think, therefore, that a holding that the term "established practice" included as between the parties a division of the profits and losses according to any previous practice or custom is error. I do not agree with the majority of the court that it is necessary to delve in presumptions in construing the two contracts as between the parties further than to presume that if the two contracts are silent on the subject as to the division of the profits and losses, and, if silent, the presumption would be that the profits and losses were to be equally divided as between them. This presumption, however, when indulged, only aids the appellant's contention that harm was done it by the trial court in excluding from consideration the two contracts. To this extent the appellant, by reason of the two contracts, upon the trial of the case, should have had the benefit of this presumption.

Neither do I agree with my associates that the two contracts are silent as to the relative duties and obligations of the parties in the performance of same. It appears that the contracts are written in plain language, there being no ambiguity, and each states that the parties shall jointly and severally perform and do the several things in the respective contracts mentioned, and that they were jointly and severally bound to perform the contracts according to their terms. Certainly plaintiff should not be permitted to say that it was bound, jointly and severally, to perform the duties and obligations as required of it by the contracts as to Armour Car Lines, Continental Fruit Express and the Armour Packing Company, and in the next breath contend that, as between it and the appellant, it was not so bound, and if, perchance, it was so bound by said contracts, it was bound by a mere presumption of law which presumption could be overcome by oral testimony; nor should the appellee be permitted to say that it was bound in its liability to the Armour Car Lines and the other contracting parties, but as to appellant another rule should prevail, or that the contract had been abandoned and was not binding upon it. I think that, if the appellee was bound to the Armour Car Lines and the other contracting companies under said contracts, then, except under proper pleadings, substantiated by proper evidence, that it would be bound to the appellant by said contracts. If appellee desires to urge a defense as against the appellant that the written contracts did not embrace all the agreements as between them, or that there was an agreement contemporaneous with the one which was embraced in the two written contracts and that said agreement was not included in said written contracts, then it devolved upon the appellee to have properly pleaded the omitted part and to have alleged that said omission was made by fraud, accident, or mistake. Or, if the appellee sought to avoid the effect of the two written contracts by reason of a change made subsequently or by reason of an abandonment, I think that it was required of it to have made a proper pleading setting up such defenses. The contracts, being in writing, and, to my mind, in plain, unambiguous language, except as to the determination of the term "established practice," cannot be varied or avoided by the mere introduction of oral testimony except under a proper pleading. Self v. King, 28 Tex. 552; East Line Red River Railroad Co. v. Garrett,52 Tex. 133; Belcher v. Mulhall Scaling, 57 Tex. 17; Loonie v. Tillman, 3 Tex. Civ. App. 332, 22 S.W. 524; Janes v. Ferd Heim Brewing Co., 44 S.W. 896; Earle v. Marx, 80 Tex. 39, 15 S.W. 595; Schwantkowsky v. Dykowsky, 132 S.W. 373.

As to the sufficiency of the evidence to sustain the judgment had there been proper pleadings to authorize the introduction of such evidence, I refrain from making any comments further than to say that I do not concur in all of the deductions as made by the majority opinion as to the effect of such evidence. For the reasons above assigned, it is, to my mind, clear that this cause should be reversed and remanded.

The defendant's defense was predicated upon the validity of the two written contracts. The court held said two contracts void and against public policy. Such action on the part of the court deprived the defendant of a legitimate defense, and the error is such that it should not be overlooked by this court. I think appellant's motion for rehearing should be granted.