110 S.W. 162
BEENE & TROTTER 
v. 
ROTAN GROCERY CO.
Court of Civil Appeals of Texas.
April 29, 1908.
Page 163
        Appeal from McLennan County Court; E. C. Street, Judge.
        Action by the Rotan Grocery Company against G. A. Beene and W. M. Trotter, co-partners, on notes. 
Defendant Trotter pleaded fraud, and made Earnest McGilvery a party. There was a judgment for plaintiff 
against the firm of Beene & Trotter and against the members thereof individually, and judgment over in 
favor of Trotter against McGilvery for the same amount. Defendant Trotter appeals. Reversed and 
remanded.
        Boyd & Boyd, for appellant. Prendergast & Williamson, for appellee.
        KEY, J.
        The Rotan Grocery Company brought this suit against G. A. Beene and W. M. Trotter and the firm of 
Beene & Trotter, seeking to recover upon two promissory notes executed by said firm. The defendant 
Trotter filed an answer embracing a general denial, a plea of non est factum, and a special plea of fraud, 
which authorized proof of the facts hereinafter referred to. By that plea he made Earnest McGilvery a 
party, and prayed that, in the event judgment was rendered against him, he have judgment over against 
Beene and McGilvery for the same amount. The plaintiff filed a supplemental petition denying all the 
allegations in Trotter's answer, and alleged that Trotter had bought the interest of McGilvery in the firm of 
Beene & McGilvery, and had assumed payment of the debts of that firm, including an indebtedness to the 
plaintiff, and that thereafter, in consideration of an extension of time, the notes sued on had been 
executed for part of that indebtedness, and that the plaintiff had no knowledge or notice of the alleged 
fraud perpetrated upon Trotter by Beene and McGilvery, and praying in the alternative for judgment 
against Beene and McGilvery. There was a trial before the court without a jury, which resulted in a 
judgment for the plaintiff against the firm of Beene & Trotter and G. A. Beene and W. M. Trotter 
individually for $427.90, and judgment over in favor of Trotter against McGilvery for the same amount.
        The defendant Trotter has appealed, and presents the case in this court on two assignments of 
errors, both of which charge, in effect, that the judgment is not supported by, and is contrary to, the 
testimony. We sustain that contention, and reverse the judgment. The defendant Trotter testified as 
follows:
        "I am one of the defendants in this cause. I never saw the notes here sued on before now. I did not 
sign them nor authorize any one to execute same for me. About the 15th of June, 1906, the firm of Beene 
& McGilvery were engaged in the family grocery business at Freestone, Texas. I had known Mr. Beene for 
about 26 years and McGilvery for about 2 years. I am, and was then, engaged in farming. McGilvery 
proposed to sell his one-half interest in the business to me. We talked the matter over, and I saw Beene 
and talked with him in regard to the matter, and he stated that he thought there was good money in the 
business. I then decided I would trade. Beene and McGilvery both told me that the outstanding 
indebtedness of the firm was about, and not exceeding, $500. We then took a partial inventory of the 
stock of goods on hand, and all decided that it amounted to $1,000, and, acting upon the statement of 
Beene and McGilvery that the indebtedness did not amount to over $500, I took McGilvery's one-half 
interest, and agreed to assume his one-half the indebtedness of the old firm. I paid McGilvery $90 cash, 
and agreed to pay Beene $150 for McGilvery, he having agreed to take $240 for his interest in the 
business, and me assume his part of the debts of the old firm. We closed the trade, and I took charge with 
Beene as his partner on June 20, 1906. We
Page 164
ran the business until the 12th of July, 1906, at which date the trade was canceled and rescinded with 
McGilvery, and the business turned over to Beene & McGilvery. The firm of Beene & Trotter created no 
debts. We only purchased one barrel of cider and paid for that. A few days after I had traded with 
McGilvery, statements of accounts and claims against the old firm began to come in, and I found that the 
indebtedness was largely more than $500—in fact it ran to more than $1,800 —and, finding that the 
statements and representations of both Beene and McGilvery were false and fraudulently made, I decided 
that I would rescind the trade. I told Mr. Beene about it, and he made two trips to see McGilvery, and 
McGilvery promised to come over and attend to the matter, but having failed to do so, I went over to see 
him, and canceled the trade with him on July 12, 1906, and turned the whole business over to Beene & 
McGilvery. Six or eight days after I made the trade, and after having received a statement from Rotan 
Grocery Company of their account against Beene & McGilvery, and finding it to be nearly $800, I saw 
Charley Clark, plaintiff's drummer, at Teague, Texas, and told him about the whole business, and that I 
intended to rescind the trade with McGilvery —told him of the fraud that had been practiced on me—and 
he said that I ought not to pay the debts. This was before July 1st, the date of the execution of the notes 
by Beene. Of course, I relied on the statements made by both Beene and McGilvery as to the debts not 
being over $500. I have never gotten back my $90 paid to McGilvery. He promised to give me his note for 
it, but has not done so.
        "I had known Beene for about 26 years. He and McGilvery had been in business at Mexia before 
coming to Freestone. I gave Beene my trade while he was in business at Mexia. Thought he was honest at 
the time I traded with McGilvery. Had known McGilvery about two years, and thought he was honest. 
When I traded with McGilvery I took the stock at $1,000, and I agreed to assume one-half the 
indebtedness of the old firm, but my understanding was that it was not over $500. They had some books 
and I went over them, but could not tell what they owed. We just took a partial inventory of the goods, 
and agreed that there was $1,000 worth, and the debts were represented to be about $500, so I paid 
McGilvery $90 cash, and agreed to pay Beene $150, McGilvery agreeing to take $240 for his interest, and 
me assume his part of the debts. The books they had had not been kept up. I had never been in the 
mercantile business before I made this trade. I had been farming in a few miles off where Beene & 
McGilvery were engaged in the mercantile business at that time. I had never had much to do with books 
and could not tell much about them. I did not get any one else to examine the books for me to see how 
much Beene & McGilvery owed. In the trade I made with Beene & McGilvery, I simply bought out 
McGilvery's interest in the business, and took his place in the firm. I got his half interest, and took his 
place in assuming the debts of said firm. A few days after I had consummated this trade, I went into the 
store with Beene and McGilvery went out. Beene was familiar with the business and was the manager. He 
was the managing partner after I went in. A few days after June 20, 1906, when I had consummated the 
trade, the Rotan Grocery Company sent in their claim, demanding payment. I then saw their claim was 
about $800. After I had seen this I told Beene to go ahead and pay out on this and other claims all the 
money we had on hand and the proceeds of the sales as made. We then paid the Rotan Grocery Company 
about $100 in cash on their said claim. We also made payments to other creditors, some $500 or $600 in 
all. This was all done with my knowledge and consent, and in accordance with my instructions. The Pace 
Grocery Company sent in their claim, which was about $700 or $800. I found out that they owed the First 
National Bank about $100 and some other little debts. I do not remember the names of any of the other 
creditors. I do not remember the exact time when I saw Charley Clark, the drummer of the Rotan Grocery 
Company. He was not at our place of business, and was not offering to sell us any goods. I met him at 
Teague, which was several miles away from where our store was and where we did business. It was about 
ten days after I had closed the trade with Beene & McGilvery and had been in possession that I saw 
Charley Clark, though I do not remember the exact time. I told him about the trade and what I had found 
out since, and he said he thought I would have no trouble in rescinding the trade with McGilvery. I did not 
know that he had authority only to sell goods for the Rotan Grocery Company. Beene wanted us to borrow 
the money to pay off all the debts, but I declined to do that. I did not know that Beene gave the notes 
sued on until about six weeks after I canceled the trade. (The notes sued on were handed to the witness 
and examined by him.) These notes are signed with our firm name of `Beene & Trotter,' and were signed 
by Mr. Beene, not me. I presume that they were given at the time they bear date. I did not cancel the 
trade with McGilvery until July 12, 1906. I presumed the debt of the Rotan Grocery Company, which was 
an open account when it was first presented to us for payment after I had bought out McGilvery, was past 
due, or they would not have presented it and wanted it paid."
        Neither Beene nor McGilvery was placed upon the stand, and no testimony was offered tending to 
controvert that given by Trotter. We think the latter's testimony shows that he was not liable upon the 
note sued
Page 165
on. His answer presented an equitable defense, entitling him to have his contract with Beene & McGilvery 
set aside and held for naught as between the original parties, and he is entitled to the same relief against 
the plaintiff, unless he is estopped, or has waived such right. That no estoppel exists is manifest. The 
plaintiff's debt existed before Trotter bought out McGilvery. It is not shown that the extension of the time 
of payment of that debt will result in any injury to the plaintiff. If Trotter is not liable, the original 
indebtedness exists against both Beene and McGilvery, and the plaintiff can procure judgment against 
them.
        We also hold that the testimony fails to show that the appellant abandoned his right to plead the 
fraud perpetrated upon him by Beene and McGilvery. The fact that after ascertaining the existence of the 
fraud he directed Beene to apply the money on hand and proceeds of the stock of goods to the payment 
of the debts against the old firm should not be construed as signifying anything more than that he was 
willing for the property acquired by him from McGilvery to be used for the payment of the debts of the old 
firm, and should not be held as authorizing Beene to execute obligations which would bind Trotter 
individually for such indebtedness; nor does such fact show an abandonment by Trotter of his right to 
plead the fraud referred to as against any one seeking to hold him individually liable for the debts of 
Beene & McGilvery.
        The only theory on which the judgment could be sustained would rest upon the proposition that 
Trotter, being an interested party, the trial court was not compelled to give credence to his uncontradicted 
testimony. There are cases in which that rule has been applied, but we do not think that this case belongs 
to that class. Trotter's answer, filed months before the case was tried, apprised the plaintiff and Beene 
and McGilvery of the fact that Trotter charged the latter with perpetrating a fraud upon him. Both of the 
parties charged with committing the fraud were parties to the suit, and judgment was sought and 
obtained against McGilvery on account of the commission of that fraud. Notwithstanding these facts, 
neither Beene nor McGilvery controverted the testimony given by Trotter; in fact, neither of them was 
placed upon the witness stand. This being the case, and nothing appearing to indicate that Trotter did not 
testify truthfully, we think it would be an abuse of discretion to disregard his testimony. Under these 
circumstances, Beene and McGilvery's silence tends strongly to corroborate Trotter.
        It is also proper to say that we dispose of this case upon the theory that the plaintiff not only did not 
participate in the fraud, but had no notice of its existence until after the notes were executed. It was 
shown by the testimony of Mr. Patton, the plaintiff's cashier, that Charley Clark, the drummer referred to 
by Trotter, was not the plaintiff's representative in such capacity that notice to him would be notice to the 
plaintiff. We do not regard the question of notice or want of notice as of any importance, because, in so 
far as appears from he record, Trotter's release from liability upon the notes will leave the plaintiff in 
exactly the same condition as it would have been in if the notes had not been executed, and Trotter had 
not bought out McGilvery. This being the case, and Trotter's assumption of the payment of plaintiff's debt 
having been procured by fraud, he is entitled in equity to be released from such liability.
        For the error pointed out, the judgment is reversed and the cause remanded.
        Reversed and remanded.